PETALING JAYA: Malaysian businesses may see some relief in their cost structures as the ringgit strengthens, particularly those reliant on imported inputs, said RichWorks X founder Datuk Wira Dr Azizan Osman.
He said a stronger ringgit appears helpful, particularly for MSMEs that depend on imported materials, machinery, ingredients or digital tools.
“In theory, a stronger currency reduces raw material and equipment costs, which should improve margins for many F&B operators, retailers, manufacturers, clinics and service providers that rely on software subscriptions, equipment, or platforms from abroad,” Azizan told SunBiz.
However, he cautioned that many of these businesses do not have long-term supplier contracts, strong cost-tracking systems or sufficient working capital to bulk-purchase or hedge foreign exchange gains. “So while their cost base may improve slightly, they’re often unable to fully capture or sustain these benefits.”
At the same time, Azizan said, domestic operating costs including wages, rental, logistics and regulatory compliance continue to rise. “The net result is that currency appreciation offsets existing cost pressures, rather than meaningfully boosting profitability.”
On the demand side, he said, a stronger ringgit doesn’t automatically lead to higher consumer spending as Malaysian households are still cautious due to cost-of-living concerns, inflation effects and high debt commitments. “So MSMEs may not experience significant demand uplift unless they offer compelling value, convenience, or differentiation.”
The stronger ringgit is creating a clear divide within the Malaysian MSME landscape and this divide is growing more visible in how businesses respond operationally.
Azizan said there’s potential for improved cash flow stability and a more optimistic earnings outlook, but only if they take proactive steps. “This means restructuring cost bases, locking in better supplier terms and investing in systems that track margins more closely.”
MSMEs still operate reactively without strong procurement strategies, digital tools or cost discipline, so the advantages of a stronger currency may slip through the cracks, he said.
Export-oriented MSMEs, meanwhile, face increasing pressure with the stronger ringgit reducing Malaysia’s pricing advantage relative to Vietnam, Indonesia and Thailand, key regional competitors which continue to attract global buyers based on cost.
“MSMEs that compete purely on price, or without strong branding, sufficient scale, or long-term buyer relationships, are the most vulnerable in this environment,” Azizan said, adding that MSMEs should treat currency movements as an opportunity to strengthen internal fundamentals rather than as a short-term windfall.
Businesses should prioritise improving operational efficiency and inventory management, renegotiating supplier terms and refining pricing strategies, he said.
“Firms should also tighten cash flow monitoring and forecasting systems while investing in product differentiation and value-driven positioning.”
Exploring new markets, particularly those where Malaysian quality standards command stronger recognition, could help reduce reliance on price-based competition, Azizan said.
The Sun Malaysia
