Malaysia is poised to become the top destination for businesses from the Association of Southeast Asian Nations (Asean) and Greater China looking to expand over the next three years, according to the latest UOB Business Outlook Study 2024.
This annual study, now in its fifth edition, surveyed over 4,000 small and medium-sized enterprises (SMEs) and large enterprises across seven markets, including more than 500 Malaysian businesses. The findings revealed a strong sense of optimism among these businesses regarding Malaysia’s growth prospects.
Key Insights from the Study
The UOB Business Outlook Study indicates that local businesses are gearing up for growth, buoyed by Malaysia’s economic potential. “The UOB Business Outlook Study indicates that local businesses are gearing up for a period of growth as they are bullish on Malaysia’s economic potential,” said UOB Malaysia CEO Ng Wei Wei.
Several factors contribute to this positive outlook, including the China+1 strategy, the upcoming Johor-Singapore Special Economic Zone, and the global semiconductor industry’s upcycle. These elements make Malaysia an attractive hub for regional business activities.
Business Sentiment and Sector Optimism
The survey found that more than seven in ten Malaysian businesses have a positive outlook on the current business environment, with 76% expecting improved business performance this year. The most optimistic sectors are industrials, oil and gas (90%), and manufacturing and engineering (80%).
However, despite this optimism, many businesses are still recovering from the recent economic slowdown and are concerned about inflation and higher operating costs.
Expansion Plans and Sustainability Goals
Almost 80% of Malaysian businesses plan to expand overseas to boost profits and enhance their international reputation. Asean and mainland China are the top markets for expansion, with Indonesia being the most important country for local businesses to venture into, followed by Singapore, Thailand, and Brunei.
Sustainability is also a key focus, with over eight in ten local businesses recognizing its importance in attracting investors. However, only 39% of these businesses have implemented sustainability practices, with the manufacturing and engineering sector leading the way at 53%.
Call for Support
The survey highlights the need for more financial support to encourage better adoption of sustainability practices. Businesses are requesting tax incentives, sustainable financing options, and easier access to funding. Additionally, they are seeking training programs to reskill employees on sustainability initiatives, which are essential for attracting investment and fostering growth.
Malaysia’s strong economic fundamentals and strategic initiatives are making it a top destination for business expansion in the region. With continued support and a focus on sustainability, Malaysian businesses are well-positioned for a period of significant growth.