INTERNATIONAL BUSINESS REPORT (IBR) 2007 REVEALS KEY FINDINGS OF MALAYSIAN BUSINESS OWNERS

 

Kuala Lumpur 26 June 2007 – The Malaysia results from the 2007 Grant Thornton International Business Report (IBR) is released today at a launch event officiated by the Deputy Finance Minister I Dato’ Dr. Ng Yen Yen.

The survey in Malaysia is conducted by Shamsir Jasani Grant Thornton, which marks the country’s second participation in the global survey. As the only survey of its type, the IBR 2007 examines the attitudes, plans and trends of 7,200 businesses in 32 countries across six continents that include all G8 and the majority of the World Bank’s top 20 economies which account for 81% of global GDP.

Key findings released in the survey today include economic prospects and business expectations for 2007, constraints on business growth and expansion, international trade and stress among business owners.

“As the Report explores key issues such as the economic prospects, business expectations, operating in foreign markets, importing and exporting trends and stress among business owners, the positive view by more than half of the survey respondents is an indication of the public’s high level of confidence towards Government’s initiative and may help in formulating relevant Government policies.”

“In this respect, joint efforts between the Private Sector organisations like Grant Thornton and the Government can help spur the nation’s business environment as well as encourage more investments and more jobs for Malaysians,” said Dato’ N. K. Jasani, Managing Partner, Shamsir Jasani Grant Thornton.

 

Economic Prospects for 2007

This year’s survey reveals that Medium to Large Enterprises (MLEs) around the world are considerably more optimistic about the prospects for their economies in 2007. Businesses in East Asia (this term refers to mainland China, Hong Kong, Japan, Malaysia, Philippines, Singapore, Taiwan and Thailand) are more optimistic than in any other global region, and although levels of optimism do vary throughout the East Asian countries/territories, overall optimism has risen significantly.

Malaysia’s confidence index has gone up from 36% in 2006 to 38% this year, citing a balance percentage with global average of 45%. Whilst the confidence level in Malaysia has increased slightly, it has fallen considerably behind its ASEAN ‘(Association of Southeast Asian Nations)’ neighbours namely Singapore and Philippines but not Thailand as its balance percentage is below Malaysia at 30%. Malaysia’s balance percentage is much lower when compared to the two giant economies in Asia with India leading at 97% and mainland China closely following at 85%. When comparing the balance percentage, Malaysian MLEs are more optimistic on selling prices and turnover as compared to the global and East Asian averages. However, the Malaysian MLEs are less optimistic as compared to the other two averages when it comes to creation of new employment.

 

Business Expectations for 2007

Prospects of another year of robust global economic growth underpin positive expectations for turnover, selling prices, employment, profitability and investment in many countries.

Malaysian businesses are generally more optimistic about their business prospects for the year, recording the strongest expectations for turnover/revenue (+77) as compared to (+58%) in 2006. Their levels of optimism regarding turnover performance are considerably above East Asia (+68%) in general and the global average (70%).

 

Constraints on business growth

Lack of availability of a skilled workforce is the constraint restricting expansion for more businesses in Malaysia (34%) than any other factor. All these factors are far more of an issue for businesses in East Asia and globally than for Malaysian businesses. Only cost of finance is cited as a constraint for more businesses in Malaysia (28%) than businesses globally (23%).

 

Stress among business owners

This year the proportion of business owners in Malaysia reporting an increase in stress levels is almost identical to 2006. 64% report that they have experienced a rise in stress levels, compared to a global figure of 56%. In order to gain insight into how business owners manage stress, we also asked about how many hours they work a week. On average, business owners in Malaysia work 50 hours per week, slightly lower than the global average of 53 hours.

 

International trade

The proportion of Malaysian companies exporting has increased in the last year. 44% of Malaysian companies now export 7% more than last year. This is significantly higher than both the East Asian average (30%) and the global average (34%), both of which have fallen slightly since 2006.

 

Globalisation

Malaysian businesses are much more likely to see globalisation as an opportunity than a threat to their business with 74% viewing it as an opportunity and just 8% viewing it as a threat. Businesses in East Asia as a whole are more likely to see globalisation as a threat (17%) compared to Malaysian businesses. Businesses globally are much less likely to see globalisation as an opportunity (55%) compared to businesses in Malaysia.

 

Impact on cost pressures

Over half of all Malaysian businesses (52%) expect raw material costs to have a major impact on their cost pressures over the coming year. Cost pressures are above the East Asia and global average in all areas except for staff costs (33%). A considerable proportion of Malaysian businesses also expect transportation costs to have a major impact – 47% compared to only 31% in East Asia as a whole.

 End.