Hard times like this: Part 2 ...

There are always opportunities in a gloomy economic situation for Companies that have established business plan, processes and strong management.

With the Malaysian Ringgit weakened against its trading partners, export oriented Companies will have more demands on their goods. The strong foreign currencies will make Malaysian goods very affordable and competitive for the importing Countries.

Depending on the percentage of the domestic components in the product content of the Malaysian exporter Company, the profit margin will vary.

A Company which have a high local content, which are purchased in the Ringgit, will definitely have a higher profit than those that have lesser when the payment of the goods are paid in the foreign currency particularly the USD!

The USD currency is the global dominant trading currency. Depending on the foreign currency traded Companies will enjoy different percentage/value of forex gain.

Companies may convert the foreign currency immediately upon realisation of payment. Some may "deposit" the receivables in forex account for future payments in foreign currency.

Companies that are highly impacted by the USD may also consider that their future trading transactions should be a mix of  foreign currencies rather than on a single currency as each currency have different impact on the Ringgit.

For Companies that are not export driven, but have opportunity to do so, may have to embark to do so, in order to have a healthy revenue stream of domestic and foreign earnings.

With the dynamism and changing world economy and the expected introduction of the TPPA, whether the Country is a signatory to or not, in a short few years, the challenges of the world trading system will see great paradigm shifts and business behaviour.

Thus, this present situation, is a glimpse of what could be expected in the years to come where the geographies of the world are intimately linked and flattened with almost borderless, equitable and fair, may be deemed distorted in some smaller economies, trading environment.

Let all Malaysian Companies be prepared ...

/07-11-2015

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