Malaysia shines with strong economic performance, unique set of challenges - Jetro - MIDA | Malaysian Investment Development Authority
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Malaysia shines with strong economic performance, unique set of challenges – Jetro

Malaysia shines with strong economic performance, unique set of challenges – Jetro

19 Jan 2024

Malaysia is a shining star with a strong economic performance and a unique set of challenges, according to the Japan External Trade Organisation (Jetro).

In Jetro’s survey, called the “Business Conditions of Japanese Companies Operating Overseas in Asia and Oceania” for the financial year 2023 (FY2023), Malaysia stood out among major ASEAN countries as the only nation experiencing a consistent increase in operating surplus.

“The forecast for FY2023 reveals an impressive 67.9 per cent operating surplus, marking a steady climb from 59.7 per cent in FY2021 and 63.0 per cent in FY2022.

“The improved percentage for FY2023 is 34.2 per cent, with expectations of further enhancement in 2024,” the survey said.

It also found that over half of Malaysian companies (50.2 per cent) are considering business expansion, surpassing the 50 per cent mark for the first time in five years.

Jetro said the respondents expressed interest not only in expanding sales but also in the production of high-value-added products and investing in research and development.

“Malaysia’s investment environment is lauded for its ease of communication, with 80 per cent of companies highlighting the absence of language barriers,” it said.

However, risks are centred around human resources, including escalating labour costs, high turnover rates, labour shortages, and recruitment challenges.

“More than 60 per cent of ASEAN countries, with Malaysia leading at 63.5 per cent, face a severe shortage of human resources, particularly professionals and factory workers.

“Malaysian companies are actively automating production lines, showcasing the nation’s top rank in automation efforts and interest in automation within ASEAN,” Jetro reported.

Meanwhile, Malaysia exhibited a growing commitment to environmental, social, and governance (ESG) practices, with 45.4 per cent of companies undertaking decarbonisation initiatives.

“Human rights issues are recognised as a management challenge by a staggering 85.7 per cent of companies, ranking Malaysia first among major ASEAN countries for the third consecutive year,” it stated.

Market development strategies are evolving, with a shift towards local companies for business-to-business (B2B) targets and the upper class for Business-toconsumer (B2C).

The challenges include the small market size, difficulties in government and industry connections, and designing effective marketing campaigns due to ethnic diversity.

The survey noted that Malaysia’s economic landscape showcases remarkable growth in operating profits and a positive inclination towards business expansion and ESG practices.

However, the nation grapples with intricate challenges in human resources and market development unique to its diverse environment.

Source: Bernama