NAJIB NAJIB DID NOTHING!: Citing 'no real change', Asian business leaders unimpressed with Malaysia reforms

KUALA LUMPUR - Despite Putrajaya’s economic and political reform efforts, most Asian corporations with interests in Malaysia remain skeptical that the business climate here will change, with only 13 per cent believing there will be “significant improvements” over the next three years, a survey has shown.

The Economist Corporate Network’s (ECN) Asia Business Outlook Survey 2015 released this month also showed that the executives were more confident of positive change in Malaysia’s neighbour Indonesia, which the survey has dubbed as “Southeast Asia’s economic engine”.

The survey, which was carried out in December 2014, polled 704 senior executives in the Asia Pacific region from a wide range of industries, including oil and gas, healthcare and pharmaceuticals, IT and telecommunications as well as banking and insurance.

Of the those polled, only 12.9 per cent said they believe that Malaysia’s reforms would significantly improve business in the next three years while 42.3 per cent said there will be “no real change”.

In comparison, respondents were more upbeat on their prospects in Indonesia, with 38.6 per cent believing in “significant improvements” and just 14.7 per cent disagreeing.

The tepid response to Malaysia’s reform package comes even as the ruling Barisan Nasional (BN) government moved last year to scrap fuel subsidies and decided to implement the six per cent broad-based Goods and Services (GST) consumption tax this April.

Just last week, Prime Minister Datuk Seri Najib Razak’s administration announced a revision to its budget for 2015 in response to plunging oil prices — global crude oil prices have dipped to less than half of the federal government’s estimated average of US$110 (RM396) per barrel for 2015.

The oil slump has also weakened the ringgit, with Bloomberg reporting today that the ringgit extended losses as this month’s worst-performing Asian currency.

The prime minister has also announced an RM5.5 billion cut in Putrajaya’s operating expenditure this year and adjusted the deficit reduction target to 3.2 per cent of the national economy instead of the original 3 per cent, while maintaining the RM48.5 billion development budget.

The ECN survey showed Malaysia falling behind Indonesia in a ranking of investment destinations, with about 60 per cent of companies saying they will increase their investment in the latter this year, compared to 42 per cent for the former.

Malaysia ranked fourth out of 14 countries, behind India, Indonesia and China, which topped the list of investment destinations.

“While the country has had a somewhat turbulent time over the past two years, what with falling commodity prices, a bruising election, and major currency volatility, few companies can afford to ignore Southeast Asia’s economic engine, and the fourth most populous country in the world,” said the survey, referring to Indonesia.

“Behind these three giants, sit a whole set of much smaller markets in Southeast Asia, such as Malaysia and Vietnam. While the markets may be relatively small, growth rates are attractive, and opportunities significant,” said the survey. - Malay Mail