The RAM-CTOS Business Confidence Index (BCI) survey revealed that sentiments on Malaysia’s business prospects have risen to 53.4 in the first quarter of 2024 (1Q 2024) following two consecutive quarters of deterioration.
The overall BCI index rose to 53.4 in 1Q 2024 (4Q 2023: 48.9), above the neutral level of 50 delineating positive and negative sentiments. The upturn in sentiments was observed across all five surveyed aspects of doing business.
Respondents were sanguine about higher sales, capital investments and hiring prospects, but the still-elevated cost pressures inhibited their profitability expectations, said RAM Holdings Bhd and CTOS Data Systems Sdn Bhd in a joint statement today (Apr 9).
“The upturn in sentiments was observed across all five surveyed aspects of doing business as respondents were sanguine about higher sales, capital investments and hiring prospects, but the still-elevated cost pressures inhibited their profitability expectations,” they said.
Commenting on the improved sentiment, RAM Holdings Berhad Group CEO and Executive Director Chris W.K. Lee said, “The latest BCI readings coincide with the recent uptick in macroeconomic and trade data, signalling that the Malaysian economy is poised for higher growth this year. This aligns with RAM’s 2024 GDP growth projection of 4.5%-5.5%, an acceleration after a relatively weak 3.7% last year.”
CTOS Digital Berhad Group CEO Erick Hamburger added, “While the latest BCI reflects a notable upturn, it’s crucial for companies to leverage this positive sentiment wisely to navigate the challenges ahead, particularly concerning profitability outlook amidst rising costs. Embracing credit management best practices becomes paramount in harnessing these opportunities effectively. By prioritising prudent credit assessments and fostering healthy financial relationships, SMEs can fortify their positions in the market and capitalise on the emerging economic upswing.”
Rising cost of doing business continued to top the list of challenges for the ninth consecutive survey and was cited even more widely than in the last quarter.
Among the 115 firms polled in this survey, around 90% cited rising costs as their top challenge in the next three months. Growing competition, which is the other top challenge cited by over 60% of firms surveyed, could also limit their ability to fully pass on costs, thereby crimping profitability despite higher sales prospects, said RAM and CTOS.
In this survey’s thematic query on where firms turn to for assistance, around 50% of respondents – mainly small and medium enterprises (SMEs) – rely on their trade or business associations. These organisations provide firms with an efficient and critical support network within their trade segments.
Government agencies such as SME Corporation Malaysia (SME Corp), Bumiputera Agenda Leadership Unit (TERAJU) and Malaysia External Trade Development Corporation (MATRADE) are also relatively popular, cited by about a quarter of surveyed firms.
These agencies support SMEs through various initiatives such as grants, training and business programmes.
However, their outreach could be enhanced as some respondents (28%, primarily SMEs) are unaware of such assistance.
The RAM-CTOS Business Confidence Index is a comprehensive survey jointly conducted by RAM and CTOS, starting 1Q 2022, on forward looking business sentiment and topical issues faced by the small and medium business community in Malaysia.
Released quarterly, the index offers a timely barometer of future economic activity to guide businesses’ investment decisions and planning as well as provide inputs for strategic policymaking by various stakeholders of the economy.
This is done through the indication of positive and negative sentiment on five key aspects that are pertinent to their business operations over the next three months.
The five business aspects surveyed are turnover, profitability, hiring, capital investment and capacity utilisation. An index value of 50 is the neutral benchmark, a value of above 50 indicates positive sentiment, and below 50 shows negative sentiment.
