Despite a gloomy global economic outlook forecasted for 2023, German companies will continue to grow their presence in Malaysia, further reinforcing the two countries’ robust trade relations, according to the latest AHK World Business Outlook Fall 2022 survey results.
In the face of global headwinds including supply chain bottlenecks, the XBB Covid-19 variant and the Russia-Ukraine war, 50% of German firms surveyed in Malaysia said they will increase spending on local investments to develop their businesses.
Some 54.2% expect to raise headcount in 2023, which bodes well for job seekers in the face of a possible economic downturn.
German companies named three advantages of doing business in Malaysia – low labour costs (65.2%), supplier network (60.9%) and the availability of skilled workers (56.5%).
To address the ongoing global supply chain disruption, 65.2% have rolled out plans to look for new or additional suppliers. The survey noted 81% said Asia-Pacific (excluding China) was their first choice for new suppliers while 61.9% preferred to look within Malaysia.
Companies preferred to source within the region and domestically because of cost reasons (76.2%), and it also allows them to diversify or minimise risk in the event of failures (61.9%).
This trend in multi-sourcing can be attributed to the supply and demand shocks due to the pandemic and the Russian invasion of Ukraine as a way of developing a resilient supply chain strategy.
Additionally, 50% of German companies preferred to remain here when asked which regions they have looked at to move their operations to.
Malaysian-German Chamber of Commerce and Industry (MGCC) executive director Daniel Bernbeck said the survey results demonstrate Malaysia has “plenty to offer” German companies. This includes an investor-friendly environment, skilled workforce and a broad and strong supplier network.
“It is promising to see an indication of job creation and preparedness to increase expenditure to grow their presence in the country. These signal strong recovery and resilience after two years of disruptions due to the pandemic.
“As representatives of German industry and trade in Malaysia, we are happy to hear that these companies are planning long-term in Malaysia.”
He added that this confidence from foreign investors will facilitate economic growth and further propel Malaysia’s position as an ideal place of doing business in the region.
Companies said labour shortages (58.3%), rising commodity prices (54.2%) and supply chain disruptions (50%) were their main concerns. Some 66.7% of companies expect the economic situation to stay the same next year.
The AHK World Business Outlook is based on a regular DIHK survey of member companies of the German Chambers of Commerce Abroad, Delegations and Representative Offices (AHKs).