KUALA LUMPUR – While the Russo-Ukrainian conflict has yet to show any major impact for Malaysian importers and exporters, a prolonged war could lead to rising costs of international freight, said the Selangor Freight Forwarders and Logistics Association (SFFLA).
Although it has already been two weeks since Russia launched its military offensive in Ukraine, SFFLA president Datuk Tony Chia Han Teun said it is too early to gauge the estimated losses experienced by Malaysian sea and air logistics companies.
However, he predicted that there will be other indirect effects, including the lower demand for consumer goods, such as electrical and electronic (E&E) products that are produced in Malaysia.
This (prolonged war) may affect a greater number of our manufacturers in this segment,” he told The Vibes when contacted.
Chia warned that the sanctions imposed by Western countries against Russia would further stretch the global supply chains which have yet to fully recover from the Covid-19 pandemic.
In gauging the effect of the war on Malaysia, the businessman said it is also important to note that Russia is the world’s second-largest exporter of crude oil and is one of the largest producers of critical oils.
Furthermore, he said both Russia and Ukraine are also producing a significant amount of agricultural products.
In fact, their combined wheat, barley, and maize exports comprise 21% of the global supply.
The two nations also produce 60% of the world’s sunflower oil supply.
The conflict and sanctions would lead to a general increase in costs of doing business with higher crude oil and natural gas prices, which will be particularly felt in Europe.”
When it comes to Malaysia’s direct trade with both nations, Chia said it amounted to only 0.4% of total exports in 2021, while imports stood at 0.6%.
Overall, dealings with Russia and Ukraine only totalled 1% of Malaysia’s total international trade.
Companies or manufacturers that substantially import grains for livestock feed or to produce flour from Russia and Ukraine may face some impact from the disrupted supply chain,” he said.
“It is still unclear how much impact is attributable to the conflict amid the already strained supply chain caused by the pandemic.”
The entrepreneur also said Malaysian companies who import cereal for animal feed or those who produce flour products may be more susceptible to the effects of conflict than those in other sectors.
However, he said the International Trade and Industry Ministry has yet to report any serious impact for Malaysian importers and exporters. – The Vibes, March 10, 2022
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