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KUALA LUMPUR (Dec 1): Malaysian companies are cautious about growth prospects as up to three quarters (76%) of them only expect to return to pre-Covid profitability levels by the end of 2022, showed an HSBC poll.
According to the HSBC Global Survey Browser: now, next and how, which surveyed more than 10,000 companies in 39 markets around the world, Malaysian companies have lowered their growth expectations but are still more positive than their regional peers.
Although more Malaysian companies say they are prospering (30%) than the world average (24%), their outlook reflects the overall decline in global optimism, the survey showed.
Malaysia’s future growth expectations have also fallen since 2019, but by a much smaller amount than globally.
The proportion of Malaysian companies projecting growth (74%) is also well above the Asia Pacific average (APAC) (60%), while around a fifth of companies (16%) expect to return to levels of growth. profitability prior to Covid for the next year. end of 2020.
Meanwhile, a minority of less than one in ten (6%) say they are already ahead of their own pre-Covid levels.
“The resurgence of Covid-19 is the main threat to the recovery of Malaysian companies. But its repercussions (including a decrease in consumer demand and difficulty in entering new markets) are also cause for concern, ”the survey said.
HSBC Malaysia CEO Stuart Milne said in a briefing that the companies that are most likely to take the longest to recover are those in the service sector.
“Manufacturing will recover more quickly, but service sector companies, particularly tourism, will take longer to recover,” he said.
He also said that the bank is optimistic in terms of Malaysia’s economic outlook, as it expects the Malaysian economy to contract by 5.1% in 2020 and recover in 2021 with growth of 6.2%.
In line with global trends, the events of 2020 have not diminished the inclination of most Malaysian companies to invest for growth, as more than three-quarters (78%) intend to increase investment in their businesses in next year compared to two-thirds seen globally. .
Additionally, 25% intend to increase their investments by more than 20% compared to 13% globally.
The survey also highlighted that companies will focus their investments on three critical areas in 2021: cash flow and capital management, marketing and sales channels.
To support these areas, they plan to increase investment in technologies that help target consumers, improve the customer experience, and promote collaboration.
Malaysian companies remain optimistic despite a record year. Almost three-quarters (74%) of Malaysian companies have experienced change in the last 12 months.
Behind these changes is the need to reduce costs, future uncertainty and change in the ways of working.
Going forward, Malaysian companies see innovation and collaboration as the two main characteristics of a successful future business.
Despite projecting difficulties in 2021, Malaysian companies remain positive about international trade going forward, as 80% of companies expect their international trade prospects for the next one to two years to be positive.
Malaysian companies rely on the benefits and opportunities of international trade. More than half (55%) believe that it makes their businesses more competitive, 47% see that it drives the development of products and services, while almost half (43%) believe that it generates more choice for consumers.
Overall, a slightly higher proportion than globally has a positive outlook for the next one to two years. This despite the fact that eight out of ten companies feel that international trade has become more difficult and more than half (56%) expect the trend to continue in 2021.
Protectionism is still being felt strongly, and Malaysian companies see selling through digital channels as the key strategy to combat it, the survey showed.
The proportion of companies operating internationally has increased marginally since 2019. Intra-regional trade has also grown: 86% of Malaysian companies are listed within APAC, an increase of 10% from 2019.
China continues to hold the top spot among current trading partners, followed by Singapore and Indonesia.
HSBC Malaysia’s director of commercial banking, Andrew Sill, said the international business outlook is expected to be positive given the additional momentum of the recent signing of the Regional Comprehensive Economic Partnership (RCEP).
“With the recent signing of RCEP, we will continue to see an increase in intra-Asian trade, which is already greater than Asia’s trade with North America and Europe combined,” Sill said, adding that this increase will continue to drive economic growth. global and pull the economic center of gravity towards Asia.
Meanwhile, almost all Malaysian companies (98%) have concerns about their supply chain, the key issues being supply chain instability and rising costs.
In response to these issues, 99% of Malaysian companies have made adjustments to their supply chain. More than half (57%) of Malaysian companies also expect their supply chain reshuffle to lower costs. Other benefits include better visibility into the supply chain and faster speed to market / approach to the final buyer.
Additionally, some of the most popular changes that Malaysian companies have undertaken have been the increased use of digital technology, diversification to work with more vendors, and choosing vendors for their operational resilience and rapid delivery capabilities.
According to the survey results, three fifths of Malaysian companies will have an immediate priority in 2021 to focus on the use of digital technology (56% versus 48% globally). This underscores the importance of digital innovation for companies in the year ahead.
The social approach is also a growing trend in Malaysia, as Malaysian companies seek to improve sustainability.
According to the survey, 99% of Malaysian companies think that there are multiple opportunities for their businesses by improving their environmental and ethical sustainability.
At least two-thirds of Malaysian companies have set a wide range of environmental, social and governance (ESG) goals.
Between a third and a half have set annual goals; the most common goals have a social focus. A fifth or a third more have set targets for 2025.
This reflects the fact that 99% of Malaysian companies recognize the business opportunities of being more sustainable. For them, the most important are: promoting new ways of working, improving employee well-being, attracting more investment and increasing customer demand.
What’s more, 97% of Malaysian companies (86% globally) expect their sales to grow from a greater focus on sustainability.
Supply chain partners, governments and employees are most likely to increase the pressure to be more sustainable over the next 12 months.
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