KUALA LUMPUR (Feb 22): Many Malaysian manufacturers are taking longer than normal to collect debts, according to the latest survey conducted by the Federation of Malaysian Manufacturers (FMM) and Malaysian Institute of Economic Research (MIER).

According to the survey, out of 414 member companies, 52% said it took longer than the common credit period of 30-60 days to collect more than half of their debts.

"Businesses should not be using supply as their cashflow, [debt collection] beyond 60 days is actually very long. This creates problems for the supply and increases the entire cost of business," said former president, now council member of the FMM, Tan Sri Saw Choo Boon.

Saw was speaking here today alongside FMM president Datuk Soh Thian Lai at a press briefing post-presentation of the Business Conditions Survey for second half of 2017 (2H17), a semi-annual survey in collaboration with MIER.

Small and medium enterprises face larger impacts on cashflow given the lack of financial muscle, said Saw.

This is the first time the survey included findings on debt collection.

However, Soh added that FMM has not received complaints on bad debts from its over 3,000 member companies thus far.

The findings of the FMM-MIER Business Conditions Survey for 2H17 showed that business conditions were favourable for the Malaysian manufacturing sector.

Sales, production volume, capacity utilisation and employment picked up while costs of production were relatively stable but still high.

For the first time, the local sales index breached the 100-point optimism threshold at 107 points in 2H17.

Also, an all-time high of 35% of the respondents enjoyed higher domestic sales in the period under review.

Still, 70% of the respondents noted an increase in their cost of production and 31% increased their capital expenditure.

Outlook for 1H18 is overall encouraging with all forward-looking indicators registering improvements over those in previous surveys, except cost of production.

The biggest gains are observed for business conditions, production volume and local sales.