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 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 (26.7%), manufacturing (23.7%), professional and business services (11.7%), construction (11.2%), real estate (6.0%), and telecommunications and information technology (4.7%), as well as others (16.0%).
• About 14.5% of the respondents are from “Large Enterprises” (according to annual turnover and number of full time employees).
• About 76.1% of the respondents are “Domestic” market oriented whereas the remaining 23.9% focus on “Both Domestic and Export” markets (13.4%) and “Export” market (10.5%).

Major survey questions and findings
The major survey questions are as follows :

I.    Economic conditions in Malaysia in the 2nd half of 2015

•    Marginal Improvement in Sales Performance of Businesses
•    Marginal Improvement in Production Volumes
•    Relatively Unchanged Inventory Levels
•    Unchanged Position in Terms of Collections from Customers
•    No Change in New Orders from Overseas Markets
•    Unchanged Level of New Local Orders
•    Reduction in Local Sales Prices
•    Employment Market Relatively Unchanged
•    Slight Rise in Wage Costs Per Unit of Output
•    Persistent Low Capacity Utilisation Levels
•    No Significant Change in Investments in New Resources or Plant

The Malaysian economy was seen to have experienced deterioration in the 2nd half of 2015

II.    What were the major factors adversely affecting business performances in the 2nd half of 2015 ?
i.    Government Policies
ii.    Increase in Operating Cost and Price of Raw Materials
iii.    Domestic Competition
iv.    Drop in Foreign and Domestic Demand

III.    Is the Chinese business communities optimistic or pessimistic about the Malaysian economic outlook ?

Overall, the Chinese business community is pessimistic about the economic outlook for Malaysia for 2016 and 2017. Some measure of reversal and improvement, however, is expected in 2018.

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

(A)    Cost of Doing Business

• An overwhelming 88% of respondents expressed that their businesses had experienced significant increase in costs of doing businesses.
• 46% of the respondents claimed that they would face significant business difficulties in the future. Another 50% opined that they would still be able to maintain their operations and business performance in their existing status.
• 44% of the respondents believed that they had some form of solution to mitigate the effects of rising costs.
• 56% claimed that they would be able to pass on the effects of rising costs onto customers or end-users.

(B)    GST Impact

(i)    How well did you cope with the implementation of GST ?

• The majority (56%) of respondents advised that since the implementation of Goods and Services Tax (GST) in Malaysia, businesses had experienced decrease in sales.

(ii)    How was your profit margin after the implementation of the GST ?

• Majority of the businesses (60%) continued to lament that their profit margins had shrunk.

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

• There was still a significant majority of the respondents (68%) who maintained that to date, they did not fully understand the workings of GST and how it affected their businesses, whilst some 10% were still unclear.
• Many of the respondents still required assistance from their tax agents and accountants to better understand the workings of GST.

(C)    Cost of Hiring Foreign Labour

(i)    Does your firm rely significantly on the use of foreign workers ?

• Majority of businesses (64%) did not rely on the use of foreign workers. Nonetheless, the % of respondents who had replied in the positive remained sizeable, being at 36%.

(ii)    Would the increase in costs of hiring foreign workers affect your firm’s performance ?

• Some 64% of the respondents replied that their business would be adversely affected, with 36% of the overall respondents stating that the effect would be significantly adverse on their business, if the cost concerned were to increase.

(iii)    Plans to resolve this problem of increase in cost of hiring foreign workers ?

• An overwhelming majority (78%) of the respondents expected to be adversely affected by the increase in costs plan to resort to ‘mechanisation’ and ‘automation’.

(iv)    If you want to adopt mechanization and automation, what are the difficulties that you expect to face ?

• Shortage of Capital (48%)
• Small Market (40%)
• Lack of technical know-how (12%)

(D)    Ringgit Depreciation

(i)    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 (82%) opined that Ringgit Malaysia would continue to weaken in the coming months.

(ii)    If you are an importer, has the depreciation of Ringgit Malaysia affected your sales ?

• 84% of the importers claimed that the exchange rates movements had caused their sales to decrease.

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

• Some 43% of the exporters reported that their businesses had benefited from the depreciation of RM as they earned more after converting foreign currencies received from customers to RM.
• 42% of the exporters were forced to lower their selling prices in foreign currency significantly to the extent that they received less returns after converting back to RM.

(iv)    Would you delay your investment as a result of the sharp depreciation of the ringgit ?

• 80% of the respondents planed to delay their investments as a result of the depreciation of Ringgit Malaysia.

(E)    International Trade

(i)    How much do you understand about ASEAN Economic Community (AEC), the “One Belt, One Road”, Asian Infrastructure Investment Bank (AIIB) initiatives and Trans-Pacific Partnership Agreement (TPPA) ?

• Around 10% of the respondents expressed understanding of the initiatives. The rest either had partial understanding or did not understand at all.

(ii)    Can our country and our businesses benefit from these initiatives arising from better business opportunities ?

• About half of the respondents were unsure that the country and their businesses would benefit from AEC, One-Belt-One-Road plan, Asian Infrastructure Investment Bank and TPPA.

(F)    Others

(i)    Do you think the Malaysian property sector will deteriorate further in 2016 ?

• A 83% of respondents believed that the property sector would continue to be depressed in 2016

(ii)    Do you think interest rates will rise in 2016 ?

• 81% of respondents forecasted that interest rates would rise in 2016, with 71% of all respondents forecasting that there would be negative effects on their businesses.

(iii)    Do you think inflation rate will rise in 2016 ?

• 87% of respondents anticipated that the inflation rate for Malaysia would rise in 2016.

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