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 (22.6%), manufacturing (21.0%), professional and business services (16.2%), construction (8.5%), tourism, shopping, hotels, restaurants, recreation & entertainment (8.2%), transportation, forwarding and warehousing (5.1%), real estate (4.4%), finance & insurance (4.1%), as well as others (9.9%).
• About 10.8% of the respondents are from “Large Enterprises” (according to annual turnover and number of full time employees).
• 74.6% – “Domestic” market oriented
• 10.8% – “Export” market oriented
• 14.6% – “Both Domestic and Export” markets oriented

Major survey questions and findings

The major survey questions are as follows :

I. Economic conditions in Malaysia in the 2nd half of 2017
• Improvement in Sales Performance of Businesses
• Improvement in Production Volumes
• Slight Increase in Inventory Levels
• Unchanged Position in Terms of Collections from Customers
• Improvement in Level of New Orders from Overseas Markets
• Relative Unchanged Position in Level of New Local Orders
• Relatively Unchanged Local Sales Prices
• Employment Market Relatively Unchanged
• Marginal Increase in Level of Wage Costs Per Unit of Output
• Capacity Utilisation Levels Rising
• Unchanged Level of Investments in New Resources or Plant

The Malaysian economy was seen to have experienced a slight improvement in the 2nd half of 2017

II. What were the major factors adversely affecting business performances in the 2nd 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. Is 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 2018, with continuous improvements expected in 2019 and 2020.

IV. Current issues facing the Chinese businessmen in relation to trade, investment and industrial development in Malaysia. 
(A) Employment Insurance System (EIS)
i. Some 50% of respondents were still in the process of completing the registration process of their employees for the newly implemented Employment Insurance System (EIS).
ii. A significant majority of the respondents (83%) replied that they were aware of the new requirement for employers to contribute for the benefit of employees who may be retrenched. They were aware of the contribution rate of 0.2% each by employer and employee, of the monthly salary (up to a ceiling of RM4,000).
iii. Majority of respondents (62.8%) indicated that their employees noted the need to contribute to EIS.
iv. 40% of respondents may have plans for ‘retrenchment’ due to the rising labour cost.
v. Some 25%  of such respondents indicated that they were ‘unsure’ of the % of staff strength to be reduced.

(B) Rise in Price of Gas
i. About 46% of respondents opined that their costs of doing businesses would be expected to be adversely affected.
ii. For those respondents who forecast that the businesses would be adversely affected, the expected corresponding effect on their costs centres mostly in the 5 – 10% range (34.6%) and 10 – 20% range (34%).

(C) Digital Free Trade Zone and e-Hub
i. The majority of businesses expressed some measure of interest to know more and keep abreast with
a. The developments in Information and Communication Technology (ICT) (some 79%)
b. the developments and initiatives promoted in MDEC and the launch of DFTZ (some 75%)
ii. Some 52% of respondents advised that sales generated via e-commerce contributed to less than 10% of total sales, denoting significant opportunities and scope for leveraging on technology and ICT in businesses.
iii. Majority of businesses are indeed aware of the benefits to be derived by businesses having a website (65%).
iv. Majority of businesses (58%) that have not made use of ICT may not consider investing in up to date ICT to improve on business performance.
v. Majority of respondents (60%) indicated interest to participate in e-Hub initiatives, DFTZ and Electronic World Trade Platform (e-WTP).

(D) Fourth Industrial Revolution (IR 4.0)
i. 50% of respondents are not aware of IR 4.0.
ii. Some 30% of respondents expressed optimism about the effects of IR 4.0.
iii. Only some 40% of respondents forecast that some measure of investments would be made by the businesses to take advantage of IR 4.0.
iv. Some 45% of respondents are uncertain of their next course of action, consistent with their lack of knowledge about IR 4.0.

(E) Property Sector Majority (60%) of respondents expressed that the current downturn in the property market has negative effects on Malaysian economy, impacting several domestic industries.

(F) Tax Matters

• Some 73% of respondents believed that they need to set aside a greater portion of their cash balances for possible increase in tax liabilities for past submissions.
• The majority of respondents (59%) replied that they were aware that the rate of penalty imposed by LHDN for arrears of tax has been increased to 100%.

(G) Miscellaneous

• An overwhelming majority of respondents (92%) believe that inflation rate in Malaysia will continue to rise in the future.
• The majority of respondents (84%) predict that interest rates would increase as a consequence of the expected rise in inflation rates.
• Various incentives and measures were included in Budget 2018 to assist SMEs in the businesses. The level of awareness among respondents was almost evenly mixed, between those aware (51%) and those not aware (49%).

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