KUALA LUMPUR, July 23 — Rising production costs continued to weigh on Malaysian Chinese businesses in the first half of 2026, with higher raw material prices and operating expenses emerging as the main challenges, according to the latest survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
Lee Heng Guie, executive director of the Socio-Economic Research Centre (SERC), a think tank under ACCCIM, said higher raw material prices were cited by an overwhelming majority of respondents in the Malaysia’s Business and Economic Conditions Survey (M-BECS).
By sector, the construction industry was the most affected, with 81.1 per cent of respondents citing higher raw material prices as a concern, followed by manufacturing at 71.2 per cent and wholesale and retail trade at 59.7 per cent.
High operating costs were the second biggest concern, cited by respondents in the construction sector (56.9 per cent), manufacturing (54.1 per cent) and wholesale and retail trade (50.7 per cent).
For the professional and business services sector, high operating costs were cited by 41.4 per cent of respondents, followed by changing consumer behaviour at 38.3 per cent.
“Changing consumer behaviour is linked to the rising cost of living and inflation where they are becoming more cost-conscious in their purchases, comparing prices, buying only essential items, looking for promotions and increasingly turning to online digital purchases,” Lee said.
Despite the challenges, he said most businesses expected continued increases in the cost of local and imported inputs in the second half of 2026.
“For 1H 2026, 50.9 per cent of respondents said domestic sales have weakened and that will continue into the second half of this year with a forecast of 40.6 per cent.
“For business production, 42.5 per cent of respondents said production levels had declined, with an improved forecast of 32.5 per cent in the second half of 2026,” he said.
The 2H 2026 outlook showed financial management, particularly cash flow conditions, was expected to remain largely unchanged, with 61.3 per cent of respondents expecting similar conditions compared with 61.2 per cent in the first half of the year.
Price conditions were also expected to improve for both domestic and export markets, with 25.1 per cent and 18.2 per cent of respondents respectively anticipating better conditions in 2H 2026, compared with 33.9 per cent and 21.1 per cent in 1H 2026.
However, input costs remained a major concern, with 67.2 per cent of respondents expecting local input costs to worsen in 2H 2026, while 62.1 per cent expected imported input costs to deteriorate.
This compared with 70.4 per cent and 65 per cent respectively in the first half of 2026.
The survey polled 791 businesses between June 4 and June 30.
