This is they are still relying on the local market and have yet to fully reap the benefits of globalisation and digitalisation
LOCAL companies are generally still concerned about the global economic growth as only 42% believe the situation will improve over the next 12 months, based on the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) Business Survey Report 2021.
The report titled “Leading into the Future: Entrepreneurship in Post-pandemic Era” revealed that 55% think that the current conditions will stay or even further decline.
The report added that the cautious outlook among the respondents could be due to the fact that most of the local businesses, in particular the small and medium enterprises (SMEs), are still relying largely on the local market and have yet to fully reap the benefits of globalisation and digitalisation.
“The Covid-19 pandemic has been a time of uncertainty for most businesses across the globe. SMEs are the eye of the storm fighting for survival.
“Those who passed the test will come out stronger and as they have risen to meet the challenges they faced,” ACCCIM said during the virtual launch of the report today.
The survey, which was conducted during the period December 2021 to January 2022, has received a total of 724 respondents, comprising more than 50% respondents who are directors, MDs and chairman.
The respondents also own businesses with an annual turnover of less than RM25 million to more than RM500 million nationwide.
The survey was also carried out in collaboration with the Young Entrepreneurs Committee and PwC Malaysia.
Meanwhile, the report revealed that the pandemic had a significant impact on cashflow for most of the businesses, of which 56% of the respondents have seen a decrease in profits.
“This is further worsened by the supply chain disruption (47%) due to the global lockdown. Keeping the focus on cash became one of the key measures to help businesses sail through the storm.
“As a result, companies are taking various measures such as rapid cost cutting (28%) and salary reduction (25%) to manage their working capital. At this juncture, cash is king for a lot of businesses,” it said.
The report also stated that while government has announced various measures to help the businesses, in particular the SMEs, only 31% of the respondents have applied for government subsidies.
On the other hand, businesses were overwhelmed with having to deal with multiple threats and when asked about how concerned businesses were to an array of possible threats, the top seven threats were all ranked closely to each other.
The report noted that the top seven threats include policy uncertainty and over-regulation, geopolitical and economic uncertainty, supply chain disruption, attract and retain the right talent, changing consumer behaviour, professionalising the business and tax policy uncertainty.
“This rightfully reflects that businesses are overwhelmed with having to deal with multiple threats at once — they have to be prepared for volatility not just in their home countries, but globally.
“It is not just about changes in the business environment, but also economic and social environments and each of these are impacting businesses in some way or another,” it added.
On digitalisation outlook for businesses, the report said most companies need to catch up on digital transformation, as only 16% of the respondents have strong digital capabilities.
While 50% of the respondents are making use of technology to assess relevant data to improve decision making, only 25% have access to reliable and timely information.
Additionally, the survey saw more than 50% have not planned for upskilling the digital capabilities and only 30% of the respondents are exploring technology to create new business opportunities and to enhance customer experience.
While the entire digital transformation journey can be complex and costly, only a handful of about 19% have a clear and documented roadmap to reach their goal.
Commenting on this, ACCCIM said the Covid-19 pandemic has sped up the process for digital transformation globally and there is no turning back from this.
“Digital capabilities are now a ‘must have’ element for businesses to remain competitive. There is still a lot for companies to catch up on for their digital transformation.
“Businesses need to reconfigure their operations and seize the opportunity to transform themselves digitally in order to future proof their business,” it added. — by S BIRRUNTHA / pic MUHD AMIN NAHARUL