Friday 29 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on November 2, 2018

KUALA LUMPUR: About nine out of 10, or 89%, of Malaysian companies are generally positive on the outlook for international trade, significantly higher than the global average of 78%, according to a HSBC survey.

This follows the general boost to confidence following the election victory of the coalition led by Tun Dr Mahathir Mohamad in May, the bank said.

A similar proportion of the respondents (91%) are confident that their companies will succeed in the current international trading environment, with consumer confidence being a key factor behind their positive outlook (39%).

HSBC said countries such as China, Singapore and Indonesia were most frequently cited by respondents as markets where they were looking to expand.

The annual survey, conducted by Kantar TNS for HSBC between August and September, covered 8,650 companies across 34 countries, including 200 Malaysian firms, to gauge business sentiment and expectations on trade.

On policy developments, more than four out of five (81%) of Malaysian respondents considered foreign governments are becoming more protective of their domestic firms.

Nonetheless, the firms do not appear to view rising global trade protectionism as having severe adverse implications for their business prospects, at least to-date, said HSBC.

It said only 25% of the respondents viewed the US-China trade frictions as a hindrance to their businesses.

In fact, nearly half (48%) viewed these trade frictions as being helpful, suggesting that firms see some opportunities arising from possible changes to regional supply chain patterns.

HSBC Bank Malaysia Bhd chief executive officer Stuart Milne said although Malaysia’s market openness can create trade and economic vulnerabilities from the US-China trade dispute, firms generally believe the current environment can present opportunities to capture market share.

“Trade war benefits nobody. Ultimately it would drag down global growth. At HSBC we are concerned about that. We would like to see free and open trade between countries.

“But there is opportunity in adversity. Talking to clients in China, both multinationals based there and local companies, it is clear they are looking at diversifying their manufacturing risk so they would look at countries like Malaysia for high-value manufacturing. But it’s not an easy thing to do to move your supply chain so it would take some time to see the change,” Milne said at the launch of the survey report yesterday.

Milne said businesses should therefore identify how directly and indirectly exposed their sales and downstream supply chains are to US and Chinese tariffs to assess the impact.

“They should also look at ways digitalisation can boost productivity and improve competitiveness,” he said.

Meanwhile, views regarding the impact of regulation and policy developments over the next three years were more divergent.

“While just over a third (34%) of the firms see regulation as an extra cost burden, a similar proportion perceived regulation as a positive for competitiveness,” said HSBC.

The survey showed that Malaysian firms are generally optimistic that regional policy initiatives will help their businesses, particularly Asean (74%) and the Asean 2025 Initiative (63%).

Relevant free trade agreements were also viewed favourably by the majority (64%) of the respondents.

And while the new government is undertaking a major review of Chinese infrastructure projects, HSBC noted that around 62% of the respondents believe that China’s Belt and Road Initiative will be positive for business.

      Print
      Text Size
      Share