The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM)’s Malaysia’s Business and Economic Conditions Survey (M-BECS) for 2H 2021 and expectations for 1H 2022 indicated that Chinese business community are cautiously optimistic about the prospects of economic and business recovery in 1H 2022 and for the full-year of 2022.

President of ACCCIM, Dato’ Low Kian Chuan said that the respondents’ positive expectations are supported by the reopening of most economic and social sectors in 4Q 2021 under the National Recovery Plan. With high levels of vaccination, consumer and business sentiments have improved. Nevertheless, the recovery pace remains uneven for some sectors, especially the construction, tourism-related services and aviation sectors.

This bi-annual survey, which was carried out throughout the period 25 October to end-December 2021, has received 807 active responses, of which SMEs making up 91.4% of total respondents.

Key Findings of the ACCCIM M-BECS Report

• Amid lingering risk from the Omicron variant as well as domestic and external headwinds, it is encouraging to note that 35.9% of respondents are confident of an economic recovery in 2022, with 41.4% expecting better economic outlook in 2H 2022 as against 33.2% in 1H 2022. Overall, 42.1% of respondents expect “Better” economic prospects in 2022 while the percentage share of respondents expecting “Worse” economic outlook reduced to 17.8% from 24.2% surveyed previously.

1. Business expectation has gradually improved. Business, cash flows and debtors’ conditions have turned around from “Poor” forecasted previously to “Satisfactory” in 2H 2021.
2. 41.3% of respondents see “Better” business outlook in 2022, with 33.8% expecting “Better” business conditions in 1H 2022 compared to 21.6% in 2H 2021. That said, 43.5% of respondents indicated that their sales still remained below pre-pandemic level. About 56.5% has achieved at least the same level as pre-pandemic level.
3. While more than one-third of respondents (38.9%) have expressed high concern about 3Cs (Cost, Credit and Cash flow), a higher percentage of businesses (32.1%) indicated that they still can manage their 3Cs (vs. 21.4% in the previous survey).
4. The survey indicated that “Increase in prices of raw materials”, “High operating cost and cash flow problem”; and “Shortage of workers” were amongst the top five sectors impacted business performance in 2H 2021. Businesses have suffered substantial increases in cost of both local and imported raw materials in 2H 2021. Input costs are expected to remain elevated in 1H 2022 and they have planned to increase their prices.

Dato’ Low said that we have raised the issues of operating costs and supply bottlenecks as well as financial facilities in our recent meeting with YAB Prime Minister. ACCCIM is looking forward for a smooth as well as fast processing of online applications and approvals of foreign workers for sectors in urgent need of workers.

Besides the lowering of import duties on intermediate goods as well as machinery and equipment, the Government can consider the following short-term and medium-term mitigating actions for businesses and consumers: (a) Compensation if prices of construction materials increase above 10%. Compensation will be funded by contingency money set aside for the tenders of public projects; (b) Extend Market Development Grant to cover both exports and imports shipments logistics costs to end-Dec 2022; (c) Double tax deduction on logistics expenses and other related costs; (d) Prices surveillance and temporary price controls, including a staggering price increase of essentials based on market-based pricing mechanism; (e) Freeing up imports licensing; and (f) Address the Temporary Occupancy Leases (TOL) to increase the farming of agricultural products.

The survey results indicated that the implementation or adoption level of green practices within the business or organization in Malaysia is still low (16.1% of respondents). By size of operations, large enterprises (39.5% of respondents) have a relatively higher adoption of green practices compared to micro (11.2%), small (14.3%) and medium (17.7%) enterprises.

Dato’ Low commented that “High cost incurred on investing green practices at the initial stage” (46.6% of respondents) and “Lack of knowledge and information about green practices” (41.8%) were cited as the key barriers hindering businesses to adopt green practices.

More than half of the respondents would like the Government to facilitate the green business initiatives in Malaysia through: (i) Provide financial support and incentives as well as technical support (69.7% of respondents); and (ii) Provide more tax incentives and grants to develop urban agriculture using indoor-planting technology (56.1%).

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