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Businesses optimistic on Q2 outlook -- RAM

29/06/2022 07:56 PM

KUALA LUMPUR, June 29 (Bernama) -- A survey by RAM Holdings Bhd and CTOS Data Systems Sdn Bhd showed that businesses are firmly optimistic about their three-month outlook for the second quarter of 2022.

The RAM-CTOS Business Confidence Index (BCI) survey, conducted from May 9 to May 27, 2022, revealed that the overall index clocked in at 65, up from 55.4 recorded in the preceding quarter and is well above the threshold of 50, which indicated positive sentiment.

All other sub-indices tracked also showed positive momentum.

“It is not all smooth sailing, however, as over 80 per cent of the 116 respondents polled are reporting rising cost pressures which could cap business recovery,” RAM said in a statement today.

The rating agency said the rising cost of doing business remained the top hurdle this quarter, cited by 83 per cent of firms, up from 72 per cent in the first quarter of 2022.

It said the share of firms citing labour issues also climbed sharply to 54 per cent in 2Q 2022 from 43 per cent previously.

“These challenges are particularly pronounced among manufacturing firms amid current spiralling input prices, supply chain disruptions and the prolonged foreign labour squeeze in Malaysia,” it said.

The survey also disclosed that about 60 per cent of respondents with the majority comprising small and medium enterprises (SMEs) as well as micro firms needed more financing in the next six months to fund growth.

“More than 40 per cent of SMEs and micro firms have had their financing applications rejected in the last six months compared to just 10 per cent for corporate respondents,” it said.

It said smaller firms tend to be more reliant on personal funds to grow their business.

The survey said the firm optimism observed this quarter points toward a strong recovery for businesses this year.

However, most firms are facing labour shortages and escalating input costs arising from high commodity prices and supply chain disruptions.

“The imposition of a higher minimum wage and rising interest rates further compound the challenges faced, particularly by smaller firms with fewer resources.

“Against these headwinds, policymakers and financial institutions are urged to continue to support SMEs and micro firms by facilitating access to financing and other market initiatives to ensure that the nation’s economic recovery remains on track this year,” it added.


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