A whopping 93% of mid-market enterprises (MMEs) in Malaysia are optimistic on the prospects of growing their top line in 2023 despite softening economic growth globally – this figure is in line with the global average across 14 markets – according to HSBC’s latest Business Balancing Act (BBA) survey.
Out of the 93% of optimistic MMEs, 30% are expecting sales to grow by 15% to 20%, while a quarter of these MMEs are even more positive and are expecting sales to grow by more than 20%. Malaysian Mid Market Enterprises Expect Sales Growth Above 15% In 2023A majority of these MMEs were from the manufacturing, retail, digital and financial services sectors.
The research – carried out for HSBC by polling company Toluna found that the optimism of sales growth in 2023 stemmed from two major catalysts, with more than half of the MMEs sharing that the introduction of new products and services for their businesses, as well as technology-driven efficiencies in their operations, will be major growth drivers. The ability to attract investments and secure financing for their business (50%), and increasing domestic demand (49%) were the other two top drivers cited by the MMEs
On major threats to business growth for MMEs in Malaysia next year, the most common concerns raised were inflation and the higher cost of living (63%), rising interest rates, and uncertainty in the political environment (43%). For Malaysian MMEs, the balancing act comes in the areas of trade, in particular exports and the supply chain, as well as their digitalisation journey.
For example, 78% of MMEs plan to enter at least one foreign market in 2023, yet at the same time, over two thirds are expecting international trade to be more difficult next year, with 43% citing an uncertain political environment and increasing tariffs as a threat to business growth.
On their supply chain, 65% of MMEs say that they will focus on making their supply chain more sustainable in 2023, but 29% of these MMEs say that the lack of quality suppliers and goods to support a sustainable supply chain is a concern. As for their digitalisation efforts, 45% of MMEs say that they will expand to new digital platforms and channels, though 37% say that there are also concerns about a decrease in demand and spending from consumers.
Investment priorities over the next 12 months
A majority of Malaysian MMEs have cited that their investment priorities over the next 12 months will be building up adequate cash flow and effective capital management. Aside from that, they will be prioritizing investments for marketing
products and services (68%), as well as investments that enhance customer experience (66%). As for how they plan to grow their business via investments, two-thirds of these MMEs (67%) say they are seeking external investments for their business, while only a third are planning to make an acquisition of their own to complement their business activities. Divestments are not favoured next year, as only a quarter say that they are looking to sell a whole or a part of their business.
However, a major challenge cited by 63% of the MMEs when it comes to making viable investments is cost-cutting exercises which are expected to be prevalent due to the tougher economic conditions next year.
Commenting on the BBA survey findings, Karel Doshi, Head of Commercial Banking, at HSBC Malaysia, said: “Despite the headwinds and challenges, it is encouraging to see that many MMEs are resilient and positive about their business prospects as they zero in on growth in 2023. MMEs are a significant driver of growth to the Malaysian economy, and their optimism in growing their businesses next year in spite of the tougher economic environment expected is definitely a positive sign.”
