High transport costs, slow hiring: Southeast Asia businesses brace for impact amid Middle East war

For sectors such as manufacturing, logistics and construction, where energy forms a bulk of operating expenditure, uncertainty can translate into tighter margins and more cautious expansion plans, say businesses and experts.

SINGAPORE: For Roy Ang who runs a plastic bag manufacturing business in Johor, the impact of the Middle East conflict is already showing up in his cost sheets. 

Polyethylene resin - a petroleum-based raw material used to produce plastic bags for his food and medical clients across Malaysia and Singapore - has jumped by US$110 to US$150.

It has jumped from a range of US$1,050 to US$1,120 prior to the war to between US$1,160 and US$1,270 per metric tonne, a 10 to 13 per cent rise in recent weeks.

Some major producers are holding back quotations until May or “until further notice” as oil prices climb while others have cut production altogether and are selectively supplying to long-term customers.

Resin prices tend to increase for a few months and then stabilise at a higher baseline, of about 10 per cent to 25 per cent higher than previously.