Businesses cautiously optimistic amid rising costs, geopolitical issues - survey

Manufacturers are cautiously optimistic about revenue growth this year, according to a survey.

Based on the Federation of Malaysian Manufacturers’ (FMM) semi-annual survey, 56 percent of its respondents expect growth, 24 percent anticipate stability, and 19 percent predict declines.

FMM president Soh Thian Lai said the market remains subdued about this year's prospects amid geopolitical tensions and uncertainties, which could affect its overall dynamism.

“Intensified pressure on input costs, increasing market competition, particularly due to the United States tax policy, weak demand, difficulties in attracting new customers, and depreciating ringgit are among major challenges for the year,” Soh (above) said during the presentation of the 26th semi-annual survey today.

He also noted that 39 percent of 524 respondents cited an increased regulatory burden as a new challenge, while another 39 percent highlighted difficulties in accessing domestic skilled labour, and 36 percent pointed to higher tax obligations as key hurdles for the manufacturers.

Soh revealed that manufacturers' expectations for higher business activity have eased, as shown by the expected business activity index, which moderated to 101 from 106 previously.

“26 percent of the respondents expect business conditions to improve soon, down from 29 percent previously.

“However, despite the moderation, confidence remains, with the index staying above 100," he said.

Sales optimism

Soh pointed out that manufacturers' expectations for local and export sales reflect cautious stability.

Local sales optimism remains limited, with only 20 percent of the respondents expecting higher sales, while responses indicating stable sales expectations grew to 55 percent, suggesting a shift toward predictability over expansion, he said.

The survey also revealed that export sales are projected to soften slightly, with the percentage of respondents expecting higher exports shrinking to 23 percent from 26 percent due to global trade uncertainties.

“However, 51 percent of respondents anticipate stable exports. Overall, businesses are prioritising stability over rapid expansion, with pessimism fading across both markets.

“Manufacturers' expectations for higher production volume also fell to 30 percent from 32 percent previously.

“Meanwhile, stable production expectations grew to 48 percent, reflecting greater predictability in output,” he shared.

Capital investment

On capital investment, respondents’ expectations remain stable, with 32 percent projecting higher investment, up slightly from 30 percent previously.

“Respondents with stable investment expectations fell to 52 percent.

“The expected capital investment index remained at 116, signalling cautious confidence in expansion,” Soh added.

- Bernama

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