KUALA LUMPUR (March 22): About 40% of the Malaysian Chinese business community may decide to retrench workers due to rising labour costs, says the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

This is based on the findings of ACCCIM's survey on the economic situation for the second half of 2017 (2H17), which gathered feedback from 390 respondents.

Presenting the findings to the media today, ACCCIM said 41% of its respondents pointed out that their business performance during the six months under review was adversely affected mainly by government policies.

These include the need to comply with the requirements outlined in the Competition Act 2010, minimum wages, foreign workers' levy, anti-profiteering mechanism, Goods and Services Act 2014 and the Employment Insurance System (EIS).

Meanwhile, 39% of its respondents complained that they have been experiencing rising operating and raw material costs — compared with 35% in 1H17 — one of them being rising staff costs on an individual basis.

"They continued to gripe about the effects of the minimum wage requirement and more recently, with the coming into force of the EIS," said ACCCIM.

Along with the added burden of the foreign worker levy, nearly half of its respondents said they may consider reducing staff strength in the coming 12 months, the survey revealed.

ACCCIM, however, stressed that this may just indicate that Chinese businessmen are merely worried they have to entertain thoughts of retrenchment in the future based on their business performance.

"If there shall be retrenchment, the percentage effect is not expected to be significant," it said, adding that varying reliance on staff in certain areas of activities is a norm as businesses strive to remain competitive.

Other factors affecting business performance in 2H17, according to the survey, were increased domestic competition, and the continued difficulties in recruiting manpower due to a slight rise in production volumes.