Strait of Hormuz closure threatens Malaysia's food supply, economist forecasts price hikes

SHAH ALAM – A sharp increase in the prices of imported food is expected to be among the most significant direct consequences Malaysia may face if a full-scale war erupts following the United States' involvement in the Iran-Israel conflict.

Malaysia University of Science and Technology (Must) economist, Professor Emeritus Dr Barjoyai Bardai, stated that the conflict, which has entered a new phase, could lead to the closure of the Strait of Hormuz, a critical trade route for the country.

According to him, imported foods such as fruits and vegetables are among the goods likely to experience a significant price surge if tensions in the region worsen.

“Malaysia, as an open economy that imports more than RM90 billion worth of food, will certainly be affected by this conflict.

"It can be said that the food sector will be one of the hardest hit," he said.

He stated that the upcoming expansion of the Sales and Service Tax (SST) on July 1, which includes imported fruits and vegetables, could worsen the impact.

“So, the impact will be even greater. Prices of imported goods will rise, then domestic taxes in Malaysia will also increase and inevitably this situation will have a major impact on food items.

“Given the increasingly volatile developments, we can expect the prices of imported food-based items such as vegetables and fruits to go up.

"We also anticipate a knock-on effect on cooked food, and prices at restaurants are also expected to rise,” he told Sinar.

Dr Barjoyai added that all parties must prepare to face widespread impacts due to the conflict, as it would affect not only imported goods but also locally produced products.