Malaysia remains a bright spot for German firms amid global uncertainties

New Straits Times

20 hours ago

KUALA LUMPUR: Geopolitical tensions, ongoing supply chain disruptions, and uneven global economic recoveries continue to fuel worldwide uncertainty, making Malaysia an increasingly attractive base for businesses, according to the latest World Business Outlook Spring 2025 Survey.
The survey, conducted by the Malaysian-German Chamber of Commerce and Industry (MGCC), found that 85 per cent of respondents still view Malaysia's economic outlook as stable or positive, although this marks a 12 per cent decline from last year, signalling more cautious sentiment amid persistent global challenges.
Despite these headwinds, investment confidence remains firm. About 68 per cent of companies plan to maintain or increase their local investments over the next 12 months, reflecting Malaysia's strategic role in regional and global supply chains. Hiring trends are equally encouraging, with 40 per cent of respondents planning to expand their workforce, while 53 per cent intend to maintain current headcounts, a combined 6 per cent improvement in job stability compared to 2024.
The biannual survey, part of a global initiative by the German Chambers of Commerce Abroad (AHK), was conducted between March 17 and April 15, 2025, with input from 104 MGCC member companies.
This latest edition points to a resilient outlook, with 93 per cent of companies expecting business conditions in Malaysia to remain steady or improve over the next year, a significant 30 per cent increase from 2024. This rebound underscores renewed confidence in Malaysia's standing as a stable and attractive business hub.
Overall, 91 per cent of German businesses rated their current situation in Malaysia as 'good' or 'satisfactory', highlighting sustained optimism despite global volatility.
MGCC executive director Jan Noether said the findings reinforce Malaysia's position as a strategic business and logistics hub in Southeast Asia, supported by robust infrastructure, a competitive cost base, a skilled multilingual workforce, and strong bilateral ties with Germany and the European Union.
"As companies seek resilient, future-ready markets to grow and invest in, Malaysia continues to stand out as a reliable and attractive destination for German businesses across various sectors.
"Despite a complex and evolving global landscape marked by geopolitical tensions, shifting trade policies, and economic uncertainty, German companies in Malaysia remain strongly optimistic about the country's long-term prospects," he said.
However, the survey also identified several challenges that warrant attention. These include demand uncertainty (59.8 per cent), economic policy conditions (46.1 per cent), and regulatory considerations such as preferences for local firms (43.1 per cent). These concerns highlight the complexities of operating in a dynamic economic environment and the need for policy clarity, constructive dialogue, and adaptable business strategies to maintain growth momentum.
At the global level, companies cited major long-term risks over the next five years, including trade barriers and conflicts (66 per cent), global economic fragmentation (51 per cent), and inflationary pressures coupled with tighter monetary policies (36 per cent).
The survey also reflected concerns about the recent United States trade tariffs. About 38 per cent of companies expect a minor impact on local operations, while 20.4 per cent anticipate a significant effect, mainly due to higher input costs, changes in consumer behaviour, and reduced export demand.
Interestingly, 36 per cent foresee no impact, with some seeing opportunities for Malaysia-based operations to step in and bridge emerging supply chain gaps.