A business survey showed that large firms in Malaysia are upbeat about business sentiment — measuring business environment, company prospect and growth, as well as future revenue — but the same cannot be said for small and medium enterprises (SMEs).

The annual Malaysian Business Sentiment Survey 2019/2020 conducted jointly by Monash University Malaysia and CPA Australia found that business sentiment among small and medium businesses declined from 2018 to 2019 across the said metrics, while the same indicators showed an uptick for large firms According to the survey, the decline in business sentiment from 2018 to 2019 was not surprising due to the deteriorated global economic environment as a result of the trade war and Brexit uncertainties.

In 2019, high cost of doing business still remains in the top spot among challenges experienced in 2019, besides the weakening of Malaysian ringgit and increasing competition, due to the increase of usage in sophisticated technology by new entrants into the market which undertake horizontal and vertical integration of the supply chain. Similarly, the survey showed that medium sized firms viewed uncertain economic conditions arising from global uncertainties impacting their supply chains and business sentiment in 2019. Furthermore, business leaders from these medium sized firms found the weakening of the Malaysian ringgit and cost of doing business as amongst their biggest challenges. This was similar to the 2018 ranking, with the exception that increasing competition was one of the top three challenges in 2018.

Chief executive officer of Monash Malaysia Research and Development Professor Mahendhiran Nair shared that 62% of large firms surveyed are expecting their 2019 revenue to grow from a year ago. “The more upbeat business sentiment among large firms can be attributed to the fact that many of them are able to mitigate the uncertain economic conditions and intense competition by adopting advanced technologies as well as their ability to capitalise from increasing foreign direct investments into Malaysia and the region. “The latter is due to the shift in investments to the Asean region following the trade dispute between the US and China and political uncertainties in Europe,” he said.

Overall results of the survey showed that about 74% of business leaders are cautiously proactive of their company’s prospects for the next 12 months amidst external concerns. Approximately 69% of the respondents believe that their business conditions will be better in 2019/2020 if they put in place strategies to enhance their innovative capabilities using the best talent, leadership style, technology and business models. While business leaders are of the view that competitive firms are able to find new opportunities amidst the escalating trade war and economic uncertainty in Europe, concern remains on the weakening of the ringgit and the cost of doing business, the latter being a perennial issue for the past three years.

The Edge

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