More small businesses upbeat about 2024

Survey shows many expect recovery in foreign demand

Micro, small and medium enterprises (MSMES) are anticipating improved business and economic prospects in the second half of 2024 (2H24) compared with 1H24 amid concerns about reduced consumer purchasing power, persistent cost pressures and the weak ringgit.

These were among the findings of the biannual Malaysia’s Business and Economic Conditions Survey conducted by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) recently, which was based on feedback from a sample of 684 respondents, 91.5% of whom were MSMES.

The improved outlook for 2024 was supported by expectations for a recovery in foreign demand with some 82% of respondents to the survey anticipating improved economic prospects or having a neutral view, with many anticipating a better 2H24 compared with 1H24.

“Close to 40% of respondents have positive views on business prospects in 2024 compared to only 17.6% in 2023,” an ACCCIM statement said.

“It is encouraging to note that nearly two thirds of respondents increased their capital expenditure in 2H23 and will continue to invest further in 1H24,” the chamber added.

A majority of the survey respondents indicated “neutral” cash flow and debtor’s conditions in 2H23 and this cautious view is likely to continue into 1H24 amid the increasing cost of doing business, inflation risk and cost of living pressure for households.

According to the survey, the ringgit’s volatility and weakness was ranked the highest among the factors that affected respondents’ business performance in 2H23 along with rising raw-material prices, high operating costs and cash flow issues and deteriorating business and consumer sentiment which could lead to lower domestic demand.

Over 70% of respondents indicated an increase in cost of domestic and imported raw materials in 2H23 and 1H24.

“Among the respondents, 52.7% countered the ringgit’s depreciation either through absorbing increased costs or adjusting selling prices upwards,” ACCCIM stated.

Not surprisingly, a majority of respondents indicated the government’s top priorities should be to stabilise the ringgit exchange rate, ease the costs of doing business and provide clarity and consistency in business-friendly policies.

When asked about the voluntary participation in the Progressive Wage Model, the ACCCIM survey found 77.4% of respondents were concerned that its implementation would drive up employment costs, despite wage financial assistance provided for MSMES.

As for the implementation of einvoicing, businesses cited concerns regarding the intricacy of the process and possible consequences linked to mistakes.

The survey was conducted between Nov 6, 2023 and Jan 5, 2024.

“Close to 40% of respondents have positive views on business prospects in 2024 compared to only 17.6% in 2023.” Associated Chinese Chambers of Commerce and Industry of Malaysia