The Malaysian Insider
November 07, 2013

Business confidence in Malaysia plummeted in the third quarter of this year as the post-election boost has vanished, according to the Global Economic Condition Survey.

In a statement issued today, the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants (IMA) said the survey revealed that 65% of the respondents believed conditions in the Malaysian economy were stagnating in the third quarter of this year.

This is an increase from the 55% of respondents who felt business conditions in Malaysia were deteriorating or stagnating in the second quarter of the year. Only 13% of businesses reported confidence gains in the third quarter, down from 28% in the second quarter.

ACCA senior economic analyst Emmanuel Schizas said this was the second quarter of tightening conditions for its members in Malaysia. “Confidence in the economy and businesses’ own prospects have fallen back to pre-election levels and it is not hard to see why,” he said in the statement. “After stabilising in the first half of this year, pressures on demand and cash flow have risen once again, as a surge in perceived business opportunities around the election period has died down.”

ACCA Malaysia head Jennifer Lopez said finance professionals are seeing first-hand the renewed challenges facing businesses in Malaysia. “Feedback from respondents in Malaysia shows business investments in capital and staff have fallen for a second quarter.

“Inflation and foreign exchange volatility have increased for a third quarter in a row, which in turn has put importers under a lot of pressure.”

Significantly, Lopez said, a deepening credit crunch in China could have widespread implications for the Asia-Pacific. She said the approval ratings for Putrajaya’s economic policies are currently at one of the lowest points for some time, with some 63% disapproving, up from 51% in the second quarter of 2013.

However, she also pointed out that fears of public spending spiralling out of control appear to have died down. One of the government’s business policies which came under public criticism was the Bumiputera Economic Empowerment Agenda.

The affirmative action plan, announced by Prime Minister Datuk Seri Najib Razak last September, will dish out RM31 billion worth of contracts and financial assistance to help the Bumiputeras. However, questions have been raised over where the government intends to find the funds to finance the agenda.

The announcement of the agenda came about a week after Najib had said fuel subsidies would be further reduced, a move which would save the government about RM3.3 billion annually. – November 7, 2013.