EXECUTIVE SUMMARY
Significance of the survey

• To assist the Government in gauging the economic situation facing the Chinese business community.
• To collect feedback and opinions on various measures undertaken by the Government to enable them to evaluate the effectiveness of those measures.
• This 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 are mainly from wholesale and retail trade (21.9%), manufacturing (16.4%), professional and business services (11.6%), tourism, shopping, hotels, restaurants, recreation & entertainment (10.0%), construction (9.4%), real estate (7.0%), finance & insurance (5.5%), as well as others (18.2%).
• About 10.3% of the respondents are from “Large Enterprises” (according to annual turnover and number of full time employees).
• About 73.3% of the respondents are “Domestic” market oriented whereas the remaining 26.7% focus on “Both Domestic and Export” markets (18.5%) and ‘Export’ market (8.2%).

Major survey questions and findings

The major survey questions are as follows : 

I. Economic conditions in Malaysia in the 1st half of 2017
• Marginal Drop in Sales Performance of Businesses
• Marginal Drop in Production Volumes
• Relatively Unchanged Inventory Levels
• Unchanged Position in Terms of Collections from Customers
• Unchanged Level of New Orders from Overseas Markets
• Slight Improvement in Level of New Local Orders
• Relatively Unchanged Local Sales Prices
• Employment Market Relatively Unchanged
• Relatively Unchanged Level of Wage Costs Per Unit of Output
• Slight Increase in Capacity Utilisation Levels
• Unchanged Level of Investments in New Resources or Plant

The Malaysian economy was seen to have experienced a slight improvement in the 1st half of 2017

II. What were the major factors adversely affecting business performances in the 1st half of 2017 ?
i. Government Policies
ii. Increase in Operating Costs and Prices of Raw Materials
iii. Increase in Domestic Competition
iv. Manpower Shortage

III. The Chinese business community optimistic or pessimistic about the Malaysian economic outlook ?
The Chinese business community is slightly more optimistic about the economic outlook for 2017 and 2018, with continued improvements expected come 2019.

IV. Current issues facing the Chinese businessmen in relation to trade, investment and industrial development in Malaysia. 
(A) Cost and Difficulties in Hiring Foreign Workers
i. Significant proportion of respondents (62.9%) had foreign workers as part of workforce in their business.
ii. Effects on businesses:The majority of respondents (60%) replied that their businesses have been and continue to be adversely affected by the difficulties mentioned above.
iii. Impact on businesses:

• Increase in cost of operations (66%)
• Decrease in business turnover (32%)
• Negative business growth (30%)
• Downsize of business (20%)

iv. Plans to solve this problem of difficulty in hiring foreign workers:

• Recruit more locals (48%)
• Adopt a wait and see while appealing to the Government to consider more business friendly measures with regards foreign workers (37%)
• Pass on costs incurred to resolve worker shortage problem to customers (28%)
• Resort to mechanization and automation (23%)
• Terminate current business and move to other less labour intensive business (8%)
• Consider to move business to other countries (4%)

v. Difficulties in adopting mechanization and automation:

• Shortage of Capital (54%)
• Small Markets (39%)
• Lack of Technical Knowhow (29%)
• Not Able to Justify Investments (18%)

vi. The majority of respondents (67%) appear to be unaware of the new requirements surrounding the process for application for new foreign workers.

(B) Registration for E-Kad and Rehiring Programme
i. A sizeable majority of respondents (66.7%) maintained that they had difficulties in registering their foreign workers for E-Kad.
ii. Majority of respondents (74.8%) sought the consideration of the Government to extend the deadline for such registration requirement.
iii. Government should consider the appeal by businesses for the recruitment of foreign workers to be permitted beyond the five selected economic sectors (being consturction, plantation, services, manufacturing and agriculture)
iv. The costs incurred arising from the Rehiring Programme have contributed to the rise in costs of doing business (67.4%)
v. Appeal that the Government considers reducing the registration fees (91%)
vi. Appeal that the duration for the rehiring process be reduced through further efforts to streamline the process (85%)

(C) Tourism Tax
The majority of respondents:

• Are not supportive of the new Tourism Tax (85%)
• Believe that it will have a negative effect on the tourism industry in Malaysia (80%)
• Fear that this represents additional burden and costs on accommodation operators, thus fearing that room rates would rise to meet such rise in costs (79%)

(D) Digitization of the Malaysian Economy
Majority of businesses (90%) have expressed some measure of interest to know more and attempt to keep abreast with the developments in relation to Information and Communication Technology (ICT). Some 59% of respondents advised that their business has sales generated via e-commerce, denoting increasing awareness and adoption of new ICT in business. Majority of businesses are indeed aware of the benefits to be derived by businesses having a website (67%). Majority of businesses (62%) that have not made use of ICT are willing to consider investing to ensure that their business use up to date ICT. 53% of respondents believing that infrastructure at the national level is ready to support the digital transformation in Malaysia.

(E) The Belt and Road Initiative (BRI)
i. Majority of respondents (71%) believe that BRI would bring positive results to the Malaysian economy.
ii. Some 47% of respondents believe that their businesses would benefit from BRI.

(F) Miscellaneous
An overwhelming majority of respondents (94.5%) believe that inflation rate in Malaysia will continue to rise in the future. The majority of respondents (74.7%) predict that interest rates would increase as a consequence of the expected rise in inflation rates.

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