Wednesday, 7 October 2020

Business Sentiment Not Improving?


A majority (78%) of Malaysian businesses are either moderately or extremely concerned regarding the Covid-19 pandemic. This was determined by the ‘Impact of Covid-19 on Malaysian Businesses’ report. The report is a joint initiative between Monash University Malaysia, Monash Malaysia Research and Development (MMR&D) and Global Asia in the 21st Century Research Platform.

Food and beverage (F&B), entertainment & tourism, as well as agriculture industries are most concerned with the decrease in consumer confidence. In contrast, almost half of the firms (43%) within the business and financial services industry are concerned with a potential global recession. The report shows that construction firms are struggling to balance between worker well-being and productivity, with 35% worried about a reduction in productivity of their workforce. At the same time, the manufacturing and F&B industry noted the vulnerability to supply chain shocks as one of their major worries.

More than a quarter (26%) of F&B-related businesses being family-owned, face the highest risk of going out of business. Other key findings from the survey include:

·       65% of respondents are re-strategising their financial commitments given continued high levels of uncertainties;

·       Managers and company owners appear to have a bleak outlook, with 73% of businesses expecting the company’s revenue to decrease this year;

·       60% of companies cited the immediate financial impact of the pandemic as their greatest concern followed by a potential global recession (42%), and 31% questioning their ability to stay afloat;

·       Companies are exploring all avenues to mitigate the impact of the pandemic, with a near equal focus on changing business and operational strategy (66%), cost containment (65%), and changing company financing and expenditure plans (63%); and

·       73% of respondents fear that Malaysia may be at a high risk of economic stagnation.

 

Source: https://tobiasglaser.ch

 

Despite the various headwinds, 15% of respondents remain very optimistic and 30% optimistic about Malaysia’s economic outlook in the coming 12 months.

What should the Government do? There are several steps the Government could act:

·       Engage with SMEs, trade associations, Chambers of Commerce on a bi-weekly basis;

·       Issue latest bulletins of developments, initiatives launched on a weekly basis;

·       Process concerns and mitigate them with concrete steps;

·       Step-out with emergency/contingency measures/funds;

·       Monitor confidence levels by sectors; and

·       Then, perhaps confidence level will also return with political stability.

 

Reference:

Business sentiment not improving just yet, says Monash report, Focus Malaysia, 25/9/20

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