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 (24.5%), manufacturing (20.3%), professional and business services (12.0%), construction (9.7%), tourism, shopping, hotels, restaurants, recreation & entertainment (6.4%), and finance & insurance (5.8%), as well as others (21.3%).
• About 11.0% of the respondents are from “Large Enterprises” (according to annual turnover and number of full time employees).
• About 80.2% of the respondents are “Domestic” market oriented whereas the remaining 19.8% focus on “Both Domestic and Export” markets (12.0%) and “Export” market (7.8%).

Major survey questions and findings

The major survey questions are as follows :

I. Economic conditions in Malaysia in the 2nd half of 2016
• Marginal Improvement in Sales Performance of Businesses
• Slight Improvement in Production Volumes
• Relatively Unchanged Inventory Levels
• Unchanged Position in Terms of Collections from Customers
• Decrease in New Orders from Overseas Markets
• No Change in Level of New Local Orders
• Slight Increase in Local Sales Prices
• Employment Market Relatively Unchanged
• Slight Increase in 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 some improvement in the 2nd half of 2016

II. What were the major factors adversely affecting business performances in the 1st half of 2016 ?
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) Exchange Rate In a move to deepen and broaden onshore forex market, on 5 December 2016, Bank Negara Malaysia introduced a requirement for businesses in the export business of merchandise goods to convert seventy-five percent (75%) of their export proceeds to Ringgit Malaysia upon repatriation of the proceeds back to Malaysia. Further, Bank Negara Malaysia also liberalized and deregulated the onshore ringgit hedging market.
i. Some 25% of the respondents are involved in the business of exporting goods and services.
ii. Majority (91%) of respondents opined that the new foreign exchange initiatives by Bank Negara Malaysia is expected to give rise to costs of doing business.
iii.  Reason(s) for the expected rise in business costs:

• Additional administrative work and effort (64%).
• Keeping a pool of funds in foreign currencies acts as a form of natural hedge against adverse movement of foreign currencies versus RM when such adverse movement occurs (21%).
• Businesses do not have sufficient facilities / avenues to look for alternative mechanisms to hedge economically against adverse movement in exchange rates (20%).

iv.  Some 44% of respondents fear that RM will depreciate further against other major foreign currencies in the future, and another 42% believe that the exchange rate of RM against other currencies will continue to hover close to the current rates.

(B) Minimum Wage
(i) Effects on performance of your business :

• Performance of business significantly affected adversely (28%)
• Performance of business marginally affected adversely (46%)
• No adverse effects (26%)

(ii) Reaction by business :

• Pass on the cost increases to consumers (40%)
• Apply more cost cutting measures elsewhere more vigorously (27%)
• Adopt a wait and see approach (21%)
• Resort to further mechanization and automation (12%)

(C) Cost of Doing Business

• 61% of respondents expressed that their businesses had experienced significant increase in costs of doing businesses.
• 38% of the respondents claimed that they would face significant business difficulties in the future.
• Another 60% claimed that they would still be able to maintain their operations and business performance in their existing status.

(D) Cost and Difficulties in Hiring Foreign Workers
i. Majority of businesses（55%） did not rely on the use of foreign workers. Nonetheless, the % of respondents who had replied in the positive appear sizeable, being at 45%.
ii. Effects on businesses :

• An almost overwhelming 84% of respondents replied that their business have been and continue to be adversely affected by the difficulties mentioned above.

iii. Impact on businesses :

• Increase in cost of operations (52%)
• Decrease in business turnover (22%)
• Negative business growth (17%)
• Downsize of business (9%)

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

• Recruit more locals (35%)
• Adopt a wait and see while appealing to the Government to consider more business friendly measures with regards foreign workers (29%)
• Resort to mechanization and automation (20%)
• Pass on costs incurred to resolve worker shortage problem to customers (12%)
• Consider to move business to other countries (4%)

v. Difficulties in adopting mechanization and automation :

• Shortage of Capital (46%)
• Small Markets (33%)
• Not Able to Justify Investments (13%)
• Lack of Technical Knowhow (8%)

(E) Anti-Profiteering Mechanism

• Anti-profiteering regime has not had significant adverse impact by 70% of the businesses.
• 85% of the respondents are of the opinion that anti-profiteering mechanism should be abolished.

(F) Companies Act 2016

• Some 52% of the respondents are aware of the new Companies Act 2016.
• Majority (62%) of the respondents have begun to take steps to attempt to understand the requirements of the new Act.

(G) Increase of US Interest Rate i. Effects on businesses :

• 51% of respondents do not believe that it would have any effect. 33% believe that it would affect their business negatively, and the remaining 16%, believe that it might have positive effect.

ii. Some 81% of respondents believe that further rate hikes would take place in the US.

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