(AFP) Chinese businessmen are grappling with higher production costs and debt problems as the economic slowdown begins to bite, an industry group said today.

The powerful Associated Chinese Chambers of Commerce and Industry (ACCIM) said it would launch a nationwide survey to gauge the full impact of the downturn on the Chinese business community.

Chua Tia Guan, who heads the ACCIM economic survey unit, told a press conference that many members had voiced sceptism since early last year about Malaysia's short-term economic prospects.

Most were more upbeat about the medium and long-term outlook, but have acted cautiously amid the US slowdown, Chua said.

"Some of our members have raised problems they faced due to the slowdown which has caused costs to rise, difficulties in servicing borrowings as well as collecting debts," said Peck Boon Soon, an economist with the survey unit.

The survey will seek views of some 800 members on economic prospects for the second half of the year and analyse their preparation for the ASEAN Free Trade Area (AFTA) which comes into force in 2003.

The ACCIM represents some 20,000 Chinese companies and trade associations.

Chinese make up 25 percent of Malaysia's 23 million population, the second largest group after ethnic Malays.

'Crawling peg'

Chua said results of the survey would be released late August and provide a basis for ACCIM to submit relevant proposals to the government.

He said the ACCIM had earlier this year proposed to the government to adopt a "crawling peg," which would allow the ringgit to float within a narrow band.

The ringgit has been fixed at 3.80 to the dollar since September 1998.

Peck said a "crawling peg" would allow the currency to adjust to market demands and result in more efficient allocation of resouces.