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Malaysia's central bank: Middle East situation drives up corporate financing demand

 

Kuala Lumpur, October 5th (Xinhua) - The National Bank of Malaysia (PBOC) released a special article titled "Beyond Oil Prices: From Geopolitical Conflicts to Financial Stability Risks" on October 5th, stating that the rising costs of energy, raw materials, and logistics caused by geopolitical conflicts in the Middle East are increasing the working capital pressure and financing needs of some Malaysian companies.

 

According to the latest assessment by the National Bank of Malaysia, as of June 2026, Malaysia's outstanding commercial loans have increased by 7.3% year-on-year, significantly higher than the average growth rate of 4.1% from 2022 to 2025. The growth is mainly driven by corporate working capital financing.

 

The article states that the direct financial connection between Malaysia's financial system and the Middle East market is limited, and the impact of the conflict is mainly indirectly transmitted through the real economy. The rising costs of energy and logistics, as well as the rising prices of inputs such as fertilizers and petrochemicals, coupled with supply disruptions and extended payment cycles, are increasing the cash flow pressure on some companies. The wholesale and retail, transportation, and some manufacturing industries have been significantly affected, and small and medium-sized enterprises have increased their dependence on short-term financing and working capital loans due to low profit margins and cash buffers.

 

At present, the pressure has not yet evolved into a widespread credit deterioration. As of June, the impairment rate of corporate loans was 2.8%, and the overall loan quality remained stable.

 

The National Bank of Malaysia stated that the Middle East remains a significant source of uncertainty and will continue to monitor corporate liquidity, repayment trends of vulnerable businesses and households, bank financing conditions, and risks that may be amplified by financial shocks. (End)

 

(Editor in charge: Qin Yuwen)