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A survey conducted by United Overseas Bank (Malaysia) (UOB) has revealed that the World Bank expects Malaysia’s GDP to grow 4.8% in 2017 and increase another 5% per annum in the next two years. The country currently sits at number 24 out of 190 on the 2018 World Bank’s Ease of Doing Business index, the second highest in ASEAN after Singapore.
The outlook for Malaysia in 2018-19 is positive with benefits from the recovery in commodity prices, world trade and rising exports. Also strong expansion in domestic consumption and private investment, along with services and transportation sectors to profit from rising tourism.
Malaysia’s overall SME business sentiment remains positive. This is supported by investments in schools, hospitals and rural infrastructure ahead of the 2018 general election and the relative ease of conducting cross-border trades.
There are plans for ample government support for SMEs in terms of productivity and capability development, as US$1.7b will be devoted to drive SME growth and productivity, such as automating production and reducing foreign labour. An additional US$238m will be loaned to SMEs with 70% guaranteed by the government.
As for Singapore, while the external environment faces some risks, economists expect another year of steady 3% growth with a cautiously positive outlook for 2018.
Singapore continues to remain as one of the region’s most reliable economies, with solid financial and fiscal buffers to negate potential economic shocks. This is clearly illustrated in the World Bank’s Ease of Doing Business Index with the island nation retaining its number two spot in 2018, behind New Zealand.
Singapore, with the region’s highest cost of living, struggles with a persistently tight market for service industries such as finance, education and healthcare that require skilled workforce. Tightening manpower policies, foreign labour curbs, and rising demand for digitally-skilled workers will serve to further aggravate labour shortages.
However, both Malaysia and Singapore SMEs do share a priority on technology investments, at 65% and 63% respectively.
The ranking for other Asian countries in the World Bank’s Ease of Doing Business index are as follows:
The report also shows that 37% of ASEAN SMEs currently have an overseas presence and generally have an optimistic outlook, with 52% of survey respondents anticipating revenue growth and 25% projecting a double-digit expansion in revenue.
In this report, more than 1,200 SMEs were surveyed in late 2017 across the six largest ASEAN countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.