PETALING JAYA: High operating costs are among factors affecting business owners in the second half of 2024, according to a survey conducted by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
Also impacting their business performance were cash flow problems (50% of respondents), increase in prices of raw materials (41.3%) and the fluctuation of the ringgit (40.2%).
Lower domestic demand (39%) and changing consumer behaviour (36.8%) were the two other factors that affected sentiment, according to the survey.
Conducted between Nov 18, 2024 and Jan 15, the survey received 630 responses, with micro, small, and medium enterprises making up 88.3% of the respondents.
It was published in ACCCIM’s signature survey report called “Malaysia’s business and economic conditions survey” that covered performance for the second half period of 2024 and expectations for the first half of this year.
ACCCIM president Datuk Ng Yih Pyng said businesses generally maintained a cautiously optimistic view on the economic and business prospects.
“Although the high business operating costs remained the most critical concern, the implementation and proposed rollout of multiple cost-increasing measures this year will further weighed on business costs,” Ng said in a statement.
“They include higher minimum wage, mandatory Employees Provident Fund contributions for all non-citizen workers, a multi-tiered foreign worker levy, implementation of e-invoicing, rationalisation of RON95 petrol subsidy, as well as the proposed hike in electricity tariffs,” he said.
The report noted that most businesses have a “neutral” view on Malaysia’s economic and business conditions, expressing concerns over increasing business costs as well as compliance requirements and regulations.
The heightened external uncertainties surrounding the US tariff policy and its knock-on effect on global economic growth and trade, had clouded the prospects of Malaysia’s export sector as well as the ensuing negative spillover on the domestic economy.
Meanwhile, it said a majority of respondents indicated a “mixed-to-positive” impact from China’s investments and businesses on the domestic economy.
Close to one-third each of the respondents reported a positive impact and mixed impact, respectively, while 14.5% of them indicated a negative impact, according to the survey.
Encouragingly, ACCCIM’s report said over half of the respondents or 59% stated that China’s companies have transferred technology and knowledge to Malaysian firms, surpassing that of other foreign investors.
However, there were outstanding concerns about China’s hiring practices with 36.3% of respondents indicating that the companies primarily filled key positions with talents from China.
While there are positive impacts, such as supporting national economic and industrial development, there are also threats like market erosion and the crowding-out effect on domestic businesses.
Businesses surveyed hoped that the government would continue to provide support to navigate the emerging challenges.
Among the recommendations were encouraging joint ventures, addressing unfair trade practices, prioritising companies with higher local contents, setting conditions to diffuse technology and skills to local firms as well as facilitating market access for Malaysia’s products.
“It is important for Malaysian businesses to forge strategic partnerships with Chinese investors and business partners not only to share mutual benefits in the domestic market, but also to leverage the collaboration as a springboard for expansion into international markets.
“By working together, businesses can tap into new growth opportunities, enhance their competitiveness and gain access to wider market channels globally,” he pointed out.
The survey was prepared by ACCCIM’s unit Socio-Economic Research Centre in collaboration with Universiti Tunku Abdul Rahman.
