Over half of businesses in the country (51%) believe the business environment will worsen in the next 12 months due to external factors such as dampened global demand and geopolitical uncertainties, according to the Malaysian Business Sentiment Survey 2016/2017.
The survey, conducted on over 200 companies by Monash University Malaysia and CPA Australia, said that despite a restrained business environment and given a potential election year, 58% are confident or somewhat confident about their business prospects. This optimism is partly due to increased infrastructure investment and increased domestic consumption, boosted by various corridor development programmes under the 11th Malaysia Plan and 2017 Budget, the survey said.
It said the biggest issue concerning businesses over the next 12 months are increasing cost of doing business (69%), followed by the weakening of Malaysian currency (42%) and the global economic uncertainty (34%). Therefore over the next 12 months, businesses say their top priority will be to focus on managing their costs, followed by seeking new markets and developing strategic business relationships.
Meanwhile, to stay competitive, a significant portion of firms in Malaysia have introduced new products and services to the markets within the past three years. The survey showed that 40% of firms stated that more than half of their revenue came from these new products and services introduced in the past three years.
Additionally 60% of respondents reported that their sales priority over the next 12 months will be to concentrate on existing products and services as well as to seek new markets.
Furthermore a majority of firms place emphasis on pursuing incremental innovation. The survey showed that close to 40% of chief executive officers (CEOs) and senior managers who were interviewed also said their firms improved the performance of an existing product.
Other firms indicated their firms reduced the cost of an existing product using efficient manufacturing methods (30%), by negotiating with suppliers and distributors (20%), or producing products not in the market (10%).