Malaysian ranks top 10 for super growth companies in the world

 

14 March 2006. Malaysia is ranked among the top 10 countries with super growth companies, according to a world league table released today from the 2006 Grant Thornton International Business Owners Survey (IBOS). Malaysia took the 9th spot among the 30 countries surveyed.

The Super Growth Index 2006, now in its third year, is a unique research project which forms part of the IBOS which surveys more than 7,000 business owners from medium to large enterprises (MLEs) worldwide in 30 countries. In Malaysia, the survey is a joint collaboration between Shamsir Jasani Grant Thornton and ECM Libra Berhad.

“The relatively good position of Malaysian MLEs in the survey, ahead of its ASEAN neighbours is certainly worth noting,” said Dato’ N. K. Jasani, Managing Partner of Shamsir Jasani Grant Thornton.

Dato’ Jasani added that the position reflects the much greater responsiveness and efficiencies of the MLEs in Malaysia compared to the overall economy where Malaysia’s growth rate of 5.5% is about the average.

“The survey confirms that Malaysia’s investment climate compares favourably with the Asian counterparts,” said Dato’ Kalimullah Hassan, Executive Chairman and Co-CEO of ECM Libra Berhad.

“The move by the government to liberalise the foreign exchange administration rule on 1 April 2005 will help further enhance business environment and promote wider option in choices of investment in this country. Going forward we hope the government will take further active steps to reduce the regulatory burdens and streamline the operating environment, with the objective of raising investment and growth,” he added.

An interesting correlation for the countries at the top of the Super Growth league is that these countries have liberalised or have existing liberal rules for businesses. Malaysia, and even more so for countries at the bottom of the tally, should take affirmative action to reduce rules and regulations for businesses.

For the second consecutive year, the US tops the Grant Thornton International Super Growth Index, for the country with the highest proportion of “super growth” companies (39%). Despite scoring the highest ranking, however, the proportion of super growth companies in the US actually fell by 9%.  In contrast, the booming economies of India and Hong Kong surged ahead to take joint second place. With more than a third of companies (34%) achieving super growth status, both countries were within reach of challenging the US for the top slot on the Index.

A ‘super growth’ company is one which has grown considerably more than the average measured against key indicators including turnover and employment.  This year the survey established that super growth companies are 23% more likely to export than ordinary companies. Also, super growth companies were far less constrained by the ability to finance expansion of their business.  For example, cost of finance was an issue for 50% more ordinary companies than super growth companies; as was shortage of working capital (47%); and shortage of long term finance (58%). Said Dato’ N K Jasani, Managing Partner of Shamsir Jasani Grant Thornton, "The US continues to perform relatively well, reflecting the inherent dynamism of its economy which saw buoyant consumer demand, strong capital investment and robust export growth. But the real story is the continuing rise of Indian and Hong Kong companies, as their economies boom and productivity continues to surge. On current trends, there is every chance that we could see a change in the top ranking next year. The other interesting finding is that super growth companies appear to have a competitive advantage as they are not constrained by access to expansion finance.” Italy, Russia and Turkey jointly shared the bottom position in the Super Growth Index. Italy’s rank appears to reflect the sustained malaise affecting the economy with weak consumer demand, falling investment and shrinking industrial output.

 

Super growth companies are very positive about prospects for their business. A balance of *36% predict increasing the selling price of their goods and services compared to *29% of companies in general. Super growth companies are also a third more positive about increasing the level of exports this year (32% compared to 20%) and are looking to make greater investments in their businesses (37% compared to 28% investing in new buildings; 51 % compared to 43% investing in new plant and machinery).

Mainland China was included in the Index for the first time this year – and came in 14th position, with 14% of its companies classified as super growth.  It will be hard for Mainland China to achieve greater super growth status until more MLEs experience rapid expansion arising from business liberalisation, reducing red tapes and the acceptance of greater role and status for private equity. Mainland China joined Germany (15%) and Japan (15%) in mid-table.

*note: the figure is the percentage balance of the respondents who are optimistic and those who are pessimistic.