PETALING JAYA: Businesses in Malaysia are optimistic about the country’s growth prospects, according to UOB Business Outlook Study 2024 (SMEs & Large Enterprises).
The study, themed “Regional Businesses Eyeing Asean in Overseas Expansion Plans”, revealed that Malaysia has emerged as the most important country that businesses in Asean and Greater China want to venture into in the next three years.
The annual study, which is in its fifth year, surveyed more than 4,000 small and medium enterprises and large enterprises across seven markets that included more than 500 Malaysian businesses.
The survey aims to understand the business outlook and key expectations among SMEs and large enterprises in Malaysia, Hong Kong, Indonesia, Mainland China, Singapore, Thailand and Vietnam.
UOB Malaysia CEO Ng Wei Wei said, “The UOB Business Outlook Study indicates that local businesses are gearing up for a period of growth as they are bullish on Malaysia’s economic potential while overseas businesses are looking to expand into Malaysia. This is due to the country’s strong economic fundamentals and attractiveness as a regional business hub driven by the China+1 strategy, the upcoming Johor-Singapore Special Economic Zone, the upcycle of the global semiconductor industry, and rising adoption of sustainability among businesses and states.
“UOB Malaysia remains committed to leveraging our extensive regional network, strong sector expertise and local market knowledge to support the growth of local businesses and facilitate more foreign direct investments and trade into the country.”
The survey found that more than seven in 10 Malaysian businesses are positive about the current business environment, with 76% expecting business performance to improve this year, echoing their regional peers’ sentiments.
The sectors that are most positive about the current business environment are industrials, oil and gas (90%), and manufacturing and engineering (80%). Seven in 10 businesses expect to see a revenue growth each year over the next three years. However, many businesses said they are still recovering from the overall economic slowdown and are mindful of the impact of inflation and higher operating costs.
The survey also showed that the top three priorities for local businesses in the next one to three years are reducing costs, adopting digital solutions to improve productivity and sourcing for new customers. Almost 80% of Malaysian businesses want to expand overseas to boost their profits, grow revenue and build their reputation as an international business.
In particular, these businesses highlight Asean and Mainland China as the top two markets which they want to expand to within the next three years. Within Asean, Indonesia is the most important country that local businesses want to venture into, followed by Singapore, Thailand and Brunei.
The survey reported that businesses want to incorporate sustainability practices into their operations because it helps to attract investors, make it easier to work with multinational corporations with sustainability goals in place and improve the brand and reputation of the company.
Over eight in 10 local businesses believe that sustainability is important but only 39% have implemented sustainability practices. Leading the charge is the manufacturing and engineering sector (53%) which has incorporated the most sustainability practices into its business, followed by industrial, oil and gas (45%) and community and personal (40%).
To ensure better adoption, companies are requesting for more financial support in the form of tax incentives/rebates, sustainable financing options and easier access to funding or grants. Additionally, companies are looking for training programmes to reskill or upskill employees which can address concerns around the topic of sustainability and help businesses identify and execute the right sustainability initiatives.
