KUALA LUMPUR (April 23): Malaysia has emerged as the most significant country within Asean for businesses to venture into, as shown by the UOB Business Outlook Study 2024 (SMEs & Large Enterprises).

The study, which surveyed 4,000 businesses across seven key markets in the Asean and Greater China regions, revealed that approximately three in five businesses identified Asean as the top market for expansion within the next three years, while only one in three businesses expressed interest in entering Mainland China.

“Within Asean, Malaysia is the most important country that businesses want to venture into, followed by Singapore, Thailand and Indonesia,” said UOB in a statement on Tuesday.

Now in its fifth year, the annual study serves as UOB’s flagship regional research, gauging business outlook and key expectations among small- and medium-sized enterprises (SMEs) and large enterprises across Singapore, Indonesia, Malaysia, Thailand, Vietnam, Mainland China and Hong Kong, with its scope extended last year to include Asean and Greater China markets.

Despite prevailing economic uncertainties, UOB said over 80% of the businesses surveyed are eager to explore international markets, aiming to bolster their profits and reputation.

This interest is particularly strong among Indonesian and Vietnamese companies, with the top two sectors aiming for expansion being manufacturing and engineering, followed by technology, media and telecommunications, as revealed by the findings.

Nearly eight in 10 businesses hold positive views about the current business environment, with one in four expecting significant improvement in business performance this year. However, many businesses remain cautious due to concerns about the impact of inflation, higher operating costs, and recovery from the overall economic slowdown.

The study also highlights several challenges faced by businesses, with 39% indicating difficulty in finding suitable partners, 36% citing a lack of in-house talent/expertise for overseas expansion, and 35% facing inadequate financial support or funds.

Moreover, nearly 90% of businesses acknowledge the importance of sustainability, yet only 44% have implemented sustainable practices. Similarly, around 90% of businesses recognise the significance of supply chain management, particularly in Mainland China, Indonesia, Thailand and Vietnam.

To ensure supply chain stability, about three in 10 businesses are diversifying their supply chains, improving inventory management practices, and leveraging data analytics for faster decision-making. Companies are seeking more support, such as tax incentives/rebates, easier access to funding/grants, and opportunities for collaboration to address ongoing supply chain challenges.

Regarding digitalisation, around four in five businesses have digitalised operations in at least one department and plan to increase digitalisation spending this year. However, the findings also showed that the businesses anticipate challenges including cyber security concerns, high implementation costs, and a lack of digital skills among employees on their digitalisation journey.