Chinese less optimistic this year and next: ACCCIM

Ea Ann Nee sunbiz@thesundaily.com

KUALA LUMPUR (Aug 30, 2012): The Chinese business community in Malaysia is less optimistic about the country’s economic outlook this year and in 2013, but is cautiously optimistic about the economy improving in 2014, according to a recent survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

“Business competition has become increasingly stern, where small and medium enterprises (SMEs) are facing tough challenges, both domestically and abroad,” ACCCIM president Datuk Lim Kok Cheong told a press conference when releasing the findings of the survey yesterday.

“Many businesses become less optimistic on the back of shrinking new orders and production as they feel the pinch from weakening global demand, while the efforts by the government at the macro level may not yet have filtered down to them and they are being squeezed by rising costs of doing business,” he added.

Local Chinese businesses saw their performance weaken in the first half of 2012 due to an increase in operating costs and prices of raw materials, government policies, manpower shortage and domestic competition.

Lim said the increase in operating costs and prices of raw materials has become the greatest concern among businesses.

“The increase of one percentage point in EPF contribution for workers earning RM5,000 and below and the impending implementation of the minimum wage are perceived to aggravate operating costs and affect the business performance of SMEs.

“At the same time, employers would be hit by another ruling, that is the extension of retirement age in the private sector to 60 years. Wage costs are now expected to further increase,” he added.

ACCCIM recommended a goods and services tax (GST) rate of 4% for a start and urged the government to formulate and announce the timetable of implementing the tax regime 18 months in advance. It is also seeking a gradual reduction of corporate tax rate from 25% to 22%, and to 17% in the long run.

The survey also found that all businesses were concerned with the developments in Europe, given the continuous stream of negative news. About 45% of respondents said they saw no impact of the European crisis on their businesses partly because they were shielded somewhat by stronger domestic demand, on the back of higher fiscal spending through various handouts and the implementation of projects under the Economic Transformation Programme, public-private partnership and various economic corridors.

About 64.2% of respondents also did not foresee property prices trending downwards in the future.