The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) has conducted a Quick-Take Survey from 19 to 25 March 2026, to assess the impact of oil shocks on Malaysian industries, and has submitted policy recommendations to the Government. A total of 203 responses has been received from a wide economic sector, of which, micro, small and medium enterprises (MSMEs) accounted for 95.1% of the respondents.

Based on the feedback gathered, the ongoing military conflict in the Middle East is creating significant, immediate challenges for businesses. Given considerable uncertainties and evolving developments, businesses are navigating a challenging operating environment, characterized by short visibility on inputs supplies and rising cost pressures, compounded by soaring fuel price, which is financially unbearable for those that are not placed under BUDI 95 subsidised fuel price fleet card mechanism.

ACCCIM President, Datuk Ng Yih Pyng said that while we welcomed the Government’s preparedness and pro-active measures announced recently in managing economic and business impacts, we must remain highly vigilance and must not let complacency set in though Malaysia’s net energy exporter places us in a better position relative to our regional peers. It must be noted the government has acknowledged that Malaysia is operating in “crisis” mode, and the situation should not be taken lightly.

A. Key Findings of the QTS

The magnitude of factors affecting the industries’ production and operating costs skew towards “MODERATELY to HIGHLY NEGATIVE” as 44.3% of total respondents have more than 10% energy use in their production and operating expenditure – 24.6% of them having 5%-10% energy share, 21.7% having 11%- 20% energy share, and 12.3% of businesses having 21%-40% energy share. Please refer to the QTS’s findings provided in the appended document.

Uncertainty has significantly clouded business visibility in the current intense geopolitical landscape. Among the dampening factors are surging fuel costs, transportation/logistic costs, raw material costs due to the supply chains disruption, shipping costs and air freight rates. Increasing production cost, supply chain disruptions and escalation in the Middle East military conflict increases the likelihood of a wait-and-see investment approach, delaying investment plan, and cutting output. Increases in production cost could lead to a cost-push effect on food and goods.

Direct cost increases have knock-on impact on industries and sectors that falling outside “the fuel subsidy-quota” scheme, such as the construction, aviation, plantation, retail and manufacturing sectors.

The affected industries include industrial products and consumer goods. Among the heavy users of gas and electricity in the manufacturing sector are iron and steel, textiles, cement, and glass products. The agricultural sector will also be impacted as crude oil is serving as a primary energy source for machinery fuel (diesel), transport, and the production of fertilizers, pesticides, and plastics.

As expected, 51.2% of the respondents indicated that total cost will increase by between 6% and 20%, and 20.2% will experience cost increases by more than 20%. Close to 46.3% of total respondents reporting will experience “moderate and significant deterioration” in their cash flow. The overall impact on company’s profitability is varying between slight decrease (as indicated by 31.0% of total respondents), moderate decrease (33.0%) and significant decrease in profitability (26.6%).

Most respondents have perceived “moderate to significant deterioration” of business outlook over the next 3-6 months if the oil shocks persist. The results indicated that 31.0% of total respondents can maintain their business operations between 3-6 months before requiring structural downsizing or seeking additional financing.

Datuk Ng stresses that business survivability is indeed crucial. For many enterprises, particularly MSMEs, which have already suffered sustained increases in operational costs over the past two years, the primary goal now is to avoid financial distress or closure if the oil shocks persisted for a longer period.

ACCCIM would like to propose a combination of immediate policy support for businesses, and accelerating strategic long-term energy shifts. These measures aim to reduce rising fuel costs pressure and other related supply chain disruptions on business operations, impacting their cash flow if the oil shocks prolong.

