KUALA LUMPUR (June 5): A lack of skilled workers, weak exchange rates, and slow demand are among the top concerns of German companies in Malaysia, according to the AHK World Business Outlook survey.

Other concerns include the volatile geopolitical landscape, with respondents citing the China-Taiwan conflict and the Russia-Ukraine war as contributing to poor sentiments among investors.

“These findings are consistent across the region, and also mirror global sentiments, as businesses are feeling the impact of economic risks,” said the Malaysian-German Chamber of Commerce and Industry's (MGCC) executive director Jan Noether.

“The silver lining is German investors in Malaysia are well prepared to cushion themselves from the impact, and confidence in conducting business here is high,” he added.

According to the survey, 49% of German firms in Malaysia said they are well prepared for these shocks. As much as 61% of the respondents said they had already implemented or are in the process of implementing a supplier network expansion plan.

These include exploring new sales markets, diversifying supplier networks and procurement, and employing shorter transportation routes.

However, the MGCC said the main challenges faced by German firms in diversifying their supply chain are finding suitable suppliers and business partners (62%), high business costs (36%), and identifying a suitable sales market (34%).

Lack of public debate on climate change remains a concern

On the environmental, social and governance (ESG), 64% of German companies in Malaysia said the issue is somewhat important, but a lack of public debate surrounding climate change and measures to mitigate it remains a concern.

According to the MGCC, while 48% of the respondents acknowledged that there is awareness in Malaysia of the need to transition to renewable energy sources, only 14% of the respondents believe that Malaysia has a credible strategy for its renewable energy transition.

Nevertheless, the MGCC said German companies in Malaysia see business opportunities in the areas of industrial energy efficiency, renewable energy generation and energy-efficient buildings.

It said nearly half of the companies (49%) view hydrogen technologies as a slightly important topic with potential for opportunities.

“Given the importance of climate protection, our overall findings under the section of sustainability indicate that awareness of the issue is present, but further clarity of policy is needed in order for Malaysia to achieve net zero by 2050,” said Noether.

The AHK World Business Outlook is conducted bi-annually by the German Chambers of Commerce Abroad, Delegations and Representative Offices, among over 40,000 member companies in 93 countries.

In Malaysia, the survey was conducted by the MGCC — which represents over 430 members — among German and local small and medium enterprises, mainly from the manufacturing and construction industry, as well as the trade and services sectors.