In view of heightened political activities such as by-elections, a business group today urged politicians not to lose sight of Malaysia's economic goals.

acccim economy survey 210901 william cheng "We hope there will be less by-elections. Then politicians can spend more time to rebuild the economy," said William Cheng Heng Jem (left) , president of the Associated Chinese Chambers of Commerce and Industry of Malaysia (Acccim), during a press conference today.

He added that political stability was one of Malaysia's advantages in attracting foreign investors.

"Don't imitate our neighbouring country which has been besieged by demonstrations, chasing away the tourists," he added.

Cheng welcomed the recent move by Prime Minister Najib Abdul Razak to liberalise the service and financial sectors. He said he saw it is a positive move to attract investment and encourage competition.

On April 22, Najib, who is also the finance minister, ended the 30 percent bumiputera equity rule for the services sector in an attempt to improve Malaysia's competitiveness against the backdrop of a softening global economy.

Four days after the move, Najib announced measures to liberalise the financial sector which would allow foreigners to own up to a 70 percent equity in all financial institutions except commercial banks, up from the previous 49 percent.

"The economy needs foreign and domestic investments now, so the liberalisation would help attract more investment here," Cheng said.

Markets have shrunk

Malaysia will see another by-election, its sixth after the 2008 March 8 general election, for the Penanti state seat at Penang, following the resignation of PKR's Mohammad Fairus Khairuddin, the former Penang deputy chief minister (I).

Najib has criticised the by-election it as ‘a sheer waste of public funds' and distracting to the government's attention on the global economic crisis. acccim sme survey report market shrinking rate 050509

BN and Umno leaders are still considering whether to contest the seat with a final decision yet to be made.

Meanwhile, most small and medium enterprises (SMEs) said the current economic crisis was having a greater impact when compared with the 1997 Asian financial crisis.

According to Acccim's 2009 SMEs Survey Report, 56 percent of SMEs held such a view and indicating their markets have shrunk.

Thirty-nine percent or 480 of the respondents said they have reviewed their business plans to reduce the impact of economic crisis. About 29 percent of the respondents have slashed their production cost while another 27 percent said they would explore new markets.

Only seven percent of the respondents stated that they would retrench workers to overcome the crisis.

Reduce corporate tax

Most of the SMEs saw the two government stimulus packages, the latest announced on March 10, as not being able to assist them in the immediate term.

Less than 19 percent of SMEs agreed that they could benefit from the assistance programmes.

acccim sme survey report second stimulus package 050509

Instead, most companies hoped the government would reduce corporate tax and the electricity tariff. Cheng suggested a one or two percent tax reduction per annum would be favourable to businesses.

"If the government cannot afford it, we hope there will be a temporary reduction for a two-year period," he said.

Cheng added the government should reduce corporate electricity tariffs to the level prior to the 26 percent increase in June last year.

Held between March 25 and April 25, the Acccim survey polled 1,231 respondents, garnering a 61.55 percent response rate.

Cheng said Acccim would submit the survey findings to Najib, Bank Negara Malaysia, the Malaysian External Trade Development Corporation (Matrade) and the Small and Medium Industries Development Corporation (Smidec).