This article first appeared in The Edge Malaysia Weekly on October 6, 2025 - October 12, 2025

THE Vistage CEO Confidence Index rose modestly by 1.8 points to 92.9 in 3Q2025, signalling a stabilisation of business sentiment after a significant 13.1-point drop the previous quarter. This nascent recovery reflects a pivot in CEO outlook: While assessments of current conditions continued to soften, expectations for future performance improved across key metrics. However, the index remains 16% below its average level from the previous year, underscoring a persistent caution despite the quarterly improvement.

This stabilisation was likely driven by two key factors. First, the announcement of US President Donald Trump’s revised 19% tariff for Malaysia and other Asean countries on July 31 provided clarity after a period of initial uncertainty. Second, the steady 4.4% year-on-year GDP growth of the Malaysian economy recorded in 2Q, released on Aug 1, helped reassure CEOs amid ongoing global uncertainties stemming from geopolitical conflicts and Trump’s April  2 “Liberation Day” tariffs.

Five of the six index components recorded marginal improvements in 3Q2025, signallling a stabilisation in confidence after the sharp 2Q2025 decline. The changes in sentiment tracked the proportion of CEOs expecting improvement and worsening conditions, respectively, across the first three quarters of the year.

Current economic conditions

The sub-index for current conditions dropped a further 3 points to 79, placing it nearly 30% below the previous year’s level of 111 and underscoring deepening near-term concerns. This deterioration is reflected in a widening pessimism gap, as the proportion of CEOs forecasting a deterioration rose to 39% (from 37%), while those expecting improvement declined marginally to 18% (from 19%).

Expected economic conditions over the next 12 months

CEO optimism for future economic conditions strengthened in the third quarter, driving the corresponding sub-index up 4% to 102 points. This gain was underpinned by a positive shift in expectations: The share of CEOs forecasting an improvement edged up to 29% (from 27%) while the proportion anticipating a deterioration declined to 27% (from 29%). Despite the improvement, the sub-index remains substantially weak, remaining 23% below the previous year’s level of 133.

Planned fixed investment

The fixed investment sub-index rose 4% to 128 points, indicating a recovery from the previous quarter’s 123, though it remains 12% below the year-ago level of 145. This quarterly improvement aligns with a stronger intention to invest, as 43% of CEOs now plan to increase capital expenditure — up from 40% — while those planning cutbacks fell to 15% from 17%.

Planned employment and workforce changes

Mirroring the rise in fixed investment, hiring intentions also strengthened in the third quarter. The corresponding sub-index rose 2% to 131, driven by an increase in the share of CEOs expecting to add staff (43%, up from 41%), while the proportion anticipating cuts held steady at 12%. Despite this quarterly improvement, the index remains 11% below the previous year’s level of 147, indicating that hiring confidence has not fully recovered.

Revenue growth expectations

CEO optimism for revenue growth improved marginally in the third quarter, with the index rising 1% to 137. Although this reading remains 13% below the previous year’s level of 158, the underlying sentiment was stable, marked by a slight increase in CEOs from 51% to 52% forecasting an improvement and a steady proportion anticipating a decline (15%).

Profit growth expectations

Mirroring the trend in revenue, profit growth expectations improved modestly in the third quarter, with the sub-index rising 3% to 125. This was driven by a positive shift in sentiment, as the share of CEOs forecasting higher profits rose to 44% while those anticipating a deterioration declined to 19%. Despite this improvement, the index remains 12% below the previous year’s level of 142.

More CEOs expect increasing local and export orders

CEO expectations for order growth rebounded in 3Q2025, signalling a recovery from the heightened pessimistic outlook experienced in 2Q2025. Optimism for export orders led the way, with the proportion of CEOs anticipating an increase climbing 4 percentage points to 46%, compared with a two-point rise to 45% for local orders.

