1. Have we seen the worst of the financial crisis?
I believe the worst is over and the impact of the economic slowdown has been well digested by many. The US economy is still in grave state with no significant improvement of consumer sentiments in sight. Its recovery would likely be sluggish. Russia’s economy is uncertain with a number of banks and enterprises at the brink of bankruptcy. However, China, India and Brazil would pose a strong rise and are expected to offset the fall of export demands and there is huge growth potential in Indonesia, mainly due to its high populations, increasing economic growth and consumer demands, as well as improved political stability.

2. When will our economy recover?
Overall, I think the local economic scene would see gradual improvement beginning next year. This is mainly due to the backing of high saving rate and the positive growth in the neighbouring Asian countries, led by China and India.

3. What are the strategies that should be adopted by the companies to cope with this crisis?
a. Mergers & Acquisitions
Currently, Cuscapi is on the lookout for strategic investment opportunities to acquire fundamentally strong companies, but are lacking cash flow to expand, to increase Cuscapi’s growth and scalability.

b. Recruiting talents
We believe that cost saving strategy is a good strategy, be it in a good or bad economy, but we also believe that investing in and preparing resources is important. Hence we continue to recruit and invest in talents so that we are ready when good times come.

c. Research & Development
As we are an IT company, research and development (R&D) is an important part of the company. Annually, we invest three to four million ringgit for R&D, and innovation development is part of this investment that we make. It is challenging for us to build and invest in building products of green technology such as the ones prior to the birth of IPOD as we lack capital and the right pool of talent. For us, we bring value to our clients by infusing innovation and value to our current offerings and products to enable long-term cost savings.

d. Overseas Expansion
I believe that Malaysian companies need to move towards building presence outside Malaysia especially in the face of globalisation. Seeking opportunities in emerging markets such as China, India and Indonesia to increase market share and sales is the way to move forward for better business continuity.

4. How to invest during this period?
From the investment aspect, I personally would encourage the pursuit of stocks of IT companies that promote continuous innovations, as well as those in the Education and Services segments. To invest in IT companies, the most important factor to consider is the company’s sustainability and its recurring revenues as recurring revenues improves profit cycles. This is opposed to traditional IT companies’ revenues, which tend to be contract-based, hence fluctuating profits.

Investors seeking to invest in a company that is expanding and building its international reach should consider two main areas; the dynamism of the company’s business strategy and its focus markets and penetration. While developing overseas business, local market share should be maintained and position strengthened. This is important as home ground business would still be the main revenue contributor, and it is also where geographical and regulatory familiarities are always advantageous for business operations.

In my opinion, investments should not focus solely on a particular industry. If one wants to invest in companies within a particular industry, one should consider investing in index or mutual funds. Investments should be made in companies regardless of the industries they are in, hence business fundamentals, skills and experience of the management team and growth model adopted by the companies are vital in attracting investors.