KUALA LUMPUR (July 19): Business confidence in Malaysia surged by 24% to 52% at the end of the second quarter of 2018, mainly due to Corporate Malaysia's confidence in the new government, says Grant Thornton Malaysia.

This near doubling in business optimism, from 28% at the end of the first quarter, is the highest recorded among Asean countries, the firm said in a statement today.

"The new emphasis on accountability and transparency has contributed to the newfound business confidence," said Grant Thornton Malaysia country managing partner Datuk NK Jasani.

According to the Grant Thornton International Business Report (IBR), Malaysia's growth in business optimism matched the overall exuberance of Asean countries. The region has never been more optimistic as it recorded its highest optimism ever of 64% in the second quarter of 2018, the results showed.

Malaysian business owners were found to be confident about business performance over the next year, with many having positive outlooks for revenue, employment and also investments, Jasani said.

A net 56% of businesses are expecting an increase in revenue over the next twelve months, an increase of 22% from the first quarter, while a net 26% of business owners expect to hire more employees.

"Businesses owners have also expressed that they are expecting to increase their level of investments, (with) 66% of businesses, the highest in Asean, expecting to increase their investment in technology, up 16% from the first quarter," Jasani added.

On top of that, more businesses were found to be planning investments in plant and machinery, followed by research and development as well as investment in new buildings.

The IBR revealed that fewer business owners cited the economic uncertainty as a constraint to their business growth. However, they are growing more concerned over a lack of skilled workers, energy costs and exchange rate fluctuations, Grant Thornton said.

"Access to skilled workers is seen as the biggest constraint to growth by Malaysian businesses at 46%," the IBR found. The figure represents a 14% increase from the first quarter, making it the highest in Asean.

"With many businesses across Asean still borrowing in US dollars, fears over rate rises could easily blow business confidence off course. However, action can be taken to reduce the risks associated with a reliance on US dollars. One option is to hedge and lock in a more predictable exchange rate for a period of time," Jasani said.

He added that the new Malaysian government should now emphasize on business transparency and come up with a business friendly budget to continue this positive momentum.

Across Asean, the Philippines and Indonesia also recorded improvements in business sentiment, while Singapore and Thailand saw slight declines in business optimism.