Malaysian businesses optimistic on international trade

According to HSBC’s global survey ‘Navigator: Now, next and how’, 80% of Malaysian businesses are confident and optimistic about  their international trade prospect over the next 1-2 years. Although protectionism continues to be felt, selling through digital channels is the key strategy for Malaysian businesses to combat this.

This latest report gauges business sentiment and expectations on trade activity and business growth, surveyed more than 10,000 companies across 39 markets in the world, including Malaysia.

The survey data shows that Malaysian businesses are more positive than their regional peers and are coping relatively well with the current challenges. It also reveals that around 76% of Malaysian businesses expect to return to pre-Covid profitability levels by the end of 2022, while 6% say that they are already ahead of their own pre-Covid levels.

Seventy four percent of Malaysian businesses are projecting growth over the next year, and this is also well above the average for APAC (60%).

The top three drivers of business growth include increased domestic demand, expanding to new digital platforms and channels and introducing new products and services.

This positive outlook is also evidenced by the fact that 78% of Malaysian businesses intend to increase investment in their business in the new year, over the two thirds seen globally.

Companies will focus their investment on three fundamental areas in 2021 such as cash flow and capital management, marketing and sales channels.

To support these areas, they plan to increase investment in technologies that help target consumers, improve customer experience and promote collaboration.

Commenting on the survey findings, Stuart Milne, CEO, HSBC Malaysia, said, “Malaysian businesses remain optimistic despite the unprecedented year. Almost three quarters (74%) of Malaysian businesses have undergone changes in the last 12 months. Behind these changes were the need to reduce costs, future uncertainty and change in ways of working. Looking ahead, Malaysian businesses view innovation and collaboration as the top two characteristics of a successful future business.”

In Malaysia, overall trade within APAC remains the most important (top 3 trading partners) with more than four fifths (86% compared to 76% in 2019) currently trading with APAC markets. China continues to retain the top spot of current trading partner, followed by Singapore and Indonesia.

Given the recent signing (and eventual ratification) of the Regional Comprehensive Economic Partnership (RCEP), we will continue to see an increase in intra-Asian trade, which is already larger than Asia’s trade with North America and Europe combined.

This increase will continue to power global economic growth and pull the economic centre of gravity towards Asia.

But, 98% of Malaysian businesses have concerns about their supply chain mainly on instability and increased costs. In response to these issues, 99% of Malaysian businesses have made adjustments to their supply chain, and 57% are also expecting that reshaping their supply chain will reduce costs. Other benefits include improved supply chain visibility and increased speed to market/moving closer to the end buyer.

Additionally, some of the more popular changes Malaysian businesses have undertaken have been the increased usage of digital technology, diversifying to work with more suppliers and choosing suppliers for their operational resilience and ability to deliver quickly.

According to the survey findings, three fifths of Malaysian businesses will make it their immediate priority in 2021 to focus on usage of digital technology (56% vs. 48% globally). This underpins the importance of digital innovation to businesses in the coming year.