Malaysian business confidence slips in Q4

PETALING JAYA: A survey released by Grant Thornton shows that Malaysian businesses had the least business optimism among its peers in Asean, a situation brought about by the weak ringgit.
The Grant Thornton International Business Report (IBR) global survey is a result of interviews with more than 2,600 senior management and executives from all industry sectors conducted in late October through December 2016.
Its findings reveal that business optimism in Malaysia fell to net -36% in Q4 2016, the lowest quarterly figure since 2010. This is a decrease of 24 percentage point from -12% in Q3 2016, putting Malaysia’s business optimism level at the lowest in the Asean region at the end of Q4 2016.
Grant Thornton Malaysia country managing partner Datuk NK Jasani said business optimism level in Malaysia suffered a huge decline due to the weak ringgit performance.
“Exchange rate fluctuations topped the list as Malaysia’s biggest constraint to business expansion, with 76% of business executives highlighting this as a challenge. This is an increase of 34pp from 42% in Q3 2016 and is the highest in the Asean region.”
Business executives highlighted economic uncertainty as the second-biggest constraint to business growth and expansion in Malaysia, while the lack of skilled workers is the third-biggest challenge.
It is not all doom and gloom however, as the IBR pointed out that the outlook on key indicators in Malaysia is strong heading into 2017.
The rather pessimistic outlook going into 2017, is not stopping businesses from giving employees pay hikes.
Malaysia has the most proportion of businesses in the Asean region that are expecting to offer employees a pay rise in the next 12 months (86%). It also has the most proportion of businesses in the region (34%) that are expecting an increase in exports for the year ahead.
The findings also reveal that 36% of businesses in Malaysia are expecting revenue to increase for the year ahead. About 20% of businesses are expecting an increase in selling prices while 24% expects an increase in profit. About 24% of businesses are planning to increase hiring over the next 12 months.
Meanwhile, a survey done by Dun & Bradstreet (Malaysia) Sdn Bhd (D&B Malaysia) of 200 business owners and senior executives across major industry sectors in Malaysia found that the overall outlook for 2017 appears to be cautiously optimistic as majority of the firms anticipate investments for business expansion to remain unchanged.
According to D&B Malaysia, 71% of Malaysian businesses surveyed have expected investments to remain unchanged. The proportion of firms which expect investments to increase stands at a minority of 8%. The remaining firms (21%) have anticipated a reduction in investments.
D&B Malaysia’s quarterly business expectations survey covers expected increases, decreases or no change to the upcoming quarterly sales, profits, employment, new orders, inventories and selling prices of businesses.
“The overall sentiments among the Malaysian business community for Q1 2017 have been relatively tepid compared to the preceding quarters as downside risks to growth have risen. Externally-oriented sectors such as wholesale trade will continue to face headwinds with softening exports. However, we expect the ongoing infrastructure projects within the construction and transport sectors to offset the weaknesses in other sectors and provide modest growth support in the coming months,” D&B Malaysia CEO Audrey Chia said in a statement yesterday.
She expects Malaysian businesses to err on the side of caution in their investment decisions for expansion plans.