MATURE GROWTH FOR MALAYSIAN COMPANIES

 

Kuala Lumpur, 28 Mar 2007 - Malaysia is ranked at a low 26 in the world for countries with super growth companies, a decline from last year’s eight position, according to a world league table released by the 2007 Grant Thornton International Business Report (IBR).

The Super Growth Index 2007, now in its fourth year, is a unique research project which forms part of the IBR which surveys more than 7,000 business owners from Medium to Large Enterprises (MLEs) worldwide in 32 countries.

In Malaysia, the survey was conducted by Shamsir Jasani Grant Thornton through research partners Experian Business Strategies and Harris Interactive.

“We should not necessarily consider that a drop in the number of super growth companies is a bad thing for an individual economy. Growth in employee numbers and turnover can only realistically be expected to grow rapidly for a limited time before responsible businesses take stock and review their growth strategies. What we might be seeing now is a consolidation in Malaysia with those super growth businesses of the last few years perhaps concentrating on profitability rather than simply on high levels of growth,” said Dato N.K. Jasani, Managing Partner of Shamsir Jasani Grant Thornton.

Malaysian companies were much more optimistic in 2005 and this was reflected in the 2006 survey. In 2006 our economic optimism declined and this is squarely reflected in our drop of super growth percentage from 22 per cent to 10 per cent which lead to the drop in position from 8 to 26 this year.

In the last one month the Malaysian Government has announced good number of positive measures. These include the removal of real property gains tax, liberalisation of foreign currency trading and the attractive and incentivised development of the Iskandar Region. The above has already been welcomed by business community and will likely be mirrored in the Super Growth Index 2008. A ‘super growth’ company is one which has grown considerably more than the average measured against key indicators including turnover and employment. Jasani emphasized the importance of the super growth companies. He elaborated that these are the enterprises that spearhead growth and expansion. It is the additional confidence, risk taking and investment that critically determine our incremental economic growth and well being in this competitive world. Last year’s booming economies of India and Hong Kong surged ahead to take joint second place, however this year Armenia (38%) has replaced India in second position. Indian companies suffered a dramatic drop to 14th in the table as the country’s proportion of super growth companies halved from 34% to 15%. Hong Kong - the other strong performer in 2006 has fallen out of the top ten this year – coming in at number 11. “Conversely, businesses in the Philippines and Russia could be considered as being in a different stage of their economic expansion with growth in employee numbers and turnover a component element of their emergence as global economies.”

 

For the third consecutive year, the US tops the Grant Thornton International Super Growth Index. 44% of US companies hit ‘super growth1’ status, an increase of 5% over the previous year. The Index measures the country with the highest proportion of “super growth” companies.

This year the survey established that:

Trends

• 63% of super growth companies believe globalisation presents more of an opportunity for their company, compared with 55% of all businesses in the survey
• super growth companies say the availability of a skilled workforce is considered to be a greater constraint than for companies in general (44% compared with 36%)
• red tape and regulation is another major concern for one in three (32%) super growth companies
• super growth companies are considerably less constrained in their ability to raise long-term finance with just 13% quoting this as a problem compared with 21% of companies overall.

Super growth companies are typically more positive on balance about their prospects than companies in general on a number of other indicators including: turnover - 87% compared with 70%; employment - 67% compared with 45%; and profitability – 66% compared with 52%.

“We are confident that the recent positive measures by the Government, if sustained will result in more super growth companies. We will then have as proven in the past surveys, greater revenue, employment, profitability and economic growth – all essential for the well being of our Rakyat,” concluded Jasani.

Ends