KUALA LUMPUR, April 9 — The RAM-CTOS Business Confidence Index (BCI), which examines forward-looking business sentiment in Malaysia, rose to 53.4 in the first quarter of 2024 (1Q 2024), following two consecutive quarters of decline.

The positive score, which is above the neutral level of 50, delineating positive and negative sentiments, was recorded as compared to the downturn posted in 3Q 2023 at 50.4 and 4Q 2023 at 48.9, said RAM Holdings Bhd and CTOS Data Systems Sdn Bhd in a joint statement today.

“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 Bhd group chief executive officer (CEO) and executive director Chris W K Lee said the latest BCI readings coincided 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 gross domestic product growth projection of 4.5 per cent to 5.5 per cent, an acceleration after a relatively weak 3.7 per cent last year,” he said.

Meanwhile, CTOS Digital Bhd group CEO Erick Hamburger said while the latest BCI reflected a notable upturn, companies must 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, small and medium enterprises (SMEs) can fortify their positions in the market and capitalise on the emerging economic upswing,” he said.

According to the survey, the 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.

The BCI survey noted that around 90 per cent of the 115 firms polled had cited rising costs as their top challenge in the next three months.

“Growing competition, which is the other top challenge cited by over 60 per cent of firms surveyed, could also limit their ability to fully pass on costs, thereby crimping profitability despite higher sales prospects,” said RAM and CTOS.

The survey also revealed that around 50 per cent of respondents, mainly SMEs, rely on their trade or business associations to provide an efficient and critical support network within their trade segments.

They said government agencies, namely SME Corporation Malaysia (SME Corp), Bumiputera Agenda Leadership Unit (Teraju) and Malaysia External Trade Development Corporation (MATRADE), were also relatively popular, cited by about a quarter of the 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 per cent, primarily SMEs) are unaware of such assistance,” they added. — Bernama