Who would have thought that the conflict in West Asia would now directly affect the bottled water industry in Malaysia when the disruption of the global supply chain caused a shortage of plastic raw materials.
Lam Kah Kit, President of the Malaysian Bottled Water Manufacturers Association (MBWA), stated that the current situation not only involves increased production costs, but is more acute when the issue of unavailability of raw material supply has become a major obstacle disrupting the entire production process.
He explained that although entrepreneurs are able to offset the increase in costs by adjusting selling prices, the lack of sufficient raw material supply risks causing factory operations to stop completely.
In his statement to Astro Awani, he said,
“The current supply issue is actually more serious than the cost price. In business, if my raw material cost is high, I can sell a little higher. But now the problem is there is no supply. So, how do you want to sell and how do you want to process?”
According to Kah Kit, a company’s ability to continue operating currently depends entirely on the size of the stock in their respective factories. Large companies may have enough stock for two to three months, while small entrepreneurs can only last for two weeks.
He also expressed concern over the fate of Small and Medium Enterprises (SMEs), especially association members in Sarawak who have to deal with much higher logistics and supply costs.
Kah Kit added that the situation has become increasingly difficult as all raw material purchases now require full cash transactions, thus putting pressure on the cash flow of entrepreneurs who do not have large capital for sudden investments.
Following this crisis, he said that the association is planning a meeting with the Ministry of Investment, Trade and Industry (MITI) to request government intervention because the supply of polyethylene terephthalate (PET) resin in Malaysia is currently very limited.
PET is produced through the petrochemical industry chain that starts from oil and natural gas. Malaysia imports a lot of this resin from major producing countries such as China, India and Thailand.
Intraday.my's survey of several retail stores around Kampung Bharu, Kuala Lumpur found that retailers have been forced to increase the selling prices of several brands of drinking water and mineral water due to price increases from suppliers.
