PETALING JAYA, Aug 5 — Private businesses have not increased investment in Malaysia despite expressing higher confidence amid better economic conditions, a global survey by accountants revealed today.

Business confidence in the country grew for the third consecutive quarter, with 37 per cent of businesses reporting confidence gains in the second quarter of 2013, up from 32 per cent in the previous quarter, according to the Global Economic Conditions Survey (GECS) Q2, 2013 report by the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA).

“Despite post-election euphoria, Malaysia’s businesses are still not investing,” said the GECS report released today.

“The combination of an end to pre-election political uncertainty and a surge of infrastructure spending has boosted Malaysia’s economy in the second quarter of 2013,” it added.

The GECS report, however, noted that the developments have increased inflation and foreign exchange volatility, which have surged again over the past six months and are now up year-on-year.

“Perhaps most importantly, capacity building is still mostly driven by government spending — private enterprises have not responded to the improved trading environment with increased investment,” said the report.

Jennifer Lopez, head of ACCA Malaysia, also said in a statement today that demand and cash flow pressures have decreased for the second consecutive quarter in the country.

“Businesses have seen greater capacity building,” she said.

“However, the positive picture GECS paints come with the added warning that much of that capacity growth is fuelled by government spending. Private enterprises have not responded strongly to the current, ripe conditions with increased investment,” she added.

Emmanouil Schizas, ACCA senior economic analyst and editor of the GECS, said in the same statement today that the survey revealed, across the globe, the greatest level of optimism about the national and global economies in two years, as well as the strongest year-on-year improvement in three years.

“Malaysia is echoing that confidence boost and seeing good conditions, including more opportunities, which have hit an 18-month high,” he said.

The GECS report comes shortly after Fitch downgraded Malaysia’s credit outlook from “stable” to “negative” on July 30, citing gloomier prospects for reforms to arrest the country’s rising debt after the divisive 13th general election in May.

The revision from a stable outlook increases concerns over Malaysia’s high debt at a time when the currency is pressured by bond fund outflows and talk of the US Federal Reserve ending its easy monetary policy.