Published: August 27, 2012
KUALA LUMPUR: Malaysia's Business Confidence Index (BCI) for micro, small and medium enterprises (MSME) dropped to 59.5 points in the second quarter this year, from 62.7 points in the first quarter.
According to Hong Kong-based market research agency Radar Global, 90 per cent of respondents were positive about their own company's financial prospects, but only 36 per cent was positive about the country's economy over the next 12 months.
Radar Global, which conducted quarterly survey on business confidence, economic outlook and bank reputations among MSMEs in seven emerging markets, said the second quarter results revealed a slight decline of BCI in India, Malaysia, China and Thailand.
Its co-founder and director Grant Beuzeval said despite the small decline of BCI in four countries, the "net outlook" is still very positive in all countries.
"Although a slight decline in overall business confidence levels, most respondents still believe their country's economy is improving," he said in a statement issued recently.
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Radar Global's MSMEs survey covers seven emerging markets, namely China, Egypt, India, Malaysia, the Philippines, Thailand and the UAE.
The findings are based on 4,600 interviews with finance managers and other business leaders of companies less than 250 employees during the first two quarters of 2012. This represents a good mix of industries and company sizes.
In Malaysia, the findings showed that new businesses (less than five years) are the most optimistic about the economy, while the oldest companies (above 31 years) are the least optimistic.
The most optimistic sectors for continued improvement in the country's economy are construction (45 per cent) and transport (42 per cent), while 23 per cent of the trade sector (wholesale and retail) expects a slowdown.
About 40 per cent of companies expect their workforce to increase over the coming 12 months, with 55 per cent expecting it to remain about the same, and only five per cent expect a shrinkage.
MSMEs surveyed view three main barriers to local business, namely corruption (46 per cent), red tape (39 per cent) and labour shortage (33 per cent).
Malaysian respondents also saw a European recession, rising oil prices and global recession as the three biggest issues facing global business.
Beuzeval said although the overall momentum in the seven markets appear to be improving among government bodies and financial institutions to support, nurture and sustain MSMEs, these measures are being implemented too slowly for business owners.
He said MSMEs are the lifeblood of the local and global economy as they are hotbeds of innovation, competition, growth and risk-taking. Yet, they end up taking all the risks by themselves.
"Radar Global believes it is important to measure and monitor the business confidence of MSMEs, so we created the Greenhouse250 Index, which we hope will be synonymous with business confidence in emerging markets," he added.
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