The optimism level of Malaysian business confidence has risen to 6 per cent which is a major improvement compared to a year ago at -36 per cent, according to the International Business Report (IBR) by Grant Thornton, reported by The Star.
The quarterly business survey which covered 2,500 businesses in 36 economies showed the ASEAN region’s optimism level was performing at its best at 58 per cent, the highest since 2011. The survey revealed that high levels of confidence are driven particularly by surges in Indonesia for 100 per cent, as well as the Philippines at 86 per cent, where optimism has risen by 12 percentage points (12pp) and 6pp. The report stated that the global business optimism is at a positive level too, being at its highest level ever at 58 per cent.
Grant Thornton Malaysia Country Managing Partner Datuk NK Jasani said in the statement that optimism level in Malaysia has boomed, which is at the highest since 2014, despite being the lowest level among ASEAN countries. “In the country, the signs of confidence can be seen as the survey revealed that 62 per centbusiness owners are expecting an increase in revenues up to 22pp from the third-quarter (Q3) in 2017. “Also, 44 per cent of business owners are expecting an increase in exports for the year ahead which is up to 10pp from the same period, which is the highest in ASEAN,” said Jasani. The Managing Partner also said that 58 per cent of business partners are expecting an increase in profits, up to 46pp from Q3 in 2017 and 30 per cent of business owners are looking to increase in selling prices, up to 14 pp from the same period.
As optimism improves, firms in Malaysia are thinking about the future and investing in their long-term growth. The IBR finds that Malaysian business owners are planning to spend more on plant and machinery with up 16pp to 54 per cent from Q3 last year which is the highest amongst ASEAN countries and way above the global average of 36 per cent. However, there are some areas of concern for business owners in Malaysia despite a positive picture overall. “Business owners have expressed some constraints in their business for the year ahead, with lack of skilled workers is a concern at 46 per cent, an increase of 12pp from Q3 last year. “Besides that, half of the business owners surveyed half of the business owners in the survey have mentioned the exchange rate fluctuations is a major constraint to them,” Jasani added. Moving forward, Jasani said there are signs that 2018 marks the peak business and economic cycle.
The United States is expected to increase its interest rate further which means the cost of borrowing will rise for many businesses, he said. “At the same time, inflationary pressure is also a strong possibility, with wages and prices increase as well. Forecasts suggest that global GDP will fall away from 2019 onwards.” “What can businesses do to make the most of the current environment, but make sure the music doesn’t stop at the end of this year? “A better balance in where they invest will be critical.
Hiring more workers has many benefits, but if investment in technology, plant, and machinery doesn’t keep pace, those workers will become less efficient and profits will steadily erode. “The move towards automation represents a threat to many traditional business models. But it also presents opportunities. “Dedicated investment in technology will help businesses become more productive and boost resilience. Firms that get this right over the next year will be best placed to succeed when the global economy comes off its current high,” Jasani said.