78% of Malaysian businesses are either moderately or extremely concerned about the COVID-19 pandemic according to the results highlighted in the Impact of COVID-19 on Malaysian Businesses report. The report, themed ‘Business in Turbulence,’ identifies key challenges and concerns faced by the Malaysian industries through the sentiments expressed by business leaders.
The report suggests that the concerns of Malaysian businesses varies across different industries. For instance, the food & beverage, entertainment & tourism, and agriculture industries are most concerned with a decrease in consumer confidence. In contrast, almost half of the firms (43%) within the business and financial services industry are concerned about a potential global recession.
As the government imposes stringent health and safety standard operating procedures during the COVID-19 disruption, construction firms struggle to balance between worker well-being and productivity. The construction industry is most worried (35%) about a reduction in productivity of their workforce. During the same period, the manufacturing and food & beverage industry noted vulnerability to supply chain shocks as one of their major worries. With an increasingly connected and hyper-converged economy, the pandemic has surfaced the risks of being internationally dependent for key production resources
Food-related industries are struggling to cope with demand spikes and supply chain disruptions. With more than a quarter (26%) of food-related businesses being family-owned, they face the highest risks of going out of business. When asked how long their business can financially stay afloat and weather the impact of COVID-19, about a third of the firms from food & beverage (34%), entertainment & tourism (33%), and advanced manufacturing (31%) reported that they could only stay afloat for 1 to 3 months.
Other key findings from the survey:
- 65% of respondents are re-strategizing their financial commitments given continued high levels of uncertainties.
- Managers and company owners appear to have a bleak outlook, with 73% of businesses expecting the company’s revenue to decrease this year.
- 60% of companies cited the immediate financial impact of the pandemic as their greatest concern followed by a potential global recession (42%), and 31% questioning their ability to stay afloat.
- Companies are exploring all avenues to mitigate the impact of the pandemic, with a near
equal focus on changing business and operational strategy (66%), cost containment (65%), and changing company financing and expenditure plans (63%).
- 73% of respondents fear that Malaysia may be at a high risk of economic stagnation.
Despite the various headwinds from the pandemic and global economic uncertainty, 15% of respondents remain very optimistic and 30% optimistic about Malaysia’s economic outlook in the coming 12 months. Professor Mahendhiran Nair, Chief Executive Officer of Monash Malaysia Research and Development (MMR&D) believes this reflects the expectations of a recovery from the negative impacts of the pandemic in the second half of 2020, as the economy opens up gradually and better economic growth numbers registered in the first half of 2021.
“The above results are due in part to the fact that Malaysia has been relatively successful in containing the pandemic, compared with many regional and developed economies. The number of new COVID-19 cases were low double-digit figures in most of June and July. The low number of active cases also bolsters consumer confidence and demand, as more sectors are opened for business. Nevertheless, most businesses (32%) are only moderately optimistic, which suggests a cautiously optimistic outlook and close to 23% are pessimistic about the future economic outlook, he said.
The concerned expressed by the business leaders vary according to the sectors. “The top three sectors that are most concerned by the disruptions due to Covid-19 are manufacturing, education and healthcare. The use of advanced technology and new business models will be critical for these and other industries to navigate through these turbulent times to enhance their productivity, efficiency and competitiveness” said Associate Professor Santha Vaithilingam, Deputy Head of School (Engagement and Impact) – School of Business at Monash University Malaysia.
The Impact of COVID-19 on Malaysian Businesses report is a joint initiative between Monash University Malaysia, Monash Malaysia R&D Sdn Bhd. and Global Asia in the 21st Century Research Platform. A total of 802 respondents from various industries and locations expressed their views and opinions on how the COVID-19 pandemic has and will impact Malaysian businesses. These findings are vital as it reflects the current state of the businesses in Malaysia and a glimpse of the upcoming year.
The Impact of COVID-19 on Malaysian Businesses report is vital in gauging the health of the Malaysian business environment currently and in the coming year. “Beyond the immediate situation and response, the content of the report provides an analysis of the potential longer-term consequences and impacts. Understanding these issues, the level of business preparedness and ability to absorb the COVID aftershocks provides insights into the transformational playbook that will be needed to be put in place to create a resilient path to sustain recovery,” said Professor Pervaiz K Ahmed, Co-Director of Global Asia in the 21st Century and Head of School (Business), Monash University Malaysia.