KUALA LUMPUR – Local business outlook has dropped to its lowest since 2010, according to the Grant Thornton International Business Report that also placed the country as the most pessimistic within Asean.

The survey found that Malaysian firms’ view of the economy was -36 per cent in the final quarter of 2016, a decrease of 24 percentage points from the preceding quarter.

The drop was more than twice the average decline in business optimism within Asean, which fell 10 percentage points to 39 per cent in the fourth quarter.

“In Malaysia, however, business optimism level suffered a huge decline due to our weak Ringgit performance and this links to our country’s economic uncertainty,” Grant Thornton Malaysia’s country managing partner Datuk NK Jasani said in the statement announcing the results.

Globally, business optimism at the end of 2016’s final quarter was 38 per cent, an increase of 5pp from the third quarter and the highest level since 2015.

Indonesia has fallen 10pp from 98 per cent in Q3 2016 to 88 per cent in Q4 2016. Philippines has fallen 4pp from 84 per cent in Q3 2016 to 80 per cent in Q4 2016. Thailand has fallen 2pp from 18 per cent in Q3 2016 to 16 per cent in Q4 2016 and Singapore remains at -28 per cent in Q3 and Q4 of 2016.

The survey that polled 2,600 businesses did not specify the scale used.

According to Jasani, the three biggest factors that contributed to Malaysian firms’ glum outlook were currency fluctuations, economic uncertainty and the lack of skilled workers in the country.

Despite the negativity, however, the survey found that Malaysian employers were expecting to increase “salary, revenue, exports, selling prices, employment and also profit to gear up over the next 12 months.”

“Malaysia has the most proportion of businesses in the Asean region that are expecting to offer employees a pay rise in next 12 months. 86 per cent of businesses are expecting to offer salary increment for their employees for the year ahead,” he said.

Malaysia also has the most proportion of businesses in the Asean region, at 34 per cent, that are expected an increase in exports and revenue for the year ahead.

He added that there will be challenges in 2017, including the impact of further rate rises from the US Federal Reserve but it shouldn’t mean that growth plans across Asia Pacific should be abandoned.

The survey comes after a study by the Financial Times Confidential Research’s Economic Sentiment and Political Sentiment found Malaysian consumers to also be the most negative in the region, and the only country expecting a deterioration to its economy and political landscape.

– Malay Mail