ACCCIM SURVEY REPORT ON ECONOMIC SITUATION OF MALAYSIA FOR THE 1ST HALF OF 2013
EXECUTIVE SUMMARY
Significance of the survey
– To assist the Government in gauging the economic situation facing the Chinese business community.
– To collect feedback and opinion on various measures undertaken by the Government to enable them to evaluate the effectiveness of those measures
– This study would be helpful to the Government either in making adjustments to the existing policies or in the formulation of new policies.
– The results from the survey also provide a basis for ACCCIM to submit relevant memoranda to the Government and serve as a reference for the business community and foreign investors in formulating investment plan and strategy.
Profile of respondents
– The respondents were mainly from wholesale and retail (32.7%), manufacturing (20.4%), professional and business services (10.7%), construction (6.9%), finance and insurance (5.4%), real estate (5.1%), and tourism, shopping, hotels, restaurants, recreation and entertainment (5.1%) as well as others (13.8%).
– About 19% of the respondents were from Non-SMEs (according to annual turnover and full time employees)
– About 83% of the respondents were domestic market oriented whereas the remaining 17% focused on “both domestic and export” markets (11%) or ‘export’ markets (6%).
Major survey questions and findings
The major survey questions are as follows :
i. Was the Malaysian economy deteriorating, remaining unchanged or growing in the 1st half of 2013 ?
– Slight Deterioration in Sales Performance
– Slower Increase in Production Volume
– Inventory Levels Somewhat Unchanged, Albeit Lower
– Slightly Poorer Collections from Customers
– Decrease in New Orders from Overseas Markets
– New Local Orders Inch Up
– Slight Deterioration in Local Sales Prices Performance
– Employment Market Relatively Unchanged
– Wages Cost Per Unit of Output Were Generally Stable
– Relatively Unchanged Capacity Utilization
– Wait-and-See in Investment in New Resources or Plant
The Malaysian economy was seen to have experienced little growth in the 1st of 2013
ii. What were the major factors adversely affecting business performances in the 1st half of 2013 ?
– Government policies
– Manpower shortage
– Domestic competition
– Increase in operating cost and price of raw materials
iii. Is the chinese business communities optimistic or pessimistic about the malaysian economic outlook ?
– Overall, the chinese business community is generally optimistic about the economic outlook for Malaysia for 2013, 2014 and 2015.
iv. Current issues facing the chinese businessmen in relation to trade, investment and industrial development in Malaysia.
(I) Employees’ Provident Fund (EPF)
(a) The EPF has proposed that given the increase in retirement age to 60 years, the EPF contributions should revert back to the original 11% (employee) and 12 % (employer). The pervious requirement is that employees above 55 years of age need only contribute half the amount. How would this proposal affect your firm’s performance?
– Majority of businesses have accepted the need to make such adjustments in the EPF contribution rate, given the change in the retirement age to 60 for the private sector.
(b) Do you feel that your business would need ample time to comply with this EPF proposal?
– Some 58% of businesses have expressed their desire for the authorities to provide them ample time to make adjustments to comply with this new requirement as they believe that their costs would be impacted.
(II) Property Sector
(a) Budget 2013 includes increase in tax rates under Real Property Gains Tax (RPGT) for disposals of real properties within five years of acquisitions. Given the events that have taken thus far since the Budget 2013 announcement, do you think this change is sufficient to curb speculative activities in the property sector ?
– The majority of the respondents believe that the increase in tax rates for RPGT is a step in the right direction and would have positive effect in controlling speculation.
– 52.3% of respondents were of the opinion that the change in RPGT rates were likely to be able to curb speculative activities, whereas 25.8% of respondents opined that the change in tax rate would have no effect whatsoever.
(b) Do you think the price of properties in Malaysia will continue its upward trend ?
– Property prices likely to continue its upward trend.
– Many respondents (72.2%) did not foresee that property prices would trend downwards in the near future.
(III) Cheque Processing Fee
(a) Bank Negara Malaysia announced in March 2013 that effective 1st April 2014, banks will charge a cheque processing fee of 50 sen on the issuer of the cheque. Are you supportive of the move ?
– Businesses (88%) have responded that they are not in favour of such a move and have expressed their regret that they would be forced to absorb such cost.
(IV) Goods and Services Tax (GST)
(a) The Malaysian government has plans to implement the GST. What rate of GST do you think is the most appropriate?
– Majority of businesses have advocated to start the GST from a low rate, with some 55% of respondents prefering a rate of 3%.
(b) What learning period should be provided to the firms before any punitive action is taken ?
-The majority of respondents (close to 50%) have prefered a familiarization period of two (2) years or more before the authorities start to take steps to ensure compliance with the GST requirements.
(V) Internationalisation Issues
(a) The Malaysian Does your firm have plans to expand business abroad ?
– Some 40% of respondents have indicated that they have plans to spread their business activities abroad.
(b) Have you benefited from the Free Trade Agreements signed by Malaysia with other countries, such as ASEAN FTA, ASEAN-CHINA FTA & etc. ?
– The majority of the businesses (67.1%) have not benefited from the FTAs concerned. (c) Myanmar & Cambodia have opened their market. Do you have plans to expand to these markets ?
– Some 33% of respondents have indicated interest to expand businesses into these two countries, with a few group already having some form of presence in the countries concerned.
(d) Do you support Malaysia signing Trans-Pacific Partnership Agreement (TPPA) ?
– Around 35% of respondents have indicated their support for TPPA, while 13% of respondents disagree that Malaysia ought to be part of TPPA arrangement. The majority of respondents (52% of respondents) have claimed that they are not aware of or familiar with TPPA.
