German companies in Malaysia expect 2024 to be challenging due to geopolitical tensions playing out across the globe, the declining ringgit and high-interest rates, said the Malaysian-German Chamber of Commerce and Industry (MGCC).
MGCC’s bi-annual AHK World Business Outlook Fall 2023 survey, which captures the sentiments of German firms operating in Malaysia, revealed that 49% of companies said the outlook for Malaysia next year will remain the same, while 34% said the local economic development will be favourable.
When asked about the economic risks for companies in the next 12 months, 51% of respondents said demand was a major concern, followed by a lack of skilled workers (46%) and high exchange rates due to the declining ringgit (46%).
Based on current global events, many respondents predicted that high interest rates are here to stay globally which would burden new investments and investors.
“With the ongoing geopolitical tensions and territorial anxieties in the South China Sea, it comes as no surprise that geopolitical tensions ranked high on the list which respondents said will play a crucial part in shaping the progress of 2024.
“Another concern is technical barriers to trade and sanctions which businesses view as hurdles that will destabilise supply chains,” said MGCC executive director Daniel Bernbeck in a statement on Wednesday.
In terms of spending, the majority of respondents (49%) said their investments would remain the same, 39% of respondents intend to ramp up investments, 7% will lower their investments in Malaysia and 5% have no investments planned for the coming year.
However, significant investments are expected to be made in the areas of production and manufacturing (46%), sales and marketing (43%) and services such as shared service centres (41%).
The AHK World Business Outlook is based on a survey of member companies of the German Chambers of Commerce Abroad, Delegations and Representative Offices (AHKs) amongst over 40,000 member companies in 92 countries around the world.
Bernbeck said amid the prevailing global uncertainties, Malaysia’s adoption of several mechanisms, including the New Industrial Master Plan 2030, the National Energy Transition Roadmap, and being part of the Regional Comprehensive Economic Partnership as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership free trade agreements, will support the country’s transformation along with the economies worldwide.
“These strategies would at the same time ensure Malaysia remains relevant and competitive globally,” he said. – Bernama