Local factors drive optimism in Malaysia
KUALA LUMPUR: Optimism is rising in Malaysia, thanks to its resilient domestic economy as well as external market risks which have receded, according to corporate clients of a foreign bank.
Standard Chartered Bank (StanChart) found optimism rose in Kuala Lumpur but fell sharply in Jakarta and remained unchanged in the case of Bangkok.
"This suggests that local factors are now driving sentiment more than in 2012, when the European debt crisis was a major cause for concern."
According to the bank, the clients expect business prospects to be better in 2013 than in 2012 and this is explained by the improved external outlook and resilient domestic activity.
"In early 2012, given the weak external outlook and the ongoing debt crisis in Europe, businesses may have been worried about Malaysia's large trade exposure, at about 190 per cent of GDP (gross domestic product)."
But the domestic economy turned out to be highly resilient in 2012 amid strong consumption and investment.
This year, external market risks have receded while the fear of an euro-area break-up has dissipated while the US economy appears to be on a stronger footing.
" This, coupled with strong expectations that Malaysia's ongoing investment drive will continue, has resulted in high business optimism," it noted, adding that about 41 per cent of its Kuala Lumpur clients expect better business prospects this year.
On challenges, they cited managing rising costs and regulatory/policy uncertainty the biggest.
"This reflects stronger business confidence in the economy, especially after a stellar 2012, when growth was strong despite the external drag."
Wage hikes both domestically (due to the implementation of minimum wages and the low unemployment rate) and in neighbouring countries have added to the cost of doing business, and this is reflected in greater concern about managing costs.
This observation was reinforced by a manufacturer of consumer electronics, who noted that the new minimum wage has affected the majority of his workers.
More than 80 per cent of clients in Malaysia remain either bullish or neutral about the ringgit by end-2013, it added.
The StanChart global research team held annual briefings to over 500 corporate clients in Kuala Lumpur, Bangkok and Jakarta, which enabled them to gauge sentiment around the region on a number of topics, including what clients see affecting their business the most in 2013 and in which direction they see their local currency heading against the US dollar.
"This suggests that local factors are now driving sentiment more than in 2012, when the European debt crisis was a major cause for concern."
According to the bank, the clients expect business prospects to be better in 2013 than in 2012 and this is explained by the improved external outlook and resilient domestic activity.
"In early 2012, given the weak external outlook and the ongoing debt crisis in Europe, businesses may have been worried about Malaysia's large trade exposure, at about 190 per cent of GDP (gross domestic product)."
This year, external market risks have receded while the fear of an euro-area break-up has dissipated while the US economy appears to be on a stronger footing.
" This, coupled with strong expectations that Malaysia's ongoing investment drive will continue, has resulted in high business optimism," it noted, adding that about 41 per cent of its Kuala Lumpur clients expect better business prospects this year.
On challenges, they cited managing rising costs and regulatory/policy uncertainty the biggest.
"This reflects stronger business confidence in the economy, especially after a stellar 2012, when growth was strong despite the external drag."
Wage hikes both domestically (due to the implementation of minimum wages and the low unemployment rate) and in neighbouring countries have added to the cost of doing business, and this is reflected in greater concern about managing costs.
This observation was reinforced by a manufacturer of consumer electronics, who noted that the new minimum wage has affected the majority of his workers.
More than 80 per cent of clients in Malaysia remain either bullish or neutral about the ringgit by end-2013, it added.
The StanChart global research team held annual briefings to over 500 corporate clients in Kuala Lumpur, Bangkok and Jakarta, which enabled them to gauge sentiment around the region on a number of topics, including what clients see affecting their business the most in 2013 and in which direction they see their local currency heading against the US dollar.
Comments
Post a Comment