BUSINESSES in Malaysia are still confident and optimistic regarding the benefits and opportunities for international trade, according to a recent HSBC global survey entitled Navigator: Now, next and how.
The survey showed that despite the various difficulties that businesses faced in 2020, it has not dampened the inclination of local businesses to invest.
Compared to its regional peers, Malaysia seem to be more optimistic and are coping relatively well with current challenges.
About 74% of Malaysian businesses are hoping for growth in 2021 and 76% expect to return to pre-COVID-19 level of profitability by the end of 2022, while a minority said they are ahead of their own pre-COVID-19 levels already.
The survey also showed that the top three drivers of business growth are increased domestic demand, expanding to new digital platforms and channels as well as introducing new products and services.
The respondents plan to focus their investment on three fundamental areas this year, namely cash flow and capital management, marketing as well as sales channels.
To support these areas, they also plan to increase investment in technologies that help target consumers, improve customer experience and promote collaboration.
“Malaysian businesses remain optimistic despite the unprecedented year, where 74% of them have undergone changes in the last 12 months. Behind these changes were the need to reduce costs, future uncertainty and change in ways of working,” said HSBC Malaysia CEO Stuart Milne.
“Looking ahead, Malaysian business view innovation and collaboration as the top two characteristics of a successful future business,” he added.
Meanwhile, 80% of local companies expect their international trade prospect over the next one to two years to be positive.
“Although protectionism continues to be felt, selling through digital channels is the key strategy for Malaysian businesses to combat this,” the report showed.
Additionally, intra-regional trade has grown. For Malaysia, overall trade within Asia Pacific (APAC) remains the most important (top three trading partners) with more than four fifths (86% compared to 76% in 2019) currently trading with APAC markets.
China continues to retain the top spot of current trading partner, followed by Singapore and Indonesia. Malaysian businesses also aim to prioritise expanding into APAC (74% up 8% from 2019) and into China (22% up 9% from 2019).
However, nearly all of Malaysian businesses (98%) are worried about their supply chain, which mainly revolves around instability and increased costs.
Due to this, 99% of the respondents have made adjustments to their supply chain, with more than half (57%) expecting to reshape their supply chain in attempts to reduce costs.
Additionally, some of the more popular changes Malaysian businesses have undertaken have been the increased usage of digital technology, diversifying to work with more suppliers and choosing suppliers for their operational resilience and ability to deliver quickly.
Finally, three fifths of Malaysian businesses will make it their immediate priority in 2021 to focus on usage of digital technology (56% vs. 48% globally), underpinning the importance of digital innovation to businesses in this year. – Jan 1, 2021
