96% of manufacturers hit by geopolitical tensions, profit outlook split for 2H2026, says FMM

September 04, 2026

Head Office, KL

FMM In The News: THE EDGE MALAYSIA, September 3, 2026

KUALA LUMPUR (Sept 3): Nearly all Malaysian manufacturers surveyed by the Federation of Malaysian Manufacturing (FMM) have been affected by geopolitical tensions, while profit expectations for the second half of 2026 (2H2026) are evenly split between those expecting an increase and those anticipating a decline.

The survey showed that 96% of respondents had been affected by geopolitical developments at some stage, mainly through raw material shortages and higher freight and logistics costs. Meanwhile, 38% expect profits to increase in 2H2026, while an equal 38% anticipate a decline.

FMM president Jacob Lee Chor Kok said manufacturers were still seeing opportunities from Malaysia’s deeper integration into global supply chains, new investment and emerging industries looking for local suppliers.

“This shows that the businesses are actually resilient and quite confident of the prospect,” Lee told a press conference on Thursday following the release of FMM’s Business Conditions Survey for the first half of 2026 (1H2026).

However, he said the broader operating environment remained challenging, particularly as companies faced higher costs with limited room to pass them on to customers.

“When you cannot raise the price, you have to manage your costs and production efficiency,” he said.

FMM said production costs rose sharply in the first half of the year, while softer domestic and export demand weighed on business activity. The federation expects those pressures to persist into 2H2026, with production and capacity utilisation remaining subdued.

Lee said manufacturers were more confident about their own companies than the wider industry and economic outlook, pointing to continued capital spending and employment plans despite weaker demand.

He said the resilience partly reflected renewed investment interest in Malaysia and the emergence of new industries that could create more opportunities for local suppliers.

Lee said manufacturers had turned to alternative suppliers in locations like China, Canada and Central Asia, though these materials were often costlier and not always immediately suitable for existing production requirements.

He identified the automotive, plastics, pharmaceutical and some electrical and electronics industries as among the sectors still facing supply-related pressures.

Despite the challenges, Lee said the worst of the disruption had not materialised and manufacturers had become more adaptable after navigating repeated crises.

“The industries are quite relieved to see that we are able to sail through this situation very well,” he said.

The survey, conducted between July 15 and Aug 14, covered 670 companies nationwide, of which 72% were small and medium enterprises.

Source of article: theedgemalaysia.com