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CHINESE business owners in Malaysia are anticipating improved economic and business prospects in the second half of 2024 (2H24), marking a shift towards optimism, according to the latest findings from the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
The results, derived from Malaysia’s Business and Economic Conditions Survey (M-BECS), indicate a positive outlook for the latter half of 2024 compared to the cautious sentiment observed in 2H23.
In the survey, 37.3% of respondents expressed expectations of better economic prospects for 2H24, fuelled by the anticipation of a gradual recovery in external demand.
While optimism is on the rise, 45.1% of respondents maintained a neutral view, highlighting a balanced perspective on economic conditions.
The shift in sentiment is noteworthy, considering the less favourable view expressed by a majority of respondents in 2H23, with 58.9% holding a neutral stance and 29.5% perceiving economic conditions as worse.
The survey also evaluated the overall sentiment for the year 2023, revealing that 57% of respondents adopted a neutral view, while 27.5% were pessimistic about the economic outlook.
However, the survey suggests a more positive trajectory for 2H24, with a higher percentage of respondents (compared to 28.2% in 1H24) expecting better economic prospects.
This shift in perception aligns with a cautious yet optimistic outlook for business conditions in 2024, particularly in the latter half of the year. Examining specific sectors, the survey identified areas of concern and improvement.
In 2H23, more than one-third of respondents signalled challenges in the tourism-related sector (38.3%), manufacturing (36.4%), and wholesale and retail trade (34.6%).
The cautious stance adopted by business in 2023 is anticipated to evolve into a slightly positive outlook in 2024, with close to 40% of respondents expressing positive views on business prospects, a significant increase from 17.6% in 2023.
Nevertheless, a substantial percentage (43.6% in 2024 compared to 56.1% in 2023) remains neutral.
Aligning with the economic outlook, a higher percentage of businesses anticipate improved conditions in 2H24 (40.1% compared to 28.9% in 1H24).
The Association noted that nearly two-thirds of respondents increased their capital expenditure in 2H23 and plan to continue investing further in 1H24.
While respondents indicated a neutral assessment of cashflow and debtor conditions in the second half of 2023, the survey suggests that this cautious view is likely to persist into 1H24.
The concerns are attributed to factors such as the increasing cost of doing business, inflation risk, and the cost-of-living pressure on households.
The respondents identified key factors
adversely impacting business performance in 2H23, with “the ringgit’s fluctuation” topping the list at 51.8%.
This was followed by “increase in prices of raw materials” (45%), “high operating cost and cashflow problem” (38.6%), “declining business and consumer sentiment” (35.8%), and “lower domestic demand” (35.1%).
Notably, over 70% of respondents indicated an increase in the cost of domestic and imported raw materials in 2H23 and 1H24.
ACCCIM sought to understand respondents’ business concerns and priorities for the government.
The top three business concerns identified by respondents were “reduced consumer purchasing power” (91.9%), “persistent cost pressures” (90.6%), and “persistently weakening ringgit” (90.3%).
In response to the weakening ringgit, 52.7% of respondents countered the depreciation by absorbing increased costs or adjusting higher selling prices.
For the government’s priorities, respondents highlighted the need to stabilise the ringgit (58%), ease the cost of doing business (52%), and provide clarity and consistency in business-friendly policies (41.1%).
Source: https://themalaysianreserve.com/2024/02/05/accim-chinese-business-owners-shift-towards-optimism-for-2h24/