Malaysia’s companies optimistic over Q3 prospects

Companies in Malaysia believe the business environment is set to improve in the third quarter (3Q) of 2023, with the confidence indicator showing a marginally positive figure of 0.7%, up from -3.1% in the second quarter (2Q), according to the Department of Statistics Malaysia (DoSM).
Its chief statistician, Dr Mohd Uzir Mahidin said this optimism was supported by factors such as the stability of the job market, an upsurge in domestic tourism, and expectations of growth in the health tourism industry.
“In 3Q 2023, positive business expectation is bolstered by the services and industry sectors,” he said in the statement on the business tendency statistics for the quarter.
DoSM said the services sector remained optimistic about the business outlook with a confidence indicator of 6.1%, up from 3.9% in the previous quarter.
The figures also showed that the industry sector moved into the positive by posting 1.3%, from -2.1 per cent in 2Q 2023.
DoSM said the greater optimism in the sector was supported by two sub-sectors, agriculture and mining, both of which anticipated favourable business conditions in the current quarter.
However, the construction sector continued to anticipate negative business conditions, with a confidence indicator of -26.9% in 3Q 2023, it said.
“Likewise, the wholesale and retail trade sector remains pessimistic (but) with an improved confidence indicator of -1.5% in the reference quarter from -10.2% in the second quarter of 2023,” it added.
The statistics department said that looking at the business sentiment for the six months ahead ending December 2023, businesses remained upbeat, albeit at a lower net balance of 13.9% from 14.9% recorded in the preceding quarter.
“Positive outlook is underpinned across all sectors, indicating improved business conditions in the forecast period,” the agency said.
DoSM said the services sector anticipated favourable conditions in the upcoming six months, with a net balance of 27% against the 30.1% recorded for the April-September 2023 period.
Similarly, the survey found the industrial sector expected an improved business situation, with a net balance of 9.7% compared with 15.6% previously.
Moreover, the wholesale and retail trade sector turned optimistic on the business situation for the second half of 2023.
Sentiment within the sector improved with a net balance 7.2%, aided by a better outlook in the wholesale trade sub-sector.

Digital economy growing in importance
Digital economy is set to contribute 25.5% to the gross domestic product (GDP) of Malaysia by 2025, equivalent to more than RM 382 billion RM (£65 billion) compared with 23.2% or RM348 billion in 2021, according to the Horizon – Digital Economy Publication report issued recently by Malaysia Digital Economic Corporation (MDEC).
Chairman of the MDEC, Syed Ibrahim Syed Noh, said that the country will focus on three important areas in the Islamic digital economy, including Islamic finance, Halal and lifestyle, “a strategy to pave the way for a prosperous ecosystem”.
Through initiatives such as ‘Malaysia Digital’, he said that the MDEC will strive to create a digital ecosystem that nurtures innovation, while empowering businesses and digital adoption.
In 2022, the digital economy continued to show strong growth, with new foreign direct investments and domestic investments registering at RM 42 billion and RM 4.76 billion respectively.
Malaysia’s Communications and Digital Minister Fahmi Fadzil added that the digital economy played an important role in the MADANI Economy framework and the future direction of the country’s economy to create a wider market for Malaysians.
He said the main focus of the ministry was to provide the infrastructure needed to narrow the digital divide and provide stable and cheap internet packages, in addition to taking steps to improve digital literacy skills.
With the MADANI Economy framework, launched by Prime Minister Anwar Ibrahim in July, Malaysian businesses’ market is expected to be at least 652 million people in Southeast Asia.
The MADANI Economy is based on two important factors: empowering people and focusing on innovation and inclusivity.