KUALA LUMPUR: Businesses’ cautiousness about their capital expenditure (capex) spending plans have turned positive in the first half of 2019 (1H19), according to a survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

Some 58.8% of respondents have increased their capex, higher than the initial forecast of 45.7%.

Socio-Economic Research Centre executive director Lee Heng Guie said the increase in capex may be partly aided by the goods and services tax (GST) and income tax refunds, which totalled RM17.1 billion as at end-April 2019.

“This is consistent with our previous survey when we asked our respondents how many percent of their refunds will be ploughed back into their capex,” Lee said when announcing the findings for ACCCIM’s Malaysia’s Business and Economic Conditions Survey for 1H19 and forecast for 2H19 today.

The previous survey revealed that 62.3% of respondents are expected to utilise 1-10% of tax refunds from GST and income tax for capital investment or spending; while 32.5% will spend 11-30%.

Meanwhile, the latest survey found that only 6.1% of respondents lowered their capex in 1H19, while 35.1% maintained their capex.

Lee said the percentage of businesses planning to increase capex is expected to remain at a relatively high 55.5% for 2H19, with 30.4% expected to increase their capex by 1-5%, suggesting that businesses may be starting to have a clearer approach about their business strategy and intend to invest for the long term.

By sector, a high percentage of respondents in the transportation, forwarding and warehousing (82.6%), wholesale and retail trade (61.3%) and trading (58%) sectors have reported an increase in capex in 1H19 and these sectors indicated their plans to continue spending more in capital investment in 2H19 (85%, 57.1% and 61.7% respectively).

Professional and business services (42.7%) and finance & insurance sectors (41.9%) have higher percentage of respondents maintaining their capex in 1H19 and would continue to do so in 2H19.

Meanwhile, the survey revealed that 42.7% of respondents have either invested or plan to invest in Malaysia over the next 12 to 24 months, while 57.3% have no intention to invest in the same period.

Factors cited as most affecting business investment decisions are economic and business prospects (62.5%), government policies – domestic policy uncertainty (48.8%), shortage of skilled manpower (266.9%) and high cost of capital (26.6% ).

The survey also revealed that most businesses experienced softening business performance in 1H19 but the overall business expectations for 2H19 and 2020 have strengthened significantly.

The top five factors that influence and impacted business operations and domestic business environment are domestic competition, government policies, lower domestic demand, increase in prices of raw materials and ringgit fluctuations.