We can more or less sum the year as being surreal, many businesses have been totally upended and some are in a state of flux wondering how 2021 is about to pan out. Lets not be dismayed Covid-19 has not gone away, while the vaccine news is welcomed, inoculation will be a long and tedious process expected to take more than 12 months. Coupled with an uncertain political situation, what is Malaysia’s business outlook come next year?
According to Malaysian Business Sentiment survey conducted by Monash University Malaysia and CPA Australia, businesses in country are exhibiting considerable concerns in terms of prospects and outlook, especially with the on-going Covid-19 pandemic and political uncertainties that currently embroil the country. However, they remain hopeful that with a better understanding of the virus, potential discoveries of vaccines, medical therapeutics and effective implementation of the standard operating procedures they will be able to weather the Covid-19 disruption. Even small and medium enterprises, facing the highest risk of faltering maintain an apprehensive yet sanguine attitude towards managing the effects of the pandemic.
The survey further reports that business leaders’ apprehensive sentiment arose from the severe disruption of supply chains and business operations, as a consequence of the Movement Control Order, multiple waves of transmissions meant that lockdowns will continue over time and businesses will have to have respond in making strong precautionary measures. Including scaling down operations to contain costs and stay afloat. Nonetheless, business leaders remained sanguine in outlook due to the implementation of cost-cutting measures as well as the availability of various financial support programs which helped to dampen the impact of Covid-19 on businesses. A more sophisticated and targeted MCO, as well as the rollout of vaccines and better medical therapeutics in the coming months, will help increase consumer and investor confidence.
Other main concerns plaguing the local market are global economic uncertainty (possibilities of the economy entering into a recession), the cost of doing business and a weakening Ringgit. Political uncertainty was ranked the 4th major concern for businesses in 2020. A majority of business leaders were of the view that the main three factors that are likely to have positive effects on businesses in the next 12 months are rising business capability, improvements in the regional economy and potential of market expansion as more economies open up due to better management of the health pandemic.
- There was an 8% increase in negative sentiment, with business leaders expecting a worse year ahead. Four main areas that business leaders focused their time and resources on included cost management, seeking new markets, digital technology, and fore-sighting and strategic planning. 46% of the respondents estimate that they will have a higher revenue over the coming 12 months which has continued its decrease from 2019 which was at 51%. 89% of business leaders are of the view that diversity and providing equal opportunities to be top priorities in their organisations. Initiatives involving sustainability and integrated reporting are not viewed to be high focus areas for Malaysian companies at the present moment.
Compared with 2019, the percentage of firms that have fully implemented Industry 4.0 (i4.0) shows a slight decline from 16% to 13% in 2020. Nonetheless, there are small increases across the other two implementation levels, notably an increase in the preliminary adoption stage (i.e. starting to take steps to implement), from 31% in 2019 to 38% in 2020. The percentage of firms that are either not ready or do not know about i4.0 has declined slightly. Even though the survey suggests that the overall adoption of i4.0 is on an upward trajectory, there remains considerable scope for improvement in the adoption of the i4.0.
As in previous years, the development of Industry 4.0 capabilities, development of training programs for industry and enhancing graduates’ employability and industry collaboration remain key areas that universities should focus on to support industry needs. The results continue to show that there exists a serious mismatch in the supply and demand of graduate competencies needed for a future world shaped by i4.0 technologies. Business leaders are of the view that strong collaboration between academia and industry will go a long way to meet industry needs and reduce graduate unemployment in the country.
According to Professor Pervaiz K Ahmed, Head of School of Business, Monash University Malaysia, despite the enormity and the speed of the COVID disruption, the study finds that many Malaysian business leaders have responded proactively to the crisis by adopting a mindset of reinvention. “Even though the disruptive doom and gloom of COVID 19 has seen many businesses suffer and some even shut down their operations, many firms across different industry sectors have weathered the adverse impact of the economic storm and are coming out of it transformed,” he said.