SHAH ALAM, May 18 — The global supply chain disruption crisis is expected to have a greater impact on local industries starting June and July, as many companies begin to face shortages of raw materials needed to sustain operations.
Senior economic adviser at the Prime Minister’s Office (PMO), Nurhisham Hussein, said most businesses are currently still relying on existing stock, but these supplies are expected to be depleted within the next few months.
“Many businesses are currently still relying on existing stock. However, by mid-year, those stocks are expected to be used up while new supplies have yet to arrive,” he said in an interview on BFM radio station.
He said the current situation is highly challenging as even though alternative sources of supply are available, shipping processes continue to face delays and are unable to meet industrial demand in the short term.
According to him, the crisis is unfolding in several waves that are expected to be increasingly felt by local companies in the near future.
He said the first wave involves fuel shortages and rising energy prices, which directly affect operating costs and logistics.
The second wave occurs when industries begin to run out of feedstock for the petrochemical sector, which is essential to various manufacturing industries.
Nurhisham said discussions with large companies found that most only have sufficient raw material stocks for about two months starting from mid-March.
“After that period, companies will need to secure new supplies, but the ongoing global supply chain disruptions are making this difficult,” he said.
He also referred to a survey by the Federation of Malaysian Manufacturers (FMM) in mid-April which showed that small and medium enterprises (SMEs) are facing greater pressure compared with larger companies.
According to him, some SMEs only have enough stock for one to two weeks, making them more vulnerable to supply disruptions and rising operating costs.
He therefore expects the real economic impact of shortages to be felt from June, when more factories and production companies risk temporarily halting operations due to lack of raw materials.
He said this situation could also lead to reduced overtime, fewer worker shifts and a gradual decline in productivity.
“It is not something that happens suddenly, but a slow process that eventually puts pressure on employment, workers’ income and overall economic growth,” he said.
On global oil supply issues, Nurhisham said recovery is expected to take a long time even if the conflict in West Asia ends soon.
He said much of the region’s oil production cannot be restored immediately as oil field operations require time before returning to full capacity.
“Even if oil wells are reopened, production cannot be ramped up immediately as pressure in the system needs to be rebuilt gradually and in a controlled manner.
“The entire process from reopening operations to stabilising supply could take around six months, not including the time required to ship oil to international markets,” he said.
He added that shipping congestion in the Strait of Hormuz is also a major challenge to the recovery of the global energy supply chain, as thousands of stranded vessels require additional time to be reorganised.
“Recovery has not truly begun because the war is still ongoing. Based on current projections, oil supply may only return to normal by the end of this year or possibly extend into 2027,” he said. – Media Selangor
