Malaysian businesses more upbeat despite challenges

OHSBC global survey shows 76% of companies anticipate a return to preCovid profitability levels by end of 2022

JAYA: Malaysian businesses remain confident and optimistic over the benefits and opportunities for international trade, despite the resurgence of Covid-19, decline in consumer demand and the rise of protectionism, according to HSBC’s global survey “Navigator: Now, next and how”.

The survey pointed out that the difficulties and events of 2020, have not dampened the inclination of most Malaysian businesses to invest to grow.

Overall, the data found Malaysian businesses are more positive than their regional peers and are coping relatively well with the current challenges, as 74% of those surveyed projected growth, well above the Asia-Pacific average of 60%.

In addition, 76% of Malaysian businesses anticipated a return to pre-Covid profitability levels by the end of 2022, while 6% of the respondents revealed that they are already ahead of their own pre-Covid levels.

The HSBC survey revealed that the top three drivers of business growth include increased domestic demand, expanding to new digital platforms and channels and introducing new products and services.

The positive outlook is also evidenced by 78% of those surveyed intend to increase investment in their business in the new year, over the two thirds average seen globally.

It revealed that companies will focus these investments on three fundamental areas in 2021 – cash flow and capital management, marketing and sales channels, by increasing their investment in technologies that help target consumers, improve customer experience collaboration.

HSBC Malaysia’s CEO Stuart Milne commented that the Malaysian businesses remain optimistic despite the unprecedented year 74% of the respondents have undergone changes in the last 12 months.

“Behind these changes were the need to reduce costs, future uncertainty and change in ways of working. Looking ahead, Malaysian businesses view innovation and collaboration as the top two characteristics of a successful future business,” he said in a statement.

Similarly, Malaysian also holds an optimistic outlook in regard to international trade as 80% of companies foresee their international trade prospect over the next 1-2 years to be positive.

Although protectionism continues to be felt, selling through digital channels is the key strategy for Malaysian businesses to combat this.

For Malaysia, China continues to retain the top spot of current trading partner, followed by Singapore and Indonesia.

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Tradewise, the survey also sees Malaysian businesses prioritising expansion into Asia-Pacific (74% up 8% from 2019) and into China (22% up 9% from 2019).

The survey also showed over 98% of the Malaysian respondents have concerns about their supply chain with supply chain instability and increased costs as the key issues.

In response 99% of Malaysian businesses have made adjustments to their supply chain with 57% of those surveyed stated that such a move is expected to reduce cost, while other benefits include improved supply chain visibility and increased speed to market/moving closer to the end buyer.

Among the popular changes reported by the survey is the increased usage of digital technology, diversifying to work with more suppliers and choosing suppliers for their operational resilience and ability to deliver quickly.

The survey highlighted that 56% of the respondents stated it will make it their immediate priority in 2021 to focus on usage of digital technology, compared to the global average of 48%.