by AZREEN HANI/ pic by HUSSEIN SHAHARUDDIN
POSITIVE business sentiment recorded in the country amid the opening of the economy, according to Business Confidence Index (BCI) Survey for first quarter of 2022 by the RAM Holdings Berhad- CTOS Data Systems Sdn Bhd.
The joint survey also showed that the overall index charted a positive sentiment reading of 55.4, the first since the start of the pandemic.
Readings of the main RAM BCI index for the previous five quarters had hovered below 40. A reading of above 50 indicates positive or optimistic sentiment.
However, around 55% of firms surveyed have yet to recover to pre-pandemic levels, particularly for business services sector (62%) and smaller SMEs and micro firms (60%), according to the survey.
“Most of these firms foresee full recovery only from 2023. In contrast, only 12% of respondents, mainly from larger corporate firms, said business has surpassed pre-pandemic levels,” it said.
Large corporates likely benefited from the sharp rebound in export sales last year on the back of robust external demand.
“Our survey results indicate that SMEs and micro enterprises still trail behind corporates on the path to recovery.
Although Malaysia’s transition into an endemic phase and the reopening of borders in coming months may boost prospects, firms would have to contend with rising costs and labour shortages that will eat into margins,” the survey stated.
“Banks need to keep SMEs adequately funded during the recovery phase. Policymakers should continue to engage with vulnerable firms and address specific needs to ensure a uniform and faster recovery from the pandemic,” it added.
Surveyed firms were most bullish about sales and hiring outlook, seen in the respective sub-indices rising to 60.2 and 60.7.
The share of firms citing economic weakness as a significant challenge dropped to 50% from more than 80% in the same period last year.
Most firms surveyed nonetheless expect capacity slack to persist, implying demand has not fully normalised as the pandemic may have irrevocably changed consumption habits.
“Business sentiment is often the first indicator for the future direction of the economy,” said Eric Hamburger, Deputy Group CEO of CTOS Digital Berhad.
“CTOS has the largest customer base in the industry which allows us to monitor and access credit trends. Findings from CTOS Credit Manager concur with the joint survey, with our
subscribers pulling 17% more business credit reports since the start of 2022 compared to corresponding period in 2021 to carry out due diligence on new customers and reevaluate existing customers,” he said adding that this signals businesses are beginning to increase operations and productivity.
This quarter’s poll results from over 140 respondents, 75% of which are small and medium enterprises (SMEs) and micro enterprises, may be interpreted as cautious optimism as many firms continue to report significant challenges in the near term.
“We are pleased to collaborate with CTOS to launch this first sub-index of the RAMCTOS BCI. Since we started the RAM BCI in January 2017, the survey has proven to be a reliable and leading barometer of forward business sentiments in Malaysia, said Chris W.K. Lee, Group CEO of RAM Holdings Berhad in the same statement.
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