SEAFIC-ASEAN Monitor: The Iran Conflict - ASEAN Supply Chain Vulnerability
The report marks SEAFIC’s first research output under its ASEAN Monitor series and will inform future work on critical inputs, supply-chain concentration, and regional coordination mechanisms.
The disruption in the Strait of Hormuz should be understood not only as a temporary energy-price shock, but also as a supply-chain shock whose effects depend on how Gulf-origin inputs enter and propagate through domestic production networks. For ASEAN, the relevant policy question is therefore not only the size of the initial oil and LNG price increase, but also where exposure is concentrated and how it is transmitted across sectors.
This paper addresses that question using a three-lens framework: direct exposure at the border, exposure through domestic production linkages, and exposure through global production linkages. The framework is applied first to Malaysia as a detailed case study and then extended to nine ASEAN economies using a consistent regional input-output dataset.
Across the nine ASEAN economies covered, Gulf-origin exposure totals up to USD51 billion. Thailand tops the list as most exposed at USD26.1 billion, with Malaysia coming in second at USD8 billion in exposure by volume.
The Malaysian case study points to two central findings. First, exposure is concentrated in a narrow set of upstream sectors with large forward linkages, like petroleum refining and related energy-linked activities. Second, some downstream sectors become more vulnerable once inherited exposure is traced through domestic production chains. This is most evident in the livestock chain, where fertiliser- and feed-related linkages materially widen effective exposure.
Executive Summary
The disruption in the Strait of Hormuz should be understood not only as a temporary energy-price shock, but also as a supply-chain shock whose effects depend on how Gulf-origin inputs enter and propagate through domestic production networks. For ASEAN, the relevant policy question is therefore not only the size of the initial oil and LNG price increase, but also where exposure is concentrated and how it is transmitted across sectors.
This paper addresses that question using a three-lens framework: direct exposure at the border, exposure through domestic production linkages, and exposure through global production linkages. The framework is applied first to Malaysia as a detailed case study and then extended to nine ASEAN economies using a consistent regional input-output dataset.
Across the nine ASEAN economies covered, Gulf-origin exposure totals up to USD51 billion. Thailand tops the list as most exposed at USD26.1 billion, with Malaysia coming in second at USD8 billion in exposure by volume.
The Malaysian case study points to two central findings. First, exposure is concentrated in a narrow set of upstream sectors with large forward linkages, like petroleum refining and related energy-linked activities. Second, some downstream sectors become more vulnerable once inherited exposure is traced through domestic production chains. This is most evident in the livestock chain, where fertiliser- and feed-related linkages materially widen effective exposure.
“The central implication is that policy should be differentiated rather than uniform. Economies exposed through refining, manufacturing inputs, transport costs, or regional spillovers do not face the same adjustment problem and should not be expected to rely on the same policy mix. The value of the framework developed in this paper is that it provides a basis for making those distinctions more systematically and for aligning policy responses more closely with the underlying transmission mechanism.”
