Majority remains positive despite growing concern on US economy

KUALA LUMPUR: Small and medium enterprises (SMEs) in Asia, including Malaysia, remain positive about the prospects for Asia’s economic growth and trade activities this year despite the current growing concerns about the health of the US economy, according to a survey commissioned by HSBC Bank Malaysia Bhd.

“The fact that the vast majority of small businesses expect economic growth to continue in 2008 is a testament to the resilience of the SME sector,” the bank’s commercial banking managing director Eddie Norton said yesterday.

“In the face of growing economic uncertainty in the US, emerging markets still see great opportunity for growth as intra-Asia trade grows and the small business sector is learning to adapt quickly to changing global conditions,” he told reporters after releasing the findings of the survey here. The survey, the second by the bank, was conducted in the fourth quarter of last year.

It covered 2,700 SMEs in Malaysia, Hong Kong, China, Taiwan, Singapore, India, Vietnam, South Korea and Indonesia.

Norton said the survey revealed that SMEs in Malaysia are generally positive about the economic outlook with 67 per cent of them expecting the economy to grow at either in the same pace or faster.

“(However) Malaysian SMEs are cautious in their investment with 52 per cent planning to maintain the same level of capital expenditure as 2007 while 29 per cent plan to increase investment,” he said.

He also said that Malaysia’s SMEs are generally positive about the trade outlook with the rest of the world, particularly with China and the Asia-Pacific countries.

Compared to involvement with the rest of the world, Norton said, Malaysian SMEs have a higher level of trade involvement with China and the rest of the Asia-Pacific.

“Most of the SMEs surveyed expect the same or better with regard to their business in 2008. Their optimism bodes well for domestic economy as a whole as the SME sector forms the backbone of Malaysia’s economy and is a major employer and among the biggest job creators in the country,” Norton added.

— Bernama