KUCHING: Rising global energy prices driven by the ongoing Middle East conflict are tightening cost pressures on Malaysian businesses, with small and medium enterprises (SMEs) facing the greatest strain as fuel volatility ripples across supply chains and daily operations.
According to ESGpedia Vice-President, Jozsef Acabo, the impact is most immediately felt through higher fuel and energy-related expenses, which are cascading into broader operational costs for businesses on the ground.
“The impact is being felt mainly through higher fuel and energy-related costs. When global oil prices rise, Malaysian businesses face more expensive transport, logistics, deliveries, and supplier movements,” he said in an email interview with Sarawak Tribune.
Jozsef has been credited with being at the forefront of implementing governance, risk and sustainability technologies that drive measurable business value.
He explained that for companies reliant on road transport, field operations, or frequent movement of goods, even modest increases in fuel prices can significantly strain already tight profit margins.
“Over time, those higher transport costs also feed into procurement, warehousing, and distribution expenses,” he added.
Beyond fuel, Acabo noted a wider knock-on effect across the supply chain, where businesses experience rising costs in materials, manufacturing, services, and utilities.
“Businesses may not always see it immediately in one line item, but they feel it across the supply chain,” he said, stressing that SMEs are particularly vulnerable due to heightened unpredictability and business risks.
“When energy-related costs become more volatile, it becomes harder to budget, price competitively, and plan ahead with confidence.”
On the government’s work-from-home (WFH) directive, Acabo described it as a practical short-term response to rising energy costs, particularly in reducing commuting-related fuel consumption.
“As a short-term measure, the directive is a practical and reasonable response. Reducing commuting can help lower fuel consumption and ease transport-related costs,” he said.
However, he cautioned that WFH alone is not a complete cost solution.
“The savings are only likely to be meaningful if companies also adjust their operations by managing supply chains more effectively, reducing air-conditioning, consolidating workspace, and managing electricity use more deliberately,” he explained.
Otherwise, he warned, businesses risk merely shifting where work takes place without achieving significant overall savings.
Acabo further pointed out that many companies do not experience substantial cost reductions from WFH arrangements because commuting represents only a small portion of overall expenses.
“Office rent, maintenance, security, software, internet, and most utility costs often remain in place, especially if the office is still partially operating,” he said.
He also highlighted a lack of proper cost tracking among businesses, noting that many rely on assumptions rather than data.
“Without that visibility, it is difficult to know whether WFH is creating real savings, shifting costs elsewhere, or simply reducing one expense while leaving most of the rest unchanged.”
One of the most common cost leakages, he said, occurs when companies reduce office attendance but continue operating workplaces almost as usual.
“Air-conditioning, lighting, lifts, pantry appliances, and cleaning schedules may still run at near-normal levels, while companies also take on added remote-work costs such as internet allowances and extra devices.
“The result is that businesses end up carrying the cost of both office-based and remote setups,” he explained.
To better assess savings, Acabo recommended that companies compare the full cost of office-based and remote work over a defined period, using consistent categories such as utilities, rent, software, maintenance, and reimbursements.
“Cost savings only matter if performance is maintained,” he stressed, adding that productivity should be factored into any evaluation.
He emphasised the importance of tracking operational and ESG-related data to improve decision-making.
“Better visibility over energy use, resource consumption, and work patterns helps businesses understand what is actually changing, rather than relying on assumptions. A simple monthly dashboard can already make a difference,” he said.
Acabo also acknowledged the risk that WFH arrangements may simply shift energy costs from employers to employees rather than reducing overall consumption.
“While office electricity use may fall, household energy use often rises at the same time through air-conditioning, lighting, internet usage, and longer device hours,” he said.
“If the office remains partly active, the overall reduction in energy consumption may be smaller than expected.”
For SMEs navigating the current environment, he underscored the importance of operational discipline and low-cost efficiency measures.
“SMEs can review air-conditioning settings, turn off unused lighting and equipment, group staff into smaller working zones, and avoid running underused office areas for a full day,” he suggested.
He added that optimising delivery planning, vehicle usage, and equipment maintenance can also yield quick gains in cost control without requiring major investments.
Equally important, he said, is building a habit of tracking expenses.
“A simple monthly review of electricity bills, fuel spend, logistics frequency, and production or sales output can already reveal where energy costs are rising faster than expected,” he noted.
Looking ahead, Acabo urged businesses to treat energy and fuel volatility as an ongoing risk rather than a temporary disruption.
“Companies need to understand which parts of their business are most exposed, where energy use is least efficient, and which costs are hardest to pass on to customers,” he said.
He added that preparation should include strengthening cost monitoring, reviewing supplier and logistics arrangements, and building flexibility into budgets.
“Resilience now depends not only on growing revenue, but also on understanding and managing operational costs with much more discipline,” he said.
