A large segment of the Chinese business community is pessimistic about the country's economic outlook for the second half of this year, according to a survey conducted by a key business organisation.

The Associated Chinese Chambers of Commerce and Industry said that its survey, which was released yesterday, showed that the business community was "cautious and sceptical" about the current economic situation.

It warned that the economic outlook for the second half of the year "remains gloomy".

According to ACCCIM, one-third of the entrepreneurs surveyed expect their local sales to decrease, while 40 percent anticipate the same for foreign sales.

"The result is fully supported by the evidence of poor sales performance and collections, reduction in local and foreign demands, as well as cautious capital investment in the period under survey," the ACCCIM report added.

The survey, with 252 respondents from the manufacturing, wholesale, retailing and construction sectors, was done to assist the government in gauging the economic situation facing the Chinese business community.

The 32-page report was prepared by the organisation's Economic Survey Unit, a seven-member team of financial and economic analysts headed by Chua Tian Guan.

ACCCIM, which represents some 24,000 Chinese businessmen and trade associations, is headed by prominent Chinese community leader Lim Guan Teik, who was in the limelight recently for his valiant but failed attempt to buy over two major Chinese dailies from political party MCA.

Continued pegging

The survey found that for the first half of Malaysia's economic outlook this year, 49 percent of the respondents believed that the economy would remain stagnant while another 39 percent believed that the economy would deteriorate.

Only seven percent of the respondents said the economy would continue to grow while five percent were uncertain.

However, the survey found that 57 percent of the respondents were optimistic that the economy would rebound within the next two to three years.

Those surveyed believed that major problems affecting business performance was a drop in foreign and domestic demand of local goods, and domestic competition, with 43 percent saying that they had been affected by the slowdown in the US economy.

Slightly more than half (54 percent) of the respondents backed the government's policy of continued pegging of the ringgit to the US dollar.

Meanwhile, 26 percent of the respondents said they had been affected by globalisation and the Asean Free Trade Area agreement, while 42 percent had already taken steps to counter it.

Non-economic factors

The survey also highlighted several issues of concern such as the row over Malay special rights in the first half of 2001.

"The intense debate on Malay privileges as a result of a pledge by lobbyist group Suqiu and the failure of outstanding Chinese students to gain entrance into public universities were amongst the main news featured in the first half of 2001," the report said.

Suqiu came under heavy fire late last year for allegedly questioning the special privileges accorded to Malays.

The survey also mentioned the recent racial clashes in Kampung Medan, the detention of reformasi leaders under the Internal Security Act and the takeover of Nanyang Press Holdings by MCA.

The government in March cut its GDP growth forecast for this year to between five and six percent, from seven percent previously.

However, the recent slump in the US economy has forced some economists to predict a much slower growth, and perhaps even a recession.

Last month, Prime Minister Dr Mahathir Mohamad predicted that the economy could still grow by two or three percent this year despite global uncertainties.