Fewer than half of business owners and trade associations contacted for a survey believe that the government will achieve in its economic transformation goals.

According to the survey by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), only 46 percent of respondents believe that the Economic Transformation Programme (ETP) is likely to succeed.

"(There have) been some flip-flops in some of the plans previously announced, in particular given the experience surrounding the New Economic Model (NEM),” said a report on the findings.

"The government needs to demonstrate greater tangilibity of action and concrete follow through...(as) the small-medium enterprises have yet to see the real benefits of the ETP.”

The survey is on the economic situation in Malaysia for the second half of last year.

It drew 265 respondents from the wholesale and retail, manufacturing, professional and business services, construction, finance and insurance and other industries.

Unveiling the repoNONErt in Kuala Lumpur today, ACCCIM commerce committee chairperson Leong Kai Hin said that, despite the doubts expressed, 83 percent of respondents expressed "cautious optimism" on the economic outlook.

This, he said, was on the back of economic growth last year.

Still, only 58 percent of respondents believe that this growth is sustainable.

"For the balance 42 percent of respondents, uncertainties may exist in the longer term as concerns still abound, given issues such as the continued Eurozone sovereign debt problems, Middle East conflicts and political instability, rising prices of oil, inflationary issues and the ancillary effects," the report noted.

A significant 72 percent expect inflation to rise, with a whopping 80 percent linking it to subsidy cuts.

Elaborating on this, ACCCIM president William Cheng said the government will have to take a more careful approach.

"In the long term we support the reduction of subsidies but if this leads to inflation of 4-6 percent, it could seriously affect businesses. When inflation is high, the government should slow down subsidy cuts," he said.

Malaysia's inflation rate is currently estimated to be about 1.7 percent.

He said there are other ways for the government to gain savings and address the budget deficit, such as increasing civil service productivity and thus reducing the size of government.

Call for prudent spending

ACCCIM also called for prudent spending and for the government to take heed of the Auditor-General’s report which annually detail wastage amounting to millions of ringgit.

The government must also ltenaga nasional and electricity 031208ook at the price of natural gas and electricity to ensure that this is comparable to regional prices.

"It must be comparable to that of our competitors - Indonesia, Vietnam, Thailand and the Philippines. Otherwise we will lose out (in investment)," he said.

Cheng also called for a more aggressive approach to curbing brain drain, which is affecting a significant 73 percent of respondents.

"We should learn from Singapore which taps talent not just from their country but from the whole world, regardless of race and religion.

"They have one department to attract talent and another to make sure (the talent) is happy, help them get loans for houses...even find a girlfriend for them so when they marry a Singaporean they can't escape.”

He said the government should also look into creating light industrial zones outside the Klang Valley and in rural areas to capitalise on higher human resources there, and to reduce both reliance on foreign workers and urban congestion.