This article first appeared in The Edge Malaysia Weekly on September 30, 2024 - October 6, 2024

THE Vistage-MIER CEO Confidence Index has risen since 2Q2023, with figures increasing each quarter until 114.6 in the current 3Q2024. This reflects a relatively optimistic outlook about the nation’s economic prospects among Malaysian CEOs. It also marks an increase of 7.7 points compared with 2Q2024 and a notable increment of 15.5 points compared with 3Q2023. This index measures CEO sentiment on various key economic indicators, including business conditions, revenue projections and investment expectations. Concurrently, Malaysia’s gross domestic product (GDP) growth for 2Q2024 is 5.9%, signalling robust economic expansion.

In 3Q2024, the current economic conditions index rose to 122, a 19-point increase from 2Q2024, indicating improved market activity and stronger-than-expected consumption. This is a 35-point rise since 3Q2023, highlighting sustained economic momentum. The expected economic conditions index also reflects optimism, starting at 125 in 2Q2024 and surging by 22 points to 147 in 3Q2024, signalling expectations for robust growth and improved market dynamics. The 33-point rise since 3Q2023 underscores growing economic confidence.

The expected change in employment for 3Q2024 shows a steady upward trend, increasing from 145 to 149, reflecting confidence in labour market stabilisation and indicating modest workforce expansion. This represents a seven-point increase since 3Q2023, highlighting strengthening employment momentum. The index for planned fixed investment saw a slight rise of two points from 144 in 2Q2024. More than 50% of the CEOs are planning to increase their investment soon.

Expected revenue growth indicates a positive trajectory (158 in 3Q2024), reflecting a three-point increase from 155 in 2Q2024. This steady increment suggests that 67% of CEOs are projecting an increase in revenue over the next quarter. Simultaneously, expected profit growth shows an eight-point increase in 3Q2024 compared with the previous quarter. There is also an increase to 144 (3Q2024) from 131 in 3Q2023, reflecting a 13-point growth between 3Q2023 and 3Q2024, further highlighting the positive trend in profit growth over the past year.

CEOs exhibit a high degree of optimism and confidence regarding both the domestic and export markets, with over 85% anticipating a positive trajectory for both local and export orders. The majority of CEOs, or 56%, anticipate that selling prices will remain stable. Additionally, 37% of CEOs foresee an increase in selling prices. However, a minority of the respondents, approximately 7%, express concerns about a potential decrease in selling prices.

The majority of respondents, around 54%, report a positive or strongly positive impact from the ringgit’s appreciation. This indicates that many businesses or individuals may have benefited from the stronger ringgit, potentially through lower import costs, improved purchasing power or favourable conditions for foreign investments. Meanwhile, 34% of respondents indicate a neutral stance, suggesting that for a significant portion, the strengthening of the ringgit has not materially affected their operations or personal circumstances. On the other hand, only 13% of respondents report a negative or strongly negative impact (see Chart 1).

A GDP growth rate of 5.9% for the second quarter was recorded. Almost 63% of respondents perceive a mild positive correlation between GDP growth and increased domestic demand. In contrast, 23% of respondents anticipate no impact on demand. A notable 10% expect a strong positive correlation, suggesting substantial gains in consumer spending, while 4% predict a potential decline in demand despite the favourable GDP growth rate. Increased consumer spending, bolstered by rising incomes and low unemployment rates, has significantly boosted economic activity (see Chart 2).

For Budget 2025, our respondents have highlighted the key fiscal priorities, with the top three wishes centring on taxation adjustments. Leading the list, respondents express a strong desire to reduce taxes and emphasise the need for a lower financial burden. Following closely, the respondents are advocating tax relief measures and seeking more favourable conditions for taxpayers facing specific economic pressures. Lastly, the respondents are calling for tax incentives aimed at promoting investments and economic growth through targeted fiscal benefits. These insights reflect a clear focus on easing tax-related pressures in the upcoming budget. Many CEOs advocate tax reduction as a strategy to enhance their company’s financial health and competitiveness. Lower taxes can lead to increased profitability, allowing businesses to reinvest savings into growth initiatives, research and development, and workforce expansion.

Additionally, reduced tax burdens can boost cash flow, providing greater flexibility for strategic investments and operational improvements. By advocating tax reductions, CEOs aim to optimise their company’s economic efficiency and long-term sustainability, ultimately benefiting shareholders and driving overall corporate success.

The primary issues identified include unattractive compensation packages (67% of responses), followed by the perception of misaligned company culture and values, cited by 50% of respondents. The steady brain drain of high-calibre talent from Malaysia is noted by 49% of respondents, while 43% report an unappealing work environment. Additionally, the lack of flexible hours and/or work-from-home arrangements is a concern for 36% of respondents. Finally, difficulties in hiring foreign talent due to bureaucratic obstacles are identified by 19% of those surveyed. These factors, along with education and skill gaps, make it difficult for companies to attract and retain top candidates in a competitive job market, leading to a high turnover and struggle in maintaining a stable, skilled workforce (see Chart 3).

According to the 2Q2024 Index survey, 83% of respondents strongly support reviving the Kuala Lumpur-Singapore High-Speed Rail (HSR) project. Stakeholders anticipate significant benefits, with 79% citing substantial economic growth, 74% emphasising enhanced connectivity, and 59% supporting increased investment and regional development. Additionally, 23% value the project for its environmental, social and governance (ESG)-related sustainable transportation benefits. Correspondingly, the revival of the project is expected to expand the talent pool by easing cross-border commuting between Singapore and Kuala Lumpur. It will offer employees the flexibility to work in either city and is likely to shift travel from cars to trains, reducing carbon emissions, alleviating traffic congestion and enhancing environmental sustainability and air quality in both cities (see Chart 4).

According to the survey, 72% of respondents have not applied for grants/incentives that are being offered by the Digital Ministry. Only 28% of respondents have done so. In addition to grants and tax incentives, the ministry is anticipated to provide several other forms of support, as highlighted by the survey respondents. The most sought-after form of assistance is access to financing and investment, with 60% of respondents indicating its importance. Meanwhile, 65% of the respondents express a need for training and education programmes to enhance their skills and knowledge. Networking and collaboration opportunities are also highly valued, with 54% of the respondents highlighting their significance. On the other hand, technical assistance and consulting services are requested by 52% of the respondents, demonstrating a strong desire for expert guidance (see Chart 5).

The majority of feedback, representing 53% of respondents, indicates an average level of satisfaction regarding download speed, territorial coverage, cybersecurity protection, efficacy and cost management. A significant portion, around 26%, considers the network’s performance good, while 17% express dissatisfaction with its achievements. Only 4% of the respondents rate the network’s performance as excellent. This distribution suggests a generally moderate reception, with many users finding the service lacking in certain areas of DNB’s 5G network performance evaluation.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.