Malaysian businesses optimistic of Q2 outlook despite headwinds

KUALA LUMPUR – Malaysian businesses are feeling optimistic about their three-month outlook for the second quarter of 2022 (Q2 2022), according to a survey.

The survey was done by RAM Holdings Bhd and CTOS Data Systems Sdn Bhd carried out a Business Confidence Index (BCI) survey from May 9 to May 27 this year, with the overall results clocking in at 65, an increase from the 55.4 that was recorded in the previous quarter of the year. The results are also higher than the threshold of 50, indicating a positive sentiment from the respondents.

Additionally, the other sub-indices that were tracked also showed positive momentum as well.

In a recent statement, RAM stated that it is not all smooth sailing seeing as more than 80% of the 116 respondents have reported rising cost pressures that might cap their business recovery.

Furthermore, the ratings agency said that the rising cost of business had kept its place as the primary obstacle for this quarter given that 83% of the respondents gave the response, an increase from the 72% recorded in this year’s preceding quarter.

The survey reported that the number of businesses that cited labour problems also rose substantially to 54% in Q2 2022, up from 43%.

RAM said that these issues were clearly reflected among the manufacturing companies amid the current spiralling input prices, disruptions to supply chains, and the prolonged foreign labour shortages in Malaysia.

The survey had also revealed that over 60% of the respondents, the bulk of which comprised small and medium enterprises (SMEs) and also micro firms, required additional funding within the coming six months in order to fund for expansion.

According to the findings, over 40% of the SMEs and micro businesses had their applications for financing denied in the recent six months. This is a contrast to just 10% of corporate respondents.

RAM’s statement had said that smaller businesses typically have to rely more on personal funds in order to grow their business.

The survey stated that the firm optimism that was witnessed this quarter speaks for a healthy rebound for businesses this year.

Despite the optimism, many businesses are struggling with labour shortages while at the same time facing rising input costs due to high commodity prices as well as disruptions in the supply chain.

“The introduction of a higher minimum wage and the rising interest rates further complicate the issues that are faced, especially the smaller businesses that have fewer available resources.

“Against these headwinds, policymakers and financial institutions are called to maintain their support for SMEs and micro firms through facilitating access to financing and other market initiatives in order to have Malaysia’s economic recovery stay on track for 2022,” RAM added.

Join our Telegram group for the latest updates!