The Chinese business community in the country is less optimistic about the economic outlook for the second half of the year despite a slew of government initiatives, a survey by a leading Chinese business group revealed.

Tough domestic competition as a result of trade liberalisation has topped the three major factors that adversely affected the community's business performance, according to the Associated Chinese Chamber of Commerce and Industry of Malaysia (ACCCIM).

Two other factors were the increase in operating cost and price of raw materials, as well as government policies.

Among the policies cited include the Ninth Malaysian Plan (9MP), the Iskandar Development Region, procurement system and the guidelines of distributive trade.

Weaker business prospects

"This also highlighted a need for the government to improve its delivery system and make its policy more transparent and liberal," said the influential group which represents 28,000 Chinese businessmen and trade associations in its findings released on Monday.

Other factors that reduced the Chinese business community's optimism were weaker business prospects and the expectation of weaker sales performance.

Out of the 256 questionnaires returned to ACCCIM, more respondents (from 15 to 20 percent) expect local sales to fall while there was a sharp drop of the respondents who anticipate their export sales to increase (from 37 to 19 percent).

The chamber sent out a total of 705 questionnaires.

The pessimism among the Chinese business community may be construed as 'bad news' for the BN government, especially its Chinese-based parties, after separate surveys had shown that Chinese voters are likely to vote for the opposition in the coming general election.

An estimated 90 percent of the small-and-medium-sized industries are Chinese-owned.

Despite their pessimism on the economic outlook, the majority of the respondents nevertheless remained optimistic or somewhat optimistic with regard to the country's economic outlook in the next two to three years (from 68 to 73 percent).

Passing cost to end-users

Meanwhile, most of the respondents said they had not felt the impact of the 9MP nor a booming share market.

Asked for their opinions on the 9MP, half of the respondents said they had not felt its impact on their business while only one-third opined that the five-year economic blueprint would have a positive impact for them.

The economic blueprint, the first by Prime Minister Abdullah Ahmad Badawi, who is also the finance minister, was announced in March last year.

Fifty seven percent said the share market - where the Kuala Lumpur Composite Index had reached a record high of more than 1,300 points in the first half - has no impact on their business while 38 percent said the impact has been positive.

"Part of the reason why many indicated the impact was neutral, as anecdotal evidences suggested (was) that the participation of retail investors was not as high as in 1993's bull-run," the findings explained.

On the government's move of increasing the salary of public servants by 5 percent to 35 percent, nearly half (49 percent) of the respondents opined it would have a positive impact on their business while 41 percent disagreed.

However, the salary hike for civil servants also translated into 62 percent of the respondents feeling that it would partly add on to the inflationary pressures in the country.

The survey also found that increasingly more respondents (from 44 to 66 percent) were able to pass on part of the rising cost - petrol, electricity tariff and water rate - to the end-users.

However, 28 percent of the respondents said they were not able to do so due to keen competition and excess capacity faced by businesses.