Malaysian business confidence up, dark clouds on horizon

By Digital News Asia February 18, 2014

21% reported confidence gains, up from 13%; 51% reported loss of confidence, down from 56%
This increase in optimism was against the odds and may not last long, warns ACCA and IMA

Malaysian business confidence up, dark clouds on horizon A COMBINATION of rising business opportunities and improved demand and cash-flow conditions encouraged Malaysia’s businesses to invest more in capital and staff in the last quarter of 2013, however there are dark clouds on the horizon, warned two organisations.

According to findings from the ACCA (Association of Chartered Certified Accountants) and the Institute of Management Accountants (IMA) in their Global Economic Conditions Survey (GECS), in the fourth quarter of 2013, both business confidence and economic sentiment improved.

The GECS quarterly survey gauges the views of ACCA and IMA finance professionals globally.

Some 21% of the Malaysian sample reported confidence gains, up from 13% in the previous quarter, while 51% reported a loss of confidence in their own organisations, down from 56% previously, the ACCA and IMA said in a statement.

Just under a third of the sample (31%, up marginally from 30%) were optimistic about the state of the economy, while the pessimists made up 62% of the sample, down from 65%.

This confidence gains among Malaysian respondents is concurrent with the reported 5.1% growth in Malaysia’s GDP (gross domestic product) in the fourth quarter of 2013, which industry regulator Bank Negara Malaysia stated was supported by private sector demand and improvement in exports.

But there’s no reason to start popping out the champagne.

“Although the headline findings show a positive picture amongst Malaysian businesses, the increase in optimism and dynamism has taken place against the odds and may not survive long,” warned ACCA Malaysia’s head Jennifer Lopez.

“A closer look at what finance professionals in Malaysia are telling us shows that respondents reported a substantial tightening in the supply of growth capital, fewer investment opportunities, and, most importantly, a year-long increase in price and exchange rate volatility,” she added.

According to Emmanouil Schizas, ACCA senior economic analyst, “as with other markets, economic recovery is a delicate period.

“While there are a lot of positive signs in what the finance professionals working inside Malaysia’s businesses are telling us, how they perceive the economy and their own organisations’ prospects over the course of 2014 will be a strong indication of whether recovery can be sustained.”

The GECS, now in its fifth year, revealed that at the global level, finance professionals had more faith in the strength of the wider economic recovery in Q4 2013 than at any time over the last five years: 55% believed conditions were improving or about to do so, up from 53% in the third quarter of 2013, while only 42% felt that economic conditions were deteriorating or stagnating, down from 43% in the previous quarter.

Download the GECS Q4 2013 report here.