'Slight improvement' in economy in first half, Chinese businesses feel: ACCCIM survey

KUALA LUMPUR: Chinese businessmen felt there was a slight improvement in the economy in the first half of 2017, evidenced by the lower percentage of respondents who felt that the economy deteriorated in the first half.

A total of 45.1% respondents opined that the Malaysian economy deteriorated in the first half of 2017, a drop from 56% in the previous survey.

Another group (close to 40% of respondents) believe that the economy had remained unchanged for the said period, up from 33% in the previous survey.
Some 329 businesses responded to the survey on first-half performance and second-half outlook by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

They were mainly from the wholesale and retail trade (21.9%), manufacturing (16.4%), professional and business services (11.6%), and tourism, shopping, hotels, restaurants, recreation & entertainment (10.0%). Small and medium entreprises (SMEs) made up 89.7% of respondents.

Based on the survey results, 70% of the respondents, compared with 72% in the second half of 2016, replied that their firms’ sales performance for the first half was either good or satisfactory. The number of respondents with poor sales performance however was up 2 percentage points to 30%. Poor sales were seen mainly from the manufacturing and wholesale and retail sectors.

ACCCIM said this came as a surprise though, given the improvement in Malaysia’s economic growth during the survey period of first half of 2017 at 5.7%.

“It also suggests that some businesses have yet to benefit from the improvement in economic growth that was largely driven by exports and supported by private sector demand. Private sector activity continues to be the main engine and contributor for growth in the Malaysian economy.

“As such, attention should therefore be focused on assisting businesses to overcome these challenges, as their adverse performance could have a significant impact on the Malaysian economy,” it opined.

Even in the case of sales outlook for the second half, sentiments have soured, with more businesses expecting poor sales, even though a majority of their sales are expected to remain relatively unchanged compared with the previous survey period with some 66% of respondents forecasting good or satisfactory future sales performance.

Socio-Economic Research Centre executive director Lee Heng Guie explained that first-half 2017 growth was strong but the sentiment on the ground did not reflect the growth seen.

“We see mixed performance among export and domestic sectors. Export-oriented industries will feel better as the ringgit had weakened, giving lots of translation gain. But retailers and trading companies are not feeling the strong growth, which is a challenge for the government to convince the people that the economy is growing.

“The sentiment is a little negative, and with businesses suffering high costs of doing business, it will cause one to be more cautious,” said Lee.
Major factors adversely affecting business performances in first-half 2017 include government policies, increase in operating costs and prices of raw materials, increase in domestic competition and manpower shortage.

Meanwhile, ACCCIM and other related organisations are actively following up on the proposed Employment Insurance System (EIS). It has held a joint meeting with the Malaysian Employers Federation and the Malaysia Trades Union Congress to gather ideas and feedback, and to seek a consensus on the contribution rate and implementation of the EIS.

ACCCIM has recommended that the government form a tripartite committee comprising representatives from the government, employers, and employees to collect views from all stakeholders.