Accountants and finance professionals are not merely concerned with domestic forces at play. The findings of this business and economic outlook clearly demonstrate that Malaysian accountants are dialled-in to global and regional dynamics.
One such dynamic is the growth potential of ASEAN, which represents a combined market of over 600 million people with more than US$2.3 trillion in GDP – the 7th largest economy in the world7. 34% of respondents see the strong growth potential in ASEAN as a significant positive factor for the economy in 2019. This is borne out by MATRADE’s (Malaysia External Trade Development Corporation) statistics, which shows that exports to ASEAN rose by 4.8% to RM261.97 billion, in the first 11 months of 2018, on the back of higher exports of electrical & electronic (E&E) products, crude petroleum, manufactures of metal, chemicals and chemical products, while imports increased by 4.4% to RM206.2 billion.
Interestingly, despite the controversies around the Belt and Road Initiative (BRI), particularly around selected large-scale infrastructure projects, the majority of respondents are however overall positive on the potential net benefits of BRI to businesses in Malaysia. 53% of respondents believe that BRI could have a positive impact on the Malaysian economy, while only less than 10% are concerned about a negative impact.
US – China trade war
In terms of potential headwinds, accountants and finance professionals are primarily concerned over the on-going US-China trade war. Here, 27% of respondents are wary of the potential impact to Malaysian businesses as a result of this conflict. This is supported by MATRADE statistics, where China is Malaysia’s largest trading partner, both in terms of exports and imports.
Among the respondents, finance directors and CFOs rate this even higher at 31%, reflecting a stronger recognition that any escalation of the US-China trade war, amid a Chinese economy already showing signs of slowdown, will have much larger implications on Malaysian businesses.
The findings of our survey in terms of future global and regional headwinds is further supported by data from the 4th quarter 2018 edition of Global Economic Conditions Survey (GECS) published by ACCA and IMA (Institute of Management Accountants), in January 2019, where a global poll of 3,800 accountants shows that all key regions recorded a negative confidence score with signs of growth weakening in the world’s three biggest economies – the US, China and the Eurozone. Interestingly, the biggest concern of GECS respondents was rising costs, with 55% citing this as an issue. This is remarkably consistent with the findings of our survey, where rising operating costs is ranked as the top challenge by respondents from the corporate sector (45%). This is further elaborated in the section on ‘Key challenges faced by Malaysian businesses’ below.