Malaysia: The New Business Epicenter in ASEAN
Malaysia is increasingly recognized as the prime destination for businesses seeking growth opportunities within ASEAN, according to the latest findings from the UOB Business Outlook Study 2024. This comprehensive study surveyed 4,000 businesses across key markets in ASEAN and Greater China, unveiling a strong preference for Malaysia over regional counterparts like Singapore, Thailand, and Indonesia.
Now in its fifth iteration, the annual study is UOB’s flagship regional research, exploring the business climate and expansion outlook among small and medium-sized enterprises (SMEs) as well as large corporations across Singapore, Indonesia, Malaysia, Thailand, Vietnam, Mainland China, and Hong Kong. This year, its scope expanded to encapsulate the broader ASEAN and Greater China markets, offering deeper insights into where businesses are setting their sights for future growth.
Despite the lingering economic uncertainties, an overwhelming 80% of those surveyed expressed an eagerness to venture beyond their local markets to boost profitability and enhance their global standing. This sentiment is particularly robust among companies from Indonesia and Vietnam, with key sectors like manufacturing and engineering, and technology, media, and telecommunications leading the charge towards regional expansion.
Navigating Business Challenges in ASEAN
The UOB study also sheds light on the prevailing optimism in the business environment, with nearly eight in 10 businesses holding a positive outlook. Yet, a quarter of the respondents anticipate even more substantial improvements by year’s end. However, this optimism is tempered by various challenges including the ongoing concerns over inflation, rising operating costs, and the general economic recovery pace.
Finding suitable partners remains a significant hurdle, with 39% of businesses flagging this as a concern. Additionally, 36% struggle with a shortage of in-house talent or expertise necessary for managing overseas operations, while 35% are hampered by insufficient financial support or funding.
The Role of Sustainability and Supply Chain Management
As businesses look to the future, sustainability emerges as a critical focus area. Although nearly 90% of respondents recognize its importance, only 44% have taken steps to integrate sustainable practices into their operations. The recognition of effective supply chain management as a vital component of success is nearly unanimous among surveyed businesses, particularly in Mainland China and the ASEAN nations of Indonesia, Thailand, and Vietnam.
Approximately 30% of companies are actively diversifying their supply chains, refining inventory management practices, and leveraging data analytics to enhance decision-making speed and accuracy. The demand for more support is clear, with calls for tax incentives, easier access to funding, and enhanced collaboration opportunities to tackle prevalent supply chain issues.
The Digital Frontier: Opportunities and Challenges
The push towards digitalization continues unabated with about 80% of surveyed businesses having initiated digital transformation in at least one department. Plans are on the table to increase spending on digitalization efforts throughout the year. Nevertheless, this transition does not come without its challenges. Concerns over cyber security, high costs of implementation, and a general lack of digital expertise among staff are notable barriers that need addressing.
As Malaysia positions itself as a beacon for business expansion in ASEAN, the insights from the UOB Business Outlook Study 2024 highlight both the opportunities and obstacles that lie ahead. For businesses ready to take on these challenges, Malaysia offers a promising landscape for growth and innovation in the increasingly competitive ASEAN market.
