KUALA LUMPUR: Sentiments regarding business prospects have improved in the first quarter of 2024 (1Q 2024), rising to 53.4 following two consecutive quarters of deterioration, according to RAM-CTOS Business Confidence Index (BCI) survey.

The overall BCI index increased to 53.4 in 1Q 2024 (4Q 2023: 48.9), above the neutral level of 50 delineating positive and negative sentiments, it said in a statement today.

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 the survey.

RAM Holdings Bhd group chief executive officer 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 gross domestic product growth projection of 4.5-5.5 per cent, an acceleration after a relatively weak 3.7 per cent last year," he said in a statement today.

CTOS Digital Bhd group chief executive officer Erick Hamburger said while the latest BCI reflects a notable upturn, it is 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, Small and medium sized enterprises (SMEs) can fortify their positions in the market and capitalise on the emerging economic upswing," he added.

He said 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 per cent 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.

In this survey's thematic query on where firms turn to for assistance, around 50 per cent of respondents - mainly 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 per cent, primarily SMEs) are unaware of such assistance," said the survey.

Of the firms that have benefited from government programmes, training and development as well as workshops were the most popular among respondents, particularly SMEs. 

"This suggests continuous upskilling remains important as firms move up the value chain," it added. 

https://www.nst.com.my/business/corporate/2024/04/1036120/ram-ctos-survey-business-sentiments-improved-1q-2024