In terms of prospects and outlook, businesses in Malaysia has displayed considerable concern, especially with the ongoing Covid-19 pandemic and political uncertainties that the country is currently embroiled in.
However, according to the results of the Malaysian Business Sentiment Survey 2020/2021 (a joint initiative between Monash University Malaysia and CPA Australia), even small and medium enterprises (SMEs) facing the highest risk of faltering maintain an apprehensive yet sanguine attitude towards managing the effects of the pandemic.
Based on the survey, multiple waves of Covid-19 transmissions have meant that Movement Control Order (MCO) lockdowns have continued over time and businesses have responded by taking strong precautionary measures. These include 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.
Business leaders were also hopeful that strong adherence to standard operating processes, 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.
The survey revealed that the 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.
Compared with 2019, the percentage of firms that have fully implemented Industry 4.0 (i4.0) shows a slight decline from 16 percent to 13 percent 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 percent in 2019 to 38 percent 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.
Other key findings from the survey include:
- There was an 8 percent 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 percent 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 percent.
- 89 percent 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.
“The Malaysian Business Sentiment Report continues the tradition of understanding business challenges from the perspective of business leaders, while also tracking how businesses reacted and adapted to a wide range of changed business protocols and arrangements in the face of the Covid-19 pandemic,” Professor Mahendhiran Nair, Director of Global Asia in the 21st Century (GA21) Platform and Professor of Public Policy Engagement and Econometrics, at Monash University Malaysia said.
“The 2020/2021 edition of the report highlights that the impact of the pandemic has not been even; it has differentially impacted some sectors more than others, with the SMEs feeling the dislocation most sharply due to their limited financial wherewithal to withstand unanticipated shocks,” he added.
Priya Terumalay, Malaysia Country Head for CPA Australia stated that “CPA Australia is proud to work alongside Monash University Malaysia in this important piece of work that has enabled senior leaders to reflect on key strategies and issues that have an impact on their businesses’ ability to create value.
We have seen the report’s reach as an important reference point for government agencies, the media, and other important stakeholders and we can say with certainty that this year’s report is even more compelling in its content and research quality.”.
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 highlighted.
Associate Professor Santha Vaithilingam, Deputy Head of School of Business (Engagement and Impact) highlighted that firms are adopting new business models to expand their market reach and stay competitive during the health pandemic.
She stated that “The crisis has forced firms to adopt new technology strategies and strategic posture to stay afloat and seize new opportunities that emerge.”