FMM calls for timely intervention to avoid long-term manufacturing risks

FMM In The News: NEW STRAITS TIMES, June 11, 2026

KUALA LUMPUR: Manufacturers require timely and targeted intervention to prevent temporary disruptions from becoming longer-term structural disadvantages for Malaysian manufacturers, according to the Federation of Malaysian Manufacturers (FMM).

Its president Jacob Lee Chor Kok said that while many companies have demonstrated resilience through inventory management, supplier diversification and operational adjustments, these measures are increasingly reaching their limits as the crisis enters a prolonged phase.

"Manufacturing remains a key pillar of the Malaysian economy, contributing significantly to exports, employment, investment and industrial development.

"Sustaining the sector's competitiveness during this period is therefore a national economic priority.

"Measures that help manufacturers manage rising costs, secure critical inputs, maintain liquidity and preserve market competitiveness will be essential to protecting industrial capacity and investor confidence," he said in a statement today.

The survey drew responses from 196 companies across a broad cross-section of industries between May 25 and June 10, 2026.

It is the third consecutive monthly assessment since disruptions first emerged in February this year.

According to Lee, the three surveys trace a clear progression, with the first capturing the freight and energy cost shock, and the second showing its spread into raw materials, cash flow and investment.

He added that the third survey shows these pressures persisting alongside a more serious development, where manufacturers are now losing orders, abandoning product lines and losing customers.

"The prolonged crisis has moved beyond a cost problem and is inflicting lasting commercial damage," he said.

According to the survey findings, operating conditions remain under severe pressure across the manufacturing sector, despite various mitigation measures.

Cost pressures have turned into commercial losses, with the most serious finding being that these costs are no longer being absorbed as a passing challenge but have become real commercial losses.

Freight and logistics remain the primary constraint, with freight costs continuing to be the dominant pressure.

About 54 per cent reported further increases since early May and 86 per cent remain at or above peak levels recorded in the second survey, with no commercial substitute for sea freight for most manufacturers.

Investment and employment decisions are being affected as the prolonged disruption is now shaping investment and workforce decisions.

Delays in industrial investment and technology upgrading carry lasting risks for Malaysia's productivity, industrial transformation agenda and future competitiveness.

The survey also examined domestic sourcing for the first time, with 46 per cent of companies having sourced or attempted to source from Malaysian suppliers.

However, 36 per cent reported that required specifications or grades were unavailable locally, while 31 per cent found local pricing uncompetitive against imports, indicating that targeted measures are needed to address capacity and competitiveness gaps.

FMM also welcomed government support, acknowledging the government's response following the second survey presentation to the National Economic Action Council (MTEN) on May 19.

However, the survey findings indicate that relief measures have yet to reach a significant proportion of affected manufacturers.

The findings point to a financing gap affecting a segment of manufacturers that falls outside existing support frameworks, despite continuing cost and cash flow pressures.

Lee said the pattern across the three surveys shows a disruption that is becoming structural, and without targeted intervention the cumulative impact on costs, competitiveness, investment and employment will intensify.

On this basis, Lee said FMM urges the government to consider six measures, including duty and tax relief for alternative-origin raw materials, as well as a double tax deduction for crisis-related freight and insurance costs.

He also called for industrial fuel cost relief, dedicated financing for mid-tier manufacturers, deferral of remaining port tariff increases, and government-facilitated domestic supplier matching.

Lee said FMM will submit the findings of the third survey to the relevant authorities and continue to engage stakeholders as the situation evolves.

He added that the survey points to a narrowing window to prevent current disruptions from translating into longer-term losses in competitiveness, market share and industrial capacity.

"Timely and targeted intervention will be essential to protect jobs, sustain investor confidence and ensure that Malaysian manufacturers emerge from this prolonged crisis in a position to recover and compete effectively when global supply chain conditions stabilise," he said.