This positive shift was further underscored by a decline in the share of CEOs expecting no change, which converged at 41% for both order types after falling from higher levels in the previous quarter. Underlying this overall improvement, however, is a notable divergence in risk sentiment. Pessimism regarding export orders decreased, with those forecasting a decline falling to 13%. In contrast, the proportion expecting a decline in local orders edged up to 15%.

Consequently, while the outlook has improved from the previous quarter’s low, the recovery remains partial. Sentiment for both local and export orders is significantly below the levels observed in 1Q2025, prior to Trump’s “Liberation Day” tariff shocks, indicating a market that is stabilising but has yet to fully recover its previous confidence.

Proportion Of CEOs expecting sale price increases edged up

The outlook for selling prices improved in parallel with the recovery in orders. The most significant change was a 5-percentage-point drop to 53% in the share of CEOs expecting no price change. This was driven by a notable jump in pricing confidence, with those planning increases rising 4 percentage points to 35%. However, the trend was not universally positive, as the proportion anticipating price declines also inched up to 12%, indicating soft demand or lingering competitive pressure in some segments.

Vistage CEOs demonstrate extensive and growing interest in the Asean region, building on the 2Q2025 survey where over 50% reaffirmed their focus on intra-Asean expansion. Current involvement is highest in Singapore (40%) and Indonesia (35%), followed by Thailand (28%), Vietnam (22%), and Cambodia (21%). Looking forward, Indonesia is the top investment destination (40%), ahead of Vietnam (36%), Singapore and Thailand (both 33%).

This broad interest across countries at varying development stages reflects the diverse sectors in which Vistage CEOs operate. The sectoral composition of Vistage CEOs’ businesses mirrors that of the national GDP, indicating their representativeness of the broader Malaysian economy.

More than half of the CEOs reported no or positive impact

Despite the disruption to international trade and supply chains from Trump’s tariffs — including a 19% levy on imports from Malaysia — a majority (55%) of Vistage CEOs report no or even a positive impact on their businesses. Specifically, 49% saw no impact, while 6% experienced a positive effect. However, a significant minority (46%) reported negative impacts, ranging from slight to strong. This mixed but resilient response suggests a notable portion of Malaysian businesses are weathering the initial tariff shock.

Cost control, competition and pricing top CEO stress list

Despite slight quarterly improvements, the revenue and profit growth indices remained 13% and 12% below their 2024 levels, respectively. When asked to identify the primary stresses from this slowdown, Vistage CEOs cited a range of pressures, led by cost control (64%), competition (58%) and pricing pressures (57%).

Beyond the primary stresses, Vistage CEOs highlighted a range of firm-specific challenges across key business areas:

•    Macroeconomic and market conditions: Navigating weak consumer demand, declining purchasing power, and volatility in exchange rates.

•    Government policy and regulation: Adapting to policy uncertainty, tax changes, compliance burdens, and restrictions on foreign labour.

•    Competitive pressures: Facing intense competition from imports and agile foreign entrants, particularly from China, leading to severe price pressure.

•    Technological disruption: Managing the impact of AI and the consequent need to evolve business models.

•    Strategic shifts: Pursuing growth through overseas expansion, M&A and operational flexibility, such as shifting from fixed to variable costs.

•    Operational management: Addressing cash flow constraints, late payments, and balancing employee interests with company needs.

The 3Q2025 survey reveals the extent of the price increases impacting Vistage CEOs’ businesses, after 80% reported being affected by inflation in the previous quarter. For major cost components, the distribution of price hikes was as follows:

•    5-10% increase: The most common range, affecting 33-51% of businesses.

•    1-5% increase: Affected 21-35% of businesses.

•    10-15% increase: Affected 13-22% of businesses.

•    15-20% increase: Affected 4-8% of businesses.

•    >20% increase: Affected 2-7% of businesses.

A breakdown of the inflation impact by cost component confirms that inflationary pressure is not only widespread but also significant in magnitude for a large portion of firms.

