THE 1Q 2024 RAM-CTOS Business Confidence Index (BCI) survey revealed that sentiments pertaining to business prospects in Malaysia have improved following two consecutive quarters of deterioration.
The overall BCI index rose to 53.4 in 1Q 2024 (4Q 2023: 48.9) which is 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 with respondents sanguine about higher sales, capital investments and hiring prospects but the still-elevated cost pressures inhibited their profitability expectations.
“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,” commented RAM Holdings Bhd Group CEO and executive director Chris W.K. Lee.
“This aligns with RAM’s 2024 GDP (gross domestic product) growth projection of 4.5%-5.5%, an acceleration after a relatively weak 3.7% last year.”
While the latest BCI reflects a notable upturn, CTOS Digital Bhd group CEO Erick Hamburger noted that it is crucial for companies to leverage such positive sentiment wisely to navigate the challenges ahead, particularly concerning profitability outlook amid rising costs.
“Embracing credit management best practices becomes paramount in harnessing these opportunities effectively,” he stressed.
“By prioritising prudent credit assessments and fostering healthy financial relationships, SMEs (small medium enterprises) can fortify their positions in the market and capitalize 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. – April 9, 2024
Main image credit: Datuk Seri Anwar Ibrahim Facebook
