Malaysia will see improvements in business ecosystem over the next 12 months riding on the short and medium-term incoming investments to Asean region.
Monash University Malaysia vice president (research and development) Professor Mahendhiran S. Nair however cautioned that full trade war between the US and its trading partner will jeopardise the optimism, that may adversely impact on local and regional firms.
Therefore, local firms should intensify their opportunities within domestic economy and expand their operations in Asean as well as other Asia Pacific markets.
“Building local supply network is important to enhance the industry's competitiveness of doing businesses among the small and medium as well as big corporations.
“Business players should adapt to new technology and innovate their products and services to reduce operational costs and maximise efficiency, while broaden their business reach” he told NST Business after announcing the Malaysian Business Sentiment Survey 2018/2019 results, today.
The survey, conducted by Monash University Malaysia in collaboration with CPA Australia gathered the opinions from Malaysia’s business leaders, highlighting concerns that could potentially affect businesses growth through investments in new markets.
“Although firms are positive on the business outlook, they should be highly competitive as the government has cut its spending to reduce its debt,” added Mahendhiran.
He said highly competitive small and medium firms will be acquired by bigger players to support them in sectors like information and communications technology (ICT), business services, transportation and logistics.
“The government recognised that science, technology, innovation and critical infrastructure are very important for the business. Through public-private partnership, this will be much cost-effective and cost-efficient in creating value for broader stakeholders,” he said.
Mahendhiran pointed out that the public-private partnership was a critical move to steer the country’s economy into stable position, involving infrastructure development like roads and train.
“The government has an important role to provide necessities in partnering with the private sector. It is also crucial for the government to build the human capital and provide the right incentive for the firms to be innovative,” he said.
It is also important for universities to nurture talent that will enable firms to enhance their innovative capacity, process improvement and product development.
Local firms should also mitigate the risk of intensive competition and potential trade war by exploring new markets and defending existing market with the introduction of new products and services.
Mahendhiran said the survey’s primary objective was to enable decision makers, business leaders and key stakeholders in taking proactive measures to improve the local business environment and build a competitive advantage.
Monash University Malaysia deputy head of school and director of research, Professor Pervaiz Ahmed said it was essential for the government to have competitive, open and fair business environments.
“Business-friendly policy will build the firm’s strength domestically as well as help them to venture into other region,” he said.
Pervaiz said local firms must embrace the digital economy and the Fourth Industrial Revolution, which would enable them to extend their reach for talent, resources, market intelligence, networks and markets.
He said firms are expected to drive operational efficiency via cost management strategy and business process improvements with the cost savings are channelled to value-creating outcomes such as expanding to new markets.
The survey revealed that the local market is concerned about the increasing cost of doing business and the weakening of ringgit, which will have an impact on their bottom-line and import goods in their production process.