KUALA LUMPUR, April 21 — Malaysia’s trade with West Asia fell 30.4 per cent to RM21.41 billion amid ongoing geopolitical tensions, said Datuk Seri Reezal Merican Naina Merican.
The chairman of the Malaysia External Trade Development Corporation (Matrade) said exports to the region dropped 23.6 per cent to RM9.87 billion, mainly due to lower shipments of palm oil, petroleum products and electrical and electronic (E&E) goods.
“The conflict has disrupted supply chains and pushed up costs, including freight charges and insurance, adding pressure on exporters.
“While the direct impact is still limited, we are monitoring the situation closely due to potential spillover effects on global trade,” Reezal Merican told a press briefing at the Matrade headquarters here today.
This decline, he said, however, was offset by strong export growth to non-conflict markets in Africa, Latin America and Central Asia, driven mainly by palm oil and related products.
“Overall, this underscores the importance of market diversification in reducing reliance on higher-risk regions.
“Since West Asia accounts for only about 2.7 per cent (RM21.41 billion) of Malaysia’s total trade, disruptions there have limited direct impact.
“However, they still warrant close attention, as indirect effects, such as higher goods prices, freight costs and war risk premiums, could weaken export competitiveness and broader trade outcomes,” he said.
He noted that this risk is further amplified by the strategic importance of the Strait of Hormuz — the sole maritime exit linking ports in the Persian Gulf to the open sea — through which an estimated 20 million barrels of oil per day (25 per cent of global oil trade), and over 30 per cent of global fertiliser trade, transit.
“Any disruption to this critical chokepoint would therefore have significant implications for global trade stability and supply.
“Based on the latest information from Matrade offices abroad, a total of seven ports has been affected, particularly in Qatar (Al Shaheen and Halul Island), Bahrain (BAPCO Oil Terminal), Kuwait (Shuaiba and Shuwaikh Port), Iraq (Basrah Oil Terminal), and Oman (Mina Al Fahal).
“This development has indirectly had a significant impact on global trade flows.”
To mitigate the impact, Reezal Merican said alternative routes have been identified, including the Saudi Landbridge, which facilitates overland shipments from Jeddah Islamic Port to Riyadh, Dammam, Tabuk and other affected destinations.
“In addition, vessels are encouraged to utilise the ports of Salalah and Sohar in Oman when the final destination lies in the Persian Gulf,” he said.
As a last resort, rail connectivity via the Middle Corridor (China-Europe through Turkiye) may be considered, although costs are estimated to exceed 100 per cent and remain substantially higher compared with conventional maritime routes, he added.
“At Matrade, we understand that the external challenges are no longer distant; they have translated into tangible pressures for our Malaysian businesses.
“Our monitoring, coupled with industry intelligence, highlights that the ‘twin pressures’ from logistics disruptions and raw material availability affecting the business landscape.
“These renewed cost pressures have pushed overall operating costs up by 10 per cent to 30 per cent for more than half of our businesses,” Reezal Merican said.