A. Ease Business Costs Burden and Relieve Cash Flow	Outcome
1. Targeted Repayment Assistance Program for affected MSMES for a specific period. Depending on the magnitude of impact, businesses could face financial stress due to increasing operation costs (fuel and raw materials cost), supply chains disruption and cancellation of orders.	A temporary suspension of loan repayment (principal and interest) to relieve financial burden.
2. Lower Service Tax rate (currently at between 6% and 8%) imposed on the expanded services (rental/leasing, and professional fees, construction, private healthcare, and education) for a period of three months, subjecting to review every three months depending on the prevailing situation.	Relieve short-term cash flow.
3. Lower the current 85% minimum of the estimated tax for the preceding year (CP204) to 50%, suspend the 10% penalty if the final tax exceeds the threshold by more than 30%. In addition, to allow any overpaid tax to be offset against the current year’s liabilities, given businesses have limited visibility on their current performance.	Relieve short-term cash flow.
4. Review Time of Use (ToU) electricity tariffs: Review the electricity tariffs under the ToU scheme; and to raise higher the eligibility threshold under Energy Efficiency Incentive (EEI) to at least 600 kWh from 200 kWh to encourage broader energy savings for MSMEs.	Relieve short-term cash flow.
5. Temporary waivers and reductions of port, transportation, and freight-related charges.	Reduce cost burden.
6. If economic conditions worsen with a sharp pullback in domestic demand, consider to lower the interest rate for safeguarding economic growth.	Ease borrowing costs and debt servicing.

B. Strategic Long-term Energy Efficiency Shifts	Outcome
1. Reducing SST on energy products, or implementing “green levies” tax breaks. These include electrical equipment, pumps, compressors, boilers, converters, and furnaces used in manufacturing processes, which are subject to a 5% to 10% sales tax.	Ease the overall tax burden on consumers and industries during price spikes.
2. A full SST waiver on solar equipment.	Support renewable energy growth.
3. Provide Accelerated Depreciation, which allows firms to deduct the full cost of energy-efficient equipment from their taxable income in the year of purchase.	Significant tax savings and increasing short-term cash flow.
4. Provide soft interest rate loans for firms to invest in energy-efficient machinery and equipment, automation technology, and advanced motors.	Ease financing cost.
5. Provide co-funding for the purchase of energy-efficient machinery and equipment.	Ease financing cost.

C. Specific Sector/Industry Support	Outcome
1. Enhance export credit insurance schemes	Mitigate energy shocks-inflicted exports risk, supply chain disruptions, and rising operating costs.
2. Provide targeted subsidies for fertilizer, fuel, and electricity to help farmers in the agriculture and plantation sectors.	Manage immediate operating costs.
3. Provide a temporary limited quota subsidized price for the targeted users in the construction site, agriculture and timber industry using heavy machineries and non- moveable vehicles on the road such as backhoe, hand of god, bulldozer, premix machine, and rollers etc. This can be included in the BUDI95 “mechanism for machinery using diesel”	Manage immediate operating costs.
4. Implement the Variation of Price (VOP) clauses to provide financial relief and better project management solutions for contractors undertaking government projects.	Avoid delays in project implementation.
5. If the conditions worsen, the construction sector could face significant delays due to significant increases in raw materials and operating costs, leading to widespread declarations of force majeure. To consider the suspension of Liquidated Ascertained Damages (LAD) obligations and penalties for developers unable to meet project deadline	Ease developers’ financial burden.
6. Provide temporary fuel subsidies to domestic inbound tourist transport operators facing higher operating costs due to fuel costs surge. The tourism sector will be dampened by restrained tourist arrivals from the Middle East and Europe caused by higher jet fuel prices, airspace restrictions, and costlier flight fares.	Ease the transportation cost of inbound tour coaches in efforts to support Visit Malaysia 2026.
7. Set up a timely government-to-chamber information sharing and reporting mechanism, allow for instant sharing of information and real time data as well as feedback between the regulators and industry stakeholders.	Businesses can immediately identify trends in logistics, ports, energy, and raw materials.
8. If conditions worsen with energy rationing or widespread shortages, the Government should prepare a designated targeted wage subsidy programme, especially for those severely affected, akin to the COVID-19 pandemic crisis in 2020- 2021.	Help businesses sustain their operation and prevent job losses.