KUALA LUMPUR: Foreign companies remain confident with surging ambitions for their business in Malaysia, according to HSBC's latest business survey entitled HSBC Navigator: SEA in Focus.
In particular, businesses in China, India and the US are either looking to expand their Malaysian operations, prioritise growth in Malaysia over the next two years or enter the Malaysian market in the next two years.
This is amidst the economy's recovery as the nation emerges from the effects of the third year of the global pandemic.
These are some of the key findings of an HSBC survey of more than 1,500 companies from six of the world's largest economies: China, India, the United States, Germany, France, and the United Kingdom – of which 32 per cent have operations in Malaysia.
HSBC Bank Malaysia Bhd head of commercial banking Andrew Sill said Malaysia has always been an attractive market for the world's largest economies.
"The nation's economic resilience, efficient supply chain, and the booming digital economy are positive signs that international companies look to for growth opportunities," he said in a recent statement.
The survey also found nine in 10 (89 per cent) foreign businesses with a foothold in SEA plan to grow their presence in the region over the next two years.
Three in five (61 per cent) foreign businesses surveyed expected their organic growth in Southeast Asia to increase by 20 per cent or more over the next 12 months.
The survey gauges their sentiment on doing business in the SEA region and each country, focusing on trade, digitisation, and sustainability.
Compared to other Southeast Asian countries, there is a strong Chinese interest in the Malaysian market.
Among the six inbound markets in the study, Chinese companies were almost twice as likely to be planning an expansion of their Malaysian operations – 41 per cent versus an average of 22 per cent.
This is in line with China and Malaysia's current trade relationship, as China has remained Malaysia's largest trading partner for 12 consecutive years.
Additionally, nearly three in 10 (29 per cent) Indian companies and almost one in four (24 per cent) US companies looked to prioritise growth in Malaysia in the next two years.
Malaysia is also poised for foreign investment in the near future as nearly two in 10 (19 per cent) companies surveyed plan to expand here in the next two years – with particular focus on Indian firms (25 per cent) and Chinese firms (22 per cent).
Despite the pandemic, bilateral trade between India and Malaysia had expanded by 26 per cent in 2021, and overall trade touched US$17 billion.
Foreign companies are attracted to Malaysia due to its positive economic outlook and the possibility of developing and testing new products and solutions on the Malaysian market.
A third of the respondents (34 per cent and 33 per cent respectively) pointed to each of these market features as attracting them to expand their Malaysian operations.
In particular, Malaysia can expect strong and continued growth in Chinese and US investment.
The survey showed that 42 per cent of Chinese companies were especially attracted by the opportunity to test new products in Malaysia, while 43 per cent of US companies operating in Malaysia pointed to the easier trade afforded by free trade agreements as a particularly attractive feature of the market.
The US is Malaysia's third-largest trading partner, while Malaysia is the country's 17th largest trade partner.
The bilateral trade in goods with the US was $71.4 billion in 2021.
On average, the respondents also cited ease of supply chain (30 per cent), proven economic resilience in response to the pandemic (31 per cent) and the growing digital economy (31 per cent) as compelling reasons for business expansion in Malaysia.
