Malaysian businesses maintain optimism in 2Q24
15 Jul 2024
In the second quarter of 2024 (2Q24), businesses in Malaysia maintained a positive outlook, as revealed by the RAM-CTOS Business Confidence Index (BCI) survey.
The latest figures, released by RAM Holdings Bhd and CTOS Digital Bhd, showed an overall BCI of 54, up slightly from 53.4 in 2Q23, marking the second consecutive quarter above the neutral mark of 50.
Corporate sentiment surged to 59.3 in 2Q24, an improvement from 57.1 in 1Q24, highlighting robust optimism among larger enterprises.
Meanwhile, small and medium enterprises (SMEs) remained optimistic at 52.6, albeit slightly lower than the 53 recorded in 1Q.
Respondents indicated heightened confidence in their business performance outlook for 2Q24, with both the sales (2.1 points to 56.4) and profitability sub-indices (1.5 points to 50.5) showing quarter-on-quarter improvements.
However, concerns lingered over profitability, which just surpassed the neutral 50 mark, influenced by persistent cost pressures.
The survey, conducted from May 27 to June 18, involved 109 respondents, with nearly 80% citing rising business costs as their top challenge, a decrease from 90% in the previous quarter.
Despite these challenges, respondents expressed optimism about future prospects.
CTOS Digital group CEO Erick Hamburger commented on the positive trend, noting the importance of business agility and ongoing support through data analytics, digital solutions and training initiatives.
The recent retargeting of diesel subsidies had minimal impact on business sentiment, according to survey results.
Responses collected before and after the policy change indicated a slight uptick in sentiment post-implementation for corporates, contrasting with a marginal decline for SMEs.
Looking ahead, concerns loom over the upcoming phase-out of blanket RON95 subsidies, with two-thirds of firms expecting cost increases for their products or services, given RON95’s significant role in their overall business costs.
Moreover, the Progressive Wage Policy (PWP) emerged as a focal point for businesses, with 61% expressing concerns over higher labour costs.
Despite apprehensions about compliance and productivity benchmarks, a majority foresee benefits such as improved morale, talent retention and enhanced productivity from PWP adoption.
RAM Holdings group CEO and ED Chris WK Lee noted the need for broader adoption and better communication of the PWP’s benefits among businesses, stressing its potential to reshape Malaysia’s wage landscape.
“We welcome the implementation of the PWP, given the potential benefits of a restructured wage system, which links wage increases to training and upskilling.
“However, a more broad-based adoption is needed to realise its full benefits to the nation as a whole,” said Lee.
Source: The Malaysian Reserve
