Malaysian businesses undaunted despite fears of worsening business environment
Over half of the businesses in the country believe that the business environment will worsen in the next twelve months, the Malaysian Business Sentiment Survey 2016/2017 revealed. This is mostly due to an unprecedented and volatile past year with dampened global demand, BREXIT and potential further fracturing of the European Union, protectionist policies in the US under the Trump administration, and the US withdrawal from the Trans-Pacific Partnership.
Despite a restrained business environment and in an election year, the spirit of the local business community remains optimistic with 58% confident or somewhat confident about their business prospects. This optimism is partly due to increased infrastructure investment and increased domestic consumption, boosted by the various corridor development programs under the 11th Malaysia Plan and the 2017 Budget.
The biggest issue that concerns the local market is the increasing cost of doing business, which will have an impact on the bottom-line of these firms. The second major issue is the weakening Malaysian currency, which will severely impact firms dependent on import goods for their production process.
The Malaysian Business Sentiment Survey 2016/2017, conducted by Monash University Malaysia’s Global Asia in the 21st Century research platform, in collaboration with CPA Australia, gathers the opinions, voice and feelings of the country’s business leaders. The survey highlights concerns that could potentially affect businesses seeking growth through investments in existing products, and services in new markets. These findings merit attention if Malaysia is to remain competitive in a global economy without borders.
“The Malaysian Business Sentiment Survey helps measure confidence of local business leaders across key macro-economic areas and provides them a platform to voice their sentiments and estimations about the business environment in Malaysia, and its impact on their global competitiveness. Events of the past year have been unprecedented and global markets have been extremely unstable. The survey is to effectively gauge the mood of the Malaysian business community and understand their apprehensions about today’s volatile economy. The primary objective of the survey is to enable policy-makers, industry bodies and other key stakeholders to adopt pro-active measures to improve the business environment and enable Malaysian firms to build global competitive advantage,” said Professor Mahendhiran Nair, Vice President (Research & Development) of Monash University Malaysia.
Specific highlights from the survey include:
- 54% of businesses identified cost management as their prime strategic/investment priority over the next 12 months, followed by seeking new markets (48%), developing business relationships (34%), and new product development (30%) and marketing and branding activities (25%).
- 49% are of the view that there is a balance: both more opportunities and more threats now compared to 3 years ago.
- More than one third of respondents (39%) informed that the government remains an important buyer of their products.
- 70% of the CEOs and senior managers responded that to stay competitive, the most important ability to cultivate is the ability to proactively manage the business using strategic foresight and thinking.
- 60% of the respondents reported that their sales priority over the next 12 months will be to concentrate on existing products/services, while at the same time explore new markets.
"The Survey looks at the challenges Malaysian businesses face, and the options they are considering to navigate the complex dynamics being played out in their immediate environments," said Professor Pervaiz Ahmed, Deputy Head of School (Research), Monash University Malaysia.
CEOs and senior managers are of the view that for firms to be competitive, they will have to embrace the digital economy and Industry 4.0; which will enable them to extend their reach for talent, resources, market intelligence, networks and markets. The top digital technology identified by respondents is mobile technologies for customer engagement (63%), followed by the Internet of Things, and data mining and analysis tools (53%).
CEOs and senior managers also highlighted the importance of universities nurturing talent that will enable firms to enhance their innovative capacity, process improvement and product development. They believe that the top three primary focus areas of universities should be to enhance graduate employability (63%), to ensure that R&D initiatives meet the needs of industry (61%) and to develop training programs that are relevant and beneficial to the industry (59%). They believe that creative, highly articulate, and self-motivated graduates are important for enhancing the innovative capacity of firms in a competitive global economy.
“Monash Malaysia continues to work closely with businesses and industries. We recognise the importance of right-skilling graduates to improve their employability quotient and to enable them to succeed amidst the current uncertainties. We will continue to intensify the “quadruple-helix” to produce graduates that can power the next wave of progress for Malaysia,” concluded Professor Nair.
The Malaysian Business Sentiment Survey 2016/2017 consisted of three (3) phases: Phase 1 was a scoping and content analysis of information from press releases, media reports, and commentaries from stakeholders; Phase 2 involved face-to-face in-depth interviews with CEOS and senior managers; and Phase 3 was an online survey with 214 randomly selected CEOs and senior managers across a wide spectrum of industries.