KUALA LUMPUR: Malaysia External Trade Development Corporation (Matrade) is taking proactive measures to cushion the impact of escalating geopolitical tensions in West Asia on Malaysia’s trade performance, following recent military escalations involving Iran, Israel and the United States.

In a statement today, the agency said it has activated a comprehensive mitigation framework to support Malaysian exporters facing maritime blockades, rising logistics costs and supply chain disruptions linked to the conflict.

As part of its response, Matrade conducted a specialised survey among exporters to assess the ground-level impact on business operations.

Preliminary findings showed that 63.9 per cent of respondents expect to be affected by the conflict, citing shipment delays and higher ocean freight and insurance costs.

Of the respondents, 53.7 per cent were micro, small and medium enterprises (MSMEs), 32.7 per cent mid-tier companies and 13.6 per cent multinational corporations.

Companies also reported operational strain, including anticipated declines in sales, order cancellations and rising raw material costs, particularly plastic materials tied to crude oil prices.

The survey also found that 39.1 per cent of respondents currently export to the region, mainly to the United Arab Emirates and Saudi Arabia, with many considering diversifying into other markets to mitigate risks.

Matrade said it is mobilising its network of trade offices in the Middle East, including those in Dubai, Jeddah and Cairo, to provide exporters with urgent market updates and on-the-ground coordination.

The offices will also assist Malaysian businesses in managing stranded cargo and addressing payment issues in high-risk zones.

Among the key interventions being implemented are logistics diversification and shipment rerouting to alternative ports such as Port of Fujairah and Port of Salalah, which are seen as more stable entry points into the region.

Matrade is also accelerating export market diversification efforts into less-affected regions, including South Asia, Latin America and Africa, while strengthening intra-Asean trade integration.

In addition, the agency will intensify digital trade facilitation through virtual business matching sessions to replace physical trade missions in high-risk areas.

Matrade said it is also engaging financial institutions to help exporters gain easier access to insurance coverage amid rising war-risk premiums and risks of cargo abandonment.

At the same time, Matrade plans to leverage Malaysia’s network of free trade agreements, including the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), to help Malaysian exporters expand into more stable markets and benefit from preferential tariff treatments that can offset higher logistics costs.

The strategy also includes accelerating intra-Asean trade realignment to allow exporters to redirect shipments away from disrupted West Asian routes, taking advantage of regional frameworks such as the Asean Trade in Goods Agreement (ATIGA).

Commenting on this, Matrade chairman Datuk Seri Reezal Merican said the feedback gathered from the recent exporters’ questionnaire highlights the urgent need for a shift from traditional trade routes to be more resilient and strategically adaptable.

He said that while the closure of critical chokepoints such as the Strait of Hormuz is testing operational agility, trade offices in Dubai, Jeddah and Cairo have been empowered to serve as frontline support centres for Malaysian exporters and to work closely with Malaysian embassies in the respective countries across the region.

“At the same time, we are accelerating intra-Asean market realignment as a key pillar of our mitigation strategy.

“By leveraging deeper regional integration under the Association of Southeast Asian Nations framework and enhancing utilisation of the ATIGA, we are enabling Malaysian exporters to redirect trade flows into geographically proximate and economically stable markets.

“This strategic pivot not only reduces exposure to geopolitical volatility but also strengthens Malaysia’s position as a regional trade hub within Southeast Asia.

“Matrade is not just monitoring the crisis; we are actively rerouting trade, mitigating export risks, and deepening our diversification initiatives to safeguard Malaysia’s long-term trade resilience,” he added.

Meanwhile, Matrade chief executive officer Abu Bakar Yusof said the agency’s immediate priority is to mitigate the “double-ended” blockade affecting Malaysian cargo by leveraging its local presence in West Asia to address real-time logistical hurdles.

“Insights from our survey reveal that 63.9 per cent of our companies expect to be impacted, which is why we are mobilising our Middle Eastern offices to provide the ground-level intelligence and identify opportunities to integrate into supply chain ecosystems to sustain and diversify our exports.

“While we anticipate operational strain, we are positioning Malaysia as a reliable alternative supplier for our trade partners seeking to diversify away from regional risks,” he said.

Matrade said it remains committed to safeguarding Malaysia’s trade interests and supporting exporters through this challenging period.

By working closely with industry players, financial institutions, and Malaysia’s missions abroad, the agency will continue to implement responsive measures to strengthen export resilience and ensure Malaysia remains a reliable and competitive trading partner in the global market.