Malaysians to pay more for gourmet food and wine, as import costs surge amid Red Sea crisis
Some importers have decided to hold off on placing new orders with their European suppliers.
“If we need [new stock], we will import. But the costs will have to be passed on to the consumer,” said a business owner who imports European wines, who asked not to be named to avoid damage to his business.
For Malaysia, this could raise costs and cause supply chain delays or disruptions in key imports from Europe
Economists say there is no avoiding higher shipping fees and logistical delays and disruptions caused by the Red Sea crisis, but warn that things could get worse if the situation persists.
“For Malaysia, this could raise costs and cause supply chain delays or disruptions in key imports from Europe for sectors/industries such as chemicals, machinery and auto,” said Suhaimi Ilias, chief economist with MIBG.
European imports that year were valued at more than 90 billion ringgit, mostly covering the electrical and electronics, chemicals and chemical products and machinery sectors.
Who are Yemen’s Houthis, and why are the Iran-aligned group under attack?
Who are Yemen’s Houthis, and why are the Iran-aligned group under attack?
Prolonged maritime traffic diversion from the Suez Canal to the Cape of Good Hope, which major shippers have said would add up to two weeks in delivery time, could also add inflationary pressure on ordinary consumers in Malaysia.
Over half of the country’s international trade depends on sea transport, said Mohd Afzanizam Abdul Rashid, chief economist with Bank Muamalat.
Before the Red Sea crisis, Malaysia’s government had forecast inflation to hover between 2.1 per cent and 3.6 per cent this year amid plans to restructure broad-based subsidies.
“The risk of inflation is quite visible the way we see it,” Mohd Afzanizam told This Week in Asia.
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US-UK attacks on Houthis raise war stakes in Middle East amid Gaza conflict
The government on Friday said the situation remained manageable for now, and it had yet to receive complaints from either importers or exporters over any increase in freight and operating costs.
“We are still monitoring the situation … we hope it is just for a short term,” Transport Minister Anthony Loke said at a news conference.
Malaysian maritime industry players say the pain will be carried by consumers, as the risks are minimal to the local shipping industry.
“I think the impact will not be on our shipping industry, but maybe on our consumers … the higher cost of operating will be passed to the consumer,” Cheah said.
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Versluis said the situation would affect global trade in the immediate term due to the surge in container shipping fares, but the bigger concern would be how the situation will play out should the Israel-Gaza war escalate into a broader regional conflict.
“It seems to be getting worse every day, with more rockets [being fired]. The Houthis are saying they will make more attacks on US ships,” he said.
Additional reporting by Hadi Azmi
