The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is cautious on this year's economic outlook.
The influential business grouping is forecasting the country's growth to moderate at between 4 and 5 per cent from last year's 5.1 per cent.
At a press conference yesterday, ACCCIM president Tan Sri William Cheng said growth prospects are increasingly uncertain with the ongoing sovereign debt crisis in Europe.
"Apart from the eurozone uncertainties, exports to China and India have started to slow since the start of the year. The challenging external environment could present greater downside risks to our economy," he said.
"On the bright side, however, Malaysia is doing more business with its Asean neighbours. Also, sustained domestic demand could help cushion growth slowdown for the year," Cheng added.
In reference to the group's half-yearly survey among its members, he said perception of slower economic growth for the year is temporary. "Business confidence is likely to improve in 2013."
On a regional level, the ACCCIM president said foreign direct investment (FDI) into Southeast Asia is expected to go on at healthy pace as the macroeconomic conditions are on more stable footing than its Western counterparts.
"Malaysia is facing stiff competition in attracting FDI compared with our neighbouring countries. Our small businesses, like those in other Asean countries, are facing many challenges like market entry barriers, rising labour costs, costlier raw materials and uncertain currency movements in the international market," Cheng said.
Moving on to the Human Resources Ministry's proposed minimum wage policy, he said ACCCIM members are appealing to the government to be more discerning in matching the different capabilities of small- and medium-sized enterprises.
"The focus of the minimum wage policy should be on the total take-home income instead of a one-size-fits-all salary. It should take into account the varying living cost in the country's regions and operational costs in different industries," he said.
In its survey among SME members, ACCCIM found that 62 per cent of respondents face human capital shortage. This problem is most pronounced in the hotel industry, agriculture, farming, timber, fishery and manufacturing.