GERMAN companies in Malaysia foresee 2024 to be a challenging year due to geopolitical tension playing out across the globe, the ringgit’s depreciation against the greenback and the high interest rates environment.
When asked about the economic risks for companies in the next 12 months, 51% of respondents to the AHK World Business Outlook Fall 2023 bi-annual survey said demand was a major concern, followed by a lack of skilled workers (46%) and high exchange rates due to the declining ringgit (46%).
Based on current global events, many respondents to the survey which captures the sentiments of German firms operating in Malaysia also predicted that high interest rates which are here to stay will burden new investments and investors.
With the ongoing Israel-Hamas conflict, Russia-Ukraine war and territorial anxieties in the South China Sea, it comes as no surprise that geopolitical tensions ranked high on the list which respondents said will play a crucial part in shaping the progress of 2024.
Another concern is technical barriers to trade and sanctions which businesses view as hurdles that will destabilise supply chains.
Noting that skilled labour is a challenge, 51% of German companies in Malaysia intend to increase employment and only 10% intend to lower employment development next year.
This points to a positive for job opportunities in the country but also underscores the crucial need to enhance technical and vocational education and training (TVET) in Malaysia to bridge the gap between education and industry needs.
Despite the risks, the good news is that 66% of companies expect business development to improve in the next 12 months.
In terms of spending, the majority of respondents (49%) said their investments will remain the same with 39% of respondents intend to ramp up investments as compared to 7% who plan to lower their investments in Malaysia while another 5% have no investments planned for the coming year.
However, significant investments are expected to be made in the areas of production and manufacturing (46%), sales and marketing (43%) and services such as shared service centres (41%).
“Malaysia’s adoption of several mechanisms including the New Industrial Master Plan 2030 (NIMP 2030), the National Energy Transition Roadmap (NETR) will support the country’s transformation along with the economies worldwide and at the same time ensure Malaysia remains relevant,” the Malaysian-German Chamber of Commerce and Industry (MGCC) executive director Daniel Bernbeck pointed out.
“The same applies to being part of the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade agreements.”
Conducted between Sept 25 and Oct 20, the AHK World Business Outlook Fall 2023 survey was completed by the MGCC network of companies which comprised mostly German and local small and medium enterprises (SMEs). – Nov 22, 2023