GROWTH OF BRIC ECONOMIES BOOSTS BUSINESS WORLDWIDE

 

• Businesses capitalising on opportunities in the world’s fastest growing economies

According to results published today from the Grant Thornton International Business Report (IBR), Medium to Large Enterprises (MLEs) are now starting to capitalise seriously on opportunities to trade with the fast-growing BRIC economies (Brazil, Russia, India and China). These countries are expected to represent 44% of global GDP by 2050. Far from being a threat, the growth of Brazil, Russia, India and China has been positive for businesses over the last two to three years. The survey explores the views of 7,200 business leaders in 32 countries and represents 81 per cent of global GDP.

In the case of Malaysia, the results suggests that local MLEs view positively the challenges arising from the fast economic expansion in the BRIC countries with focus on the expansion in China and India. This is reflected with Malaysia ranking amongst the top 10 exporters to the BRIC countries.

The top exporters** to the BRIC countries are:

	Mainland China		India	Russia	Brazil
Italy	23%		18%	27%	18%
Spain	18%			17%	18%
Philippines	24%		15%	16%	16%
USA	20%		13%		12%
Armenia				22%
Poland				19%
Singapore	28%		17%
Hong Kong	45%		14%
Malaysia	18%		13%
Taiwan	25%

Dato' N K Jasani, Managing Partner of Shamsir Jasani Grant Thornton said:

“Businesses are increasingly finding ways of doing business with the fast-expanding boom economies of the BRIC countries. It is no longer just the huge multinationals who are finding ways of taking advantage of the BRIC phenomenon – which has to be good news for the global economy.”

Of all the BRIC countries, economic expansion in mainland China has had the greatest impact on all MLEs around the globe with a positive balance* of +12%, over the past two years. Malaysia joins other Asian countries at number six with a positive balance of 23% with Hong Kong, Singapore, Philippines and Taiwan having more positive impact on their businesses from the economic expansion in China. (Refer to chart on ECONOMIC EXPANSION – Mainland China)

Malaysian MLEs also view positively the similar impact from India. Malaysia is ranked at number four with a positive balance of 17% for India. (Refer to chart on ECONOMIC EXPANSION – India)

Dato' Jasani continued: “It is particularly good news that Malaysian businesses are focusing on these opportunities. However, we believe there are further opportunities than those currently being exploited – and it will be critical for MLEs to continue engaging in these markets if they want to stay competitive.”

“Our Government’s initiative for palm oil and agri-industries, greater tourism promotion in 2007 and liberalisation on foreign residential property ownership will enable us to tap into the continuous growth of China and India. As additional measure our Government could organise trade and investment forums in major cities of the BRIC countries.”

Both Russia and India share second place in the survey at +8%, followed by Brazil at +5%. The positive impact of mainland China on MLEs has doubled in the past year, rising from +6% in last year’s survey.

Optimism among MLEs is very strong in the BRIC countries. Indian business owners are the most optimistic in the world and those in mainland China are the third most optimistic. Business owners in Brazil and Russia are also more confident about their countries’ economic prospects than the global average. 82% of Indian business owners consider globalisation to be more of an opportunity than a threat for their businesses compared to Brazil at 69%, mainland China at 71% and Russia at 30%. Malaysia ties with Singapore in the third slot at 74%, as both countries find globalisation presents more opportunity than threat to their businesses. (Refer to chart on GLOBALISATION)

However, in three out of four BRIC countries, businesses perceive access to finance as a major constraint on their ability to grow. Four in ten businesses in Russia cite the cost of finance, shortage of working capital and shortage of long-term finance as major constraints on expansion. Businesses in Brazil and mainland China are also highly likely to cite these financial factors as restricting expansion. (Refer to chart on BRIC FINANCE CONSTRAINTS)

Dato' Jasani concluded, “This finding emphasises that Indian businesses experience less restrictions than other BRIC economies when accessing capital, a further sign of the maturity of their economy. Coupled with factors such as the liberalisation of restrictions on foreign trade and investments, India is arguably best placed to challenge the current dominant position of mainland China as the leading emerging market”

Ends

*The figure is the percentage balance of the respondents who are positively impacted Vs negatively impacted. The highest possible figure countries are able to record is +100% and the lowest is -100%.

**Medium/large privately held businesses