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 (30.1%), manufacturing (18.4%), professional and business services (10.1%), construction (9.3%), real estate (6.8%), and tourism, shopping, hotels, restaurants, recreation and entertainment (6.8%), as well as others (18.5%).
• About 14.2% of the respondents were from “Large Company” (according to annual turnover and number of full time employees).
• About 78.1% of the respondents were “Domestic” market oriented whereas the remaining 21.9% focused on “Both Domestic and Export” markets (12.3%) or ‘Export’ market (9.6%).

Major survey questions and findings

The major survey questions are as follows :

1) Was the Malaysian economy deteriorating, remaining unchanged or growing in the 1st half of 2015 ?
• Decline in Sales Performance
• Drop In Production Volumes
• Slightly Decrease in Inventory levels
• Poorer Collections from Customers
• No Change in New Orders from Overseas Markets
• Drop in New Local Orders
• Reduction in Local Sales Prices
• Employment Market Relatively Unchanged
• Wage Costs Per Unit of Output Relatively Unchanged
• Persistent Low Capacity Utilization Levels
• Slightly More Respondents Choosing to Reduce Investments in New Resources or Plant The Malaysian economy was seen to have experienced weaker growth in the 1st half of 2015

2) What were the major factors adversely affecting business performances in the 1st half of 2015 ?
i. Government Policies
ii. Increase in Operating Cost and Price of Raw Materials
iii. Increase in Domestic Competition
iv. Domestic Political Situation

3) Is the Chinese business communities optimistic or pessimistic about the Malaysian economic outlook ?
Overall, the Chinese business community is more pessimistic about the economic outlook for Malaysia for 2015, 2016 and 2017. Some measure of reversal and improvement is expected in 2017.

4) Current issues facing the Chinese businessmen in relation to trade, investment and industrial development in Malaysia.

(A) Cost of Doing Business

• An overwhelming 71% of respondents complained that their businesses had experienced significant increase in costs of doing businesses.
• 53% of respondents claimed that they would face significant business difficulties in the future; another 42% opined that they would still be able to maintain their operations and business performance in their existing status.
• 39% of the respondents believed that they had some from of solutions to mitigate the effects of rising costs.
• A significant proportion of respondents (61%) claimed that they would be able to pass on the effects of rising costs onto the customers or end-users.

(B) World Prices of Commodities

(a) Will the increase of natural gas price bear any significant impact on the performance of your business ?

• 63% of the respondents claimed that they would be adversely affected by the rise in the natural gas price.

(b) Prices of commodities remained weak in the 1st half of 2015. Will this trend continue into next six months ?

• A slight majority (53%) expressed the belief that prices of commodities would continue to remain weak in the future.

(c) If the prices of commodities begin to rise in the near future, how would your business be affected ?

• A large majority of respondents (64%) claimed that their businesses would be negatively affected.

(C) GST Impact

(a) Does the implementation of GST have any effect on the sales performance of your business ?

• An overwhelming majoirty (90%) of respondents advised that since the implementation of Goods and Services Tax (GST) in Malaysia, businesses had experienced decrease in sales.

(b) If your answer in part

(a) was “Experienced sales decrease”, what is the estimated % change experienced ?

• The average decrease in sales experienced ranged from 6% to 17%, with businesses that dealt with international trade experiencing the lowest effect and businesses in the real estate sector experiencing the greatest effect.

(c) Does the implementation of GST have any effect on your profit margin ?

• The majority of businesses (67%) see that their profit margins have shrunk.

(d) Since the implementation of GST, are you now clear on the requirements and rules on GST ?

• The majority of the respondents (67%) have maintained that to date, they do not fully understand the workings of GST and how it affects their businesses, whilst some 16% are still unclear.

(e) Have you ever approached the Royal Malaysian Customs Department for clarification of any doubt on the GST implementation ?

• A significant majority of respondents (69%) have approached the Royal Malaysian Customs Department (RMCD) staff for clarification and assistance. The balance 31% have enquired with their tax agents / consultants.

(f) If you had approached the Royal Malaysian Customs Department on any query, do you receive clear and definite answer ?

• The majority of respondents (58%) have found the explanations to be partially clear. 35% found the explanations unclear.

(g) In your encounter with any officer from the Royal Malaysian Customs Department or Ministry of Domestic Trade, Co-Operatives and Consumerism during the implementation of GST, what is your opinion of the attitude of the officer ?

• An overwhelming majority (87%) of the respondents have found the staff of RMCD and Ministry of Domestic Trade, Co-Operatives and Consumerism (KPDNKK) to be friendly, helpful and professional in their conduct when providing guidance and advice to businesses.

(D) Ringgit Depreciation

(a) Do you expect Ringgit Malaysia to continue weakening in the coming months ?

• Given the political situation in Malaysia and the economic conditions worldwide (and in Malaysia), almost all respondents (93%) opined that Ringgit Malaysia would continue to weaken in the coming months.

(b) If you are an importer, has the depreciation of Ringgit Malaysia affected your selling prices ?

• 93% of respondents claimed that their selling prices had to be increased as the costs had increased.

(c) If you are an exporter, how has the depreciation of Ringgit Malaysia affected your exports ?

• The majority of businesses (60%) had benefited from the depreciation of RM as they earned more after converting foreign currencies received from customers to RM.

(E) The “One Belt One Road” and “Asian Infrastructure Investment Bank” Initiatives

(a) How much do you understand about these initiatives ?

• Only 17% of the respondents expressed understanding of the initiatives. The rest either had partial understanding or did not understand at all.

(b) Can our country and our businesses benefit from these initiatives ?

• 43% of respondents felt that the abovementioned initiatives could benefit us. 57% of the respondents were not sure. Only 12% did not see any possible benefits.

(F) Real Property Issues

(a) Do you think the property sector in Malaysia is in an over-built situation ?

• A great majority of the respondents (91%) believed that the current property market is in an over-built position.

(b) Recently there is a slowdown in the property sector, do you think this trend will continue in the near future ?

• 84% of the respondents do not believe that the property market slowdown would recover in the near future.

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