The time is now for the Malaysian government to act immediately to implement financial relief policies for Malaysian businesses, especially Micro Small and Medium Enterprises (MSMEs), to save them from a crisis of survival impacted by the escalating costs of the Middle-East war. Rising logistics costs, raw price volatility, supply chain instability caused by the current Middle East conflict, and Iran’s real threat to force up the price of oil to US200 per barrel due to its success in closing the Straits of Hormuz to shipping traffic.
The Federation of Malaysian Manufacturing has warned that Malaysia’s 2026 GDP growth could moderate to between 3.8% and 4.2% if the conflict escalates as compared to Bank Negara Malaysia’s estimates of 4% to 5%. The SME Association of Malaysia has asked for a targeted six-month loan moratorium or repayment deferment for affected MSMEs.
The Non-Performing Loan ratio in Malaysia currently remains at a healthy 1.4% to total loans as at January 2026, but several banks are warning that the financial distress of loans is likely to deteriorate. Whilst MSMEs have long asked for government intervention to secure financing support, export facilitation, and cost mitigation, MSMEs affected by rising operational costs urgently need government aid in the form of 3 short-term cost containment measures.
1) A moratorium on bank interest rate payments until the end of this year;
2) A moratorium on expansion of taxes, regulatory and compliance costs by suspending increases in SST, e-invoicing compliance and 2% EPF contributions for foreign workers effective since late last year; and
3) RM 5 billion allocation to give RM 50,000 interest free and collateral free loans for 100,000 MSMEs together with other targeted grants and subsidies.