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FMM Business Conditions Survey 2H2023 (GI/04/2024)

  FMM is conducting the 24th FMM Business Conditions Survey on performance in the second half of 2023 (2H2023) and outlook for first half of 2024 (1H2024).

As with the last 23 surveys since 2012, we are tracking the FMM Business Conditions Index (FMM BCI), which measures members’ feedback on their current and expected levels of business activity, local and export sales, production volume, capacity utilisation, capital investment, employment and cost of production.

Topical issues for this survey will focus on assessing manufacturers’ views on the following:
  • Challenges to Business Operations and Growth
  • Revenue and Profit Growth
  • Level of Preparedness and Resilience to Withstand Disruptions
  • Assistance Needed for Export Market Expansion
  • Industry 4.0 and Digitalisation
  • ESG and Sustainability Compliance
  • Service Tax on Logistics
  • Progressive Wage Model
  • New Tax Measures
FMM aims to obtain over 1,000 responses for this survey. We seek members’ continued support and participation to ensure that the BCI is a REPRESENTATIVE and ACCURATE index of manufacturing business conditions and feedback on the current state of business and the economy, business recovery progress and current challenges faced are reflective of the industry.

The survey will be conducted completely online. The questionnaire takes about ten to fifteen minutes to complete and can be accessed by scanning the QR code above OR online via this link:

This survey continues to be an important tool to collect members’ feedback on the current and expected levels of business activities as well as on topical issues impacting the manufacturing sector. For instance, the last survey revealed the following:
  • Business activity of the manufacturing sector had slowed down in 1H2023 where not only had all the indicators included in the survey declined from the previous survey, all of them, except cost of production and employment, had also registered readings below the 100-point optimism threshold, an indication that overall business conditions in 1H2023 had been subdued.
  • Looking ahead, with risks in the global economy tilted towards the downside and flagging external demand still weighing on the Malaysian economy, the sector’s six-month business outlook remained cautious and pragmatic. All forward-looking indicators had remained below the optimism threshold, implying that business conditions, local sales, production volume, capacity utilisation, production cost, CAPEX and employment were all expected to remain slow for the rest of 2023.
  • Business growth for 2H2023: 41% of respondents intended to maintain their current position, 27% to streamline their production lines while 18% planned to engage in high-growth projects.
  • Cost profile: In 1H2023, costs of water, maintenance of machinery, logistics and energy ranged up to 5% of total operating costs for 56-70% of respondents. Labour costs incurred by most (36%) at >10-20% of their total operating costs. Raw material cost was more widespread. 29% estimated cost of raw materials at >40-60% of their total operating costs; 24% at >60-80% and 13% at >80-100%.
  • Cost movement in 1H2023: In 1H2023, most costs increase by up to 20%, with labour, maintenance of machinery and raw materials comprising the top three cost increases.
  • Operating cost by year and as percentage of revenue: As percentage of total revenue up to 1H2023, more respondents report higher operating costs of >50% during Covid and post-Covid periods than pre-Covid period. Overall costs increases were higher during the pre-Covid years of 2018-19 than the Covid and post-Covid years from 2020-2023. Those experiencing >10% cost increases more than doubled during the post-Covid period from 2022-2023 vs the pre-Covid period from 2018-19
  • Business confidence in 2H2023 vis-à-vis 1H2023 was cautiously optimistic in the case of company and industry conditions while expectations for global and domestic economic conditions were unfavourable.
  • Economic outlook 2024 was cautiously optimistic with 35% saying that the economy will improve in 2024 while 39% were neutral and 25% pessimistic.
  • International trade currency: Renminbi (RMB) was the top choice of most respondents as alternative currency to the USD, followed by European Euro and Japanese Yen.
  • 63% of respondents were not aware of mandatory regulation on the European Green Deal Policy namely the Carbon Border Adjustment Mechanism (CBAM) and EU Deforestation Regulation (EUDR). Majority (55%) believed they would need more awareness sessions on CBAM and EUDR while 50% would require funding and grants to meet the new directives/standards. 43% suggested double tax deduction to cover their sustainable initiatives including consultancy fee / expenditure for those requiring external expertise.
  • Introduction of legislation on setting credit term limits for SMEs: 33% were in favour and felt that 30-45 days was acceptable. 35% were not in favour with majority (82%) of the view that credit terms are best left to be determined by the individual business operator and buyer.
  • BNM’s fifth OPR hike in May 2023 increased operating costs of most (41%) respondents by 1-3%, and another 19% by 4-6%. The OPR hike also impacted cash flow and business operations of 67% of respondents. 37% willing to accept longer repayment period, 30% not willing to if the increase in OPR was too costly to finance. Should OPR be increased further by 25 basis points by end 2023, the impact on most business revenues and profits is expected to be less than 30%.
The closing date of the survey is February 16, 2024.

Thank you for taking valuable time off to complete the questionnaire.

Click here to download Circular GI/04/024

Enquiries: Puan Hema Thiruchelvam / Puan Nurhafizah Ngatiran / Puan Kamsiah A Rahim, Business Environment Division at Tel: 03-6286 7200, Fax 03-6274 1266/7288 or e-mail:

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