The RAM-CTOS Business Confidence Index (BCI) continues to rise, climbing to 54.8 in 2Q 2023 from 51.4 in the previous quarter an indication the report notes that businesses remain sanguine about prospects for the next three months.
According to the report, the improvement in sentiment was led by the positive outlook for sales and profitability, the latter finally reverting to a positive reading (51.6) after languishing in pessimistic territory in the last three quarters. Following a round of price increases in late 2022 to maintain margins, the cost pressure faced by businesses may have started to ease this year.
Commenting on the improved sentiment, Erick Hamburger, Group CEO of CTOS Digital Berhad said “CTOS SME subscribers accessed 5% more credit reports in 2Q 2023 compared to 1Q 2023 to evaluate new customers, which is a good indicator that they are ramping up operations and productivity, in line with the improved 2Q 2023 BCI sentiment. The average CTOS SME Score has also risen by two points from 307 in 1Q 2023 to 309 in 2Q 2023, which means that the average Malaysian SME has a “Good” credit standing which is important to get access to credit.”
With sales picking up in 2023, firms may be able to shift from being merely in survival mode to growing their business again. Aside from pursuing operational improvements, an increasingly important development that businesses should heed is sustainability practices. “In particular, firms with export dealings or that are part of the global supply chain will have to comply with new global and domestic environmental, social and governance (ESG)-related regulations that are being rapidly introduced,” said Chris Lee, RAM Holdings Berhad Group CEO and Executive Director.
Most firms observing some sustainability practices
Of the 146 firms surveyed in 2Q 2023, about 75% said they had adopted at least one sustainability practice, with waste reduction and recycling the most cited. Not surprisingly, ESG practices are more common among firms that are part of a global supply chain (80%), which might need to meet clients’ compliance requirements, compared to those that are not (68%). Energy and resource conservation initiatives are also popular among firms surveyed
Strong interest in ensuring sustainability practices in business
A quarter (26%) of respondents have not adopted any sustainability practice. This is more prevalent among small and medium enterprises (SMEs) (27%) and micro firms (30%) which face various impediments to progress on this front. A lack of incentives was the most common hurdle, as cited by 45% of firms surveyed. Some 40% of respondents said it is too expensive to adopt green practices.
However, over half of the firms surveyed, particularly those with multinational clients, are keen to further adapt to sustainability initiatives to become ESG-compliant. Nevertheless, the cost of compliance is a concern.