Beyond major business costs, Vistage CEOs reported significant pressure from a range of other expenses. Labour costs remained a primary concern, driven by salaries, mandatory contributions (Employees Provident Fund), and productivity impacts. Investments in technology also contributed heavily, with rising expenses for software subscriptions, IT infrastructure, and specialised overseas tech support.

Furthermore, companies faced increased professional and compliance fees, including legal services and IPO-related costs. Financial burdens such as insurance, bank financing, and currency fluctuations added to the strain. General overheads for marketing, maintenance, and administration continued to rise, alongside specific government taxes like Sales and Service Tax on construction and outsourced services.

More than 40% of Vistage CEOs expect to grow their headcount. When asked about the hiring challenges, 63% find difficulty in recruiting sales and marketing staff, followed by engineering (24%), IT (21%), finance (20%), factory floor manpower (17%) and human resource personnel (15%).

Reflecting Vistage CEOs’ wide-ranging business portfolios, the survey question on hiring needs reveal a focus on talent across all levels of the organisation. Demand is particularly strong for strategic management and leadership to steer operations and for technical and engineering specialists to maintain competitive advantage.

Concurrently, there is a significant push to secure expertise in digital, data and technology innovation to drive future growth. This is supported by ongoing needs in core professional and administrative services and sales and marketing functions. Employers are also actively recruiting for specialised roles in the healthcare and education sectors, as well as for critical operational roles in supply chain, logistics and customer-facing retail and hospitality positions. This diverse range of hiring intentions highlights the broad-based competition for skilled talent in the current market.

Two-thirds of Vistage CEOs see no change in corruption perception

A strong majority (68%) of Vistage CEOs perceive no change in the country’s corruption level over the last eight months, an assessment that aligns with Malaysia’s unchanged score of 50 on Transparency International’s 2024 Corruption Perception Index. Among the remainder, a slightly larger share sees improvement (18%) than deterioration (14%).

On crime, 62% Of CEOs perceived no change over the past eight months

According to Bukit Aman statistics, both index crimes involving violence (eg, murder, rape, robbery) and non-index crimes (eg, vehicle theft, house break-ins) rose in 2024, by 6% and 12% respectively. When asked about their perception of crime, a majority of CEOs (62%) felt the situation was unchanged. However, among those who perceived a change, more reported a deterioration (22%) than an improvement (16%), which may reflect concern over the official data.

A slight majority Of Vistage CEOs expressed confidence in achieving the 13MP growth targets

To keep pace with the 13th Malaysia Plan (2026-30)’s targets of 4.5–5.5% real GDP growth and 2–3% inflation, businesses would need to achieve nominal income growth of 6.5–8.5% annually. When surveyed, 53% of CEOs expressed confidence in achieving this equivalent growth at their firms, while 31% found it difficult, 4% deemed it unachievable, and 12% were uncertain.

The significant proportion of CEOs (47%) who are uncertain or pessimistic about achieving this growth benchmark suggests a potential headwind for the national targets. If a large segment of the business sector lacks confidence in its own growth trajectory, the 13MP’s ambitious goals may be difficult to realise without further policy interventions to improve the business environment and bolster private sector confidence.

Another implication of the survey results is that the nearly even split between confident and non-confident CEOs points to a bifurcated business landscape. The economy may see a growing performance gap between a resilient, high-growth segment of firms and a larger cohort that is struggling to keep pace. This underscores the need for targeted support for SMEs and less competitive industries to prevent a wider economic divergence.

Raising the mandatory retirement age

Malaysia became an ageing society in 2020 when 7% of its population was aged 65 and above. It is projected to become an aged nation by 2040, when that share reaches 20%. In response to these demographic pressures — including longer life expectancy and inadequate retirement savings — the proposal to raise the retirement age from 60 to 65 is gaining traction. While a majority (52%) of Vistage CEOs agree with the proposal, significant reservations remain, as 23% object and 25% are unsure. This indicates that nearly half of the business leaders need further convincing for the policy to secure broad support.

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