SMEs Report 946 Middle East-Related Damage Cases Amid High Exchange Rates and Logistics Costs

Export and import-focused small and medium-sized enterprises (SMEs) are facing difficulties due to high exchange rates and rising logistics costs, compounded by the potential for Iran to re-block the Strait of Hormuz. While there were hopes for supply chain stability following news of a peace agreement between the United States and Iran, this declaration has dashed hopes for a normalization of global supply chains. The persistent high exchange rates increase companies' payment burdens and raise the cost of procuring raw materials, making management challenging.

As damage to the SME sector due to the prolonged Middle East crisis accumulates, a total of 946 cases related to the Middle East, including damage and difficulties, have been reported to the Ministry of SMEs and Startups. Transportation disruptions accounted for 290 cases and logistics cost hikes for 278, the highest numbers. Contract cancellations/suspensions (233 cases), business trip disruptions, and non-payment of funds were also cited as problems. Damage related to Iran totaled 101 cases, and damage related to Israel was 96 cases. The impact continues to be felt across trade activities centered in major Middle Eastern countries such as the United Arab Emirates (UAE) and Saudi Arabia.

An official from the Ministry of SMEs and Startups stated that SMEs are in a very difficult situation, facing a series of major export headwinds, including currency fluctuations followed by the Middle East conflict.

The government is receiving damage reports through 15 export support centers nationwide and is providing support such as emergency management stabilization funds, special guarantees, and export vouchers. For companies affected by Middle East issues, the scope of support has been significantly expanded to include international shipping costs and insurance premiums, as well as covering overseas warehouse rental fees, pre-shipment inspection costs, and free sample shipping costs, strengthening on-site measures. The government announced that it will continuously expand support measures to help affected SMEs overcome this challenging period.