(23 July 2018 – Malaysia) Large businesses in Malaysia are very bullish about the country’s economic prospects despite the initial knee-jerk panic reaction post-elections, new research from East and Partners found.
The survey of 93 corporate treasurers and C-suite executives from the Top 100 revenue ranked corporates with average annual turnover of over US$1.2 billion, are predicting the Malaysian ringgit will rise 13.4 percent against the US dollar, hitting 0.290 by year-end. This gives a US dollar to ringgit exchange rate of 3.45, a level last seen in December 2014. A similar positive sentiment is also shared about the ringgit to Singapore dollar pair, the second most traded currency in the country behind the greenback. By the end of 2018, the average outlook for the pair is 0.376, appreciating 12.5 percent from June 2018. These are very upbeat, post-election readings and reinforce the positive sentiment that has developed quickly in the economy.
The wider cross-industry treasurer and CFO community are positive on the market and they do not worry much about the uncertainty over future policy changes by the new government. Large businesses appear confident that the central bank will succeed in restoring the value of ringgit. In fact, when asked to rate the impact of recent election result and the change of government to their businesses, on a scale of one to five where one is highly positive and five is highly negative, these same large corporates provide an average rating of 1.81. As for the other prominent promise the new government vowed to fulfil in its first 100 days – the change in tax regime from the goods and services tax (GST) to the sales and service tax (SST) – corporates seem to broadly welcome the initiative. They foresee a rise in consumers’ purchase intention, which could well drive an increase in consumer consumption.
“This wave of optimism is not confided to just the ringgit outlook. Even though scrapping the GST would mean a fall in government’s coffers, these top end Malaysian corporates express confidence in the new administration to rein in fiscal deficit, which if successful, will in turn result in a positive impact on the country’s credit rating,” commented East’s Lead Analyst Asia, Sangiita Yoong.
Research findings are based on direct interviews conducted by East & Partners in June 4-13, 2018. A total of 93 of the Top 100 revenue ranked corporates in Malaysia from across the industries were interviewed using a structured questionnaire – a 93 percent completion rate. The sector distribution reflects a natural sample of the population distribution. Interviews were conducted with the Corporate Treasurer, CFO or Corporate Trade Head.