KUALA LUMPUR, Sept 13 — Ethnic Chinese businesses remain cautious about the economy despite the growth registered in the first half of 2017, according to a survey.
In its economic survey report, the Association of Chinese Chambers of Commerce and Industry Malaysia (ACCCIM) said the improvement was based on slightly better export and domestic market.
“Generally the first half growth is strong but the sentiment on the ground is we see a mixed performance in the export and domestic sector. Export feels better because the RM is weaker and trading partners in Europe, China and the US are recovering.
“But when you talk to the domestic retailers, they are not feeling the growth. The economy is growing and improving but we are suffering high inflation and cost of doing business which makes us cautious,” said association president Tan Sri Ter Leong Yap.
The report pointed out that 75 per cent respondents in the foreign market segment were hoping that, by end of 2017, their businesses will experience “increased” and “unchanged” levels of order from foreign markets.
The manufacturing sector saw a 14 percentage point increase on the “unchanged” level of new foreign market orders when compared to 2H16. Wholesale and retail saw its ‘unchanged’ level increased to 58 per cent points from 28 per cent points in the last survey period.
“Indeed, 23 per cent of the respondents expect their new export orders to pick up in 2H17 when compared to 10 per cent in 1H17,” said the report.
The domestic market saw fewer respondents reporting “decreased” in new local orders and that order levels remained steady throughout 1H17.
Some 69 per cent respondents expect their local orders to remain “stable’” or “increase” for 2H17 when compared with 67 per cent in 1H17, while 31 per cent expect a ‘decrease’ in local orders when compared with 33 per cent in the first half.
“This suggests that domestic economic environment should improve slightly in the future period,” said the report.
However, the report also pointed out four factors adversely affecting business performance in 1H17: government policies, increase in operating costs and raw materials, increase in domestic competition, and manpower shortage.
Around 39 per cent of the respondents find their greatest concern to be new policies and economic reforms introduced by the government recently. Association president Ter said among the policies affecting businesses include the GST, the EIS, and Tourism Tax among others.
“As Malaysia is heading for developed nation status by 2020, the government needs to implement certain policies. For instance, the implementation of minimum wage would certainly affect cost of doing business.
“Other policies such as the GST, EIS or even the Competition Act are important for long term macroeconomic benefit. ACCCIM agree and support this however, businesses need a transition period to implement all this,” said Ter.
He believed the government should introduce its reforms in stages instead of implementing all of it almost immediately or one after another, without allowing businesses room to breathe.
Touching on Budget 2018, ACCCIM included its wish list hoping that the government would reduce corporate income tax to 18 per cent, chargeable income threshold for SMEs increased to RM2 million while lowering tax rates to 15 per cent and finally an unspecified decrease in personal income tax rates.