FMM calls for tax relief, fuel support as survey flags looming supply shock

FMM In The News: THE MALAYSIAN RESERVE, April 7, 2026

THE Federation of Malaysian Manufacturers (FMM) has called for immediate tax relief, fuel prioritisation and supply chain intervention as a survey shows the sector is approaching widespread disruption from the West Asia conflict and shipping constraints.

It also called for priority diesel allocation for fuel-intensive industries and logistics operators, a temporary stabilisation of electricity and gas tariffs, faster approvals for alternative raw materials, and the formation of a national crisis response task force.

The survey found that 90% of manufacturers are already affected or expect to be impacted within four weeks, as disruptions to shipping routes through the Strait of Hormuz and Red Sea drive raw material shortages, higher logistics costs and tightening diesel supply.

Nearly 70% of companies expect raw material shortages within a month, while 8.2% have less than two weeks of stock for critical inputs. 

FMM said shortages are cutting across sectors including petrochemicals, metals, electronics, food processing and rubber products, reflecting Malaysia’s reliance on global supply chains, with 82.9% of firms sourcing more than 30% of inputs from overseas.

“Production lines are at risk of stoppage, export orders are being cancelled and the financial capacity of manufacturers to sustain operations is under direct and accelerating pressure,” said FMM president Jacob Lee Chor Kok (picture).

The survey showed 67.3% of companies expect production disruption within one month, while 48.2% have already reduced output or suspended product lines. 

According to FMM, cost pressures have intensified sharply. 

Energy costs rose between 10% and 30% for 48.6% of firms, while 33.6% reported increases exceeding 30%, including 11.8% seeing rises above 50%. 

Logistics costs have also surged, with 52.7% reporting increases of 20% to 50% and 17.7% reporting increases above 50%, driven by surcharges, war risk premiums and rerouting costs.

Domestically, 54.1% of manufacturers said haulage operations are being affected by diesel subsidy quota constraints, leading to higher transport costs and delays.

FMM said 74.5% of companies are experiencing working capital pressure, with 18.2% already affected in their ability to sustain operations. 

The same proportion reported production cost increases of at least 10%, a significant strain for manufacturers operating on margins of 5% to 15%.

The federation also called for tighter oversight of freight surcharges, deferral of planned port tariff increases, priority domestic allocation of petrochemical feedstocks, price monitoring of critical industrial inputs, and faster regulatory clearances for alternative sources.

It warned that the impact of disruptions could extend beyond factories to the availability and pricing of essential goods, noting that manufacturing accounts for about 23% of Malaysia’s GDP.

“Acting now will stabilise operations and contain further disruption. Delay will result in production stoppages, sustained export losses and wider impact across the economy,”