KUALA LUMPUR, April 16 (Bernama) — Technology firms are seeking to relocate operations to Asia, and Malaysia is well-positioned to capitalise on this development in light of ongoing geopolitical turbulence in the Middle East.
The Malaysian Institute of Economic Research (MIER) said this trend could be further leveraged through recent investments in technology infrastructure and the development of high-value industries in the Johor- Singapore Special Economic Zone (JS-SEZ).
“To support exporters, a more active role in strengthening export-oriented industries is an important priority for enhancing Malaysia’s export earnings,” it said in a statement today.
The think tank said that the banking system and institutions such as the Export-Import Bank of Malaysia (EXIM Bank) would need to remain nimble in supporting the economy, especially amid uncertainty surrounding global trade terms, commitments to long-term infrastructure development and security of the population, and increasing competition as countries pivot and diversify.
MIER also highlighted that a crisis could present an opportunity to review current practices and evolve in response to changing business demands.
“We have conducted consultations with industry players and businesses, government-related enabling agencies, the financial sector, chambers of commerce and business councils, and civil society organisations to gather views on the implications of the US-Iran conflict for the Malaysian economy,” it said.
MIER also said that there was a consensus that, although the direct impact of the conflict has not yet materialised, its effects are likely to emerge in the near term.
“A key expectation is that logistics costs and input prices will inevitably rise, which will, in turn, be quickly reflected in the cost of living. These pressures are expected to affect business performance over the next two to three months, particularly among small and medium enterprises,” it added.
Participants generally agreed that prolonged conflict could increase the likelihood of insolvencies, bankruptcies, and business failures across vulnerable sectors.
It was also suggested that the government adopt a more pre-emptive approach to managing these risks should economic conditions deteriorate further.
Meanwhile, MIER also suggested that the government streamline and temporarily reduce the Sales and Service Tax (SST) rate to five per cent over the next two years, with exceptions for liquor, cigarettes, and gaming, which could help ease cost pressures for consumers and businesses.
“Another proposed fiscal balancing measure involves the gradual reduction of RON95 subsidies, with savings reallocated to subsidise diesel consumption for businesses.
“This would help ease the cost of doing business, particularly for SMEs reliant on diesel fuel for machinery and logistics,” it said.
At the same time, MIER proposed that the government consider reducing stamp duties for business restructuring and repayment to a standardised rate to assist businesses and reduce the cost of doing business in the country.
BERNAMA
