The ongoing military conflict in the Middle East has caused severe disruption to the global supply of plastic resin, which leads to a packaging crisis in Malaysia.
There is a critical shortage of polyethylene terephthalate (PET) resin, a material made from petrochemical, essential for making plastic bottles and food containers. Due to this shortage, supply of food products like dairy, cooking oil and beverages in PET bottles are gradually affected.
According to Mike Tan, Chairman of the Malaysian Plastics Manufacturers Association (Johor branch), access to raw materials is becoming increasingly uncertain. “Some manufacturers are starting to sell at higher prices and with longer lead times…and resin prices in Asia have already surged by 15 to 40%, increasing the production cost of plastic bottles by up to 30%.”
Packaging has now become a bottleneck in the supply chain, a rare occurrence as in the past it has always been ‘underestimated’ as a critical part of production.
In fact, rising packaging material costs have affected all segments of food manufacturing from beverages to dairy products, essentials like noodles/rice to bakery/confectionery products. As an example, for the basic noodle segment, plastic packaging cost already went up by 30% since the start of the conflict.
Although Malaysia produces oil, nearly 38% of its local demand is imported from the Persian Gulf. With rising insurance premiums, delay in delivery and higher fuel costs, the cost of plastic packaging is expected to increase further, and manufacturers have no choice but to eventually pass the costs to the end-consumers. However, smaller establishments like hawkers and small traders are unwilling to increase prices as they fear of losing their customers.
