9 March 2011

Malaysian Business Leaders Cautiously Optimistic

Story by Shamini Darshni with pictures by Michelle Kiob

Malaysian business leaders have rated as critical six public policy issues that call for immediate government intervention, a survey reports.

The CEO Survey 2010, jointly conducted by Monash University Sunway Campus, Butler University in Indiana, the United States, and Minority Shareholder Watchdog Group, found that “improving public transportation” and “improving public education” were the top two worries – at 98% and 96% respectively.

“Malaysia’s business leaders highlighted these two as the most important issues for Malaysia’s economic development,” Monash University Sunway Campus’ Dr. Robert Terpstra, lead researcher on the project, said.

The two concerns were closely followed by “reducing crime rate” (95%); “streamlining government bureaucracy” (94%); “improving healthcare systems and facilities” (92%) and “increasing foreign trade” (92%).

“It is surprising that despite government efforts, these basic public needs are rated as the highest,” he said.

The CEO Survey 2010: The Climate of Our Business – A Perspective from Malaysian Executives polled158 chief executive officers, managing directors, and other top executives.

The respondents represented four major sectors – manufacturing (46%); construction and skilled trades (7.6%); banking and finance (6.3%); and, information technology and communication (5.7%).

The country’s business leaders also felt that compared to Singapore, Malaysia’s biggest challenges were its education system and a lack of innovation – among the seven out of 10 areas that Malaysia fared poorly.

“While Malaysia’s advantage is in its natural resources, cost of living and available labour force, it loses out to Singapore in terms of infrastructure, the overall business environment, economic incentives, enforcement of contracts and laws, showing favouritism, the education system and innovation,” he said.

A total of 59% of CEOs felt that Malaysia lacked innovation while 67% were worried about the education system.

“Given the experience in other Asian countries, these two issues seem to be related to each other,” Dr. Jane Tong, a co-investigator, said.

Over 54% of those polled were attached to organisations which earned over RM100 million in 2009. A third of the companies employed more than 500 people.

The survey also found that half the respondents were positive about the government’s Economic Transformation Plan.

Half were worried about the restrictions on hiring foreign workers, which they felt would leave a negative impact on the economy.

“Manufacturing and construction sectors depend on quality semi-skilled and skilled labour. These two sectors have been experiencing difficulty in hiring the right people in Malaysia. To them, importing foreign workers is the solution,” Dr Tong, of Monash University Sunway Campus, explained.

The survey also showed that respondents were unenthusiastic about government funding sources but were optimistic that financial assistance from banks in terms of loans and credit lines was sufficient.

“The responses clearly indicate that CEOs are not very impressed with the government’s effectiveness in attracting businesses, encouraging their growth or retaining business in Kuala Lumpur and the greater area,” said Dr Terpstra.

He emphasised that this would also not bode well if the country wanted to attract foreign direct investments.