THE RAM-CTOS Business Confidence Index (BCI) fell to 50.4 in the third quarter of 2023 (3Q23) from 54.8 in the previous quarter, ending a two-quarter improvement streak.
While the sentiment remains positive for the third successive survey, still-challenging operating conditions are likely to have dented business confidence for the next three months, the report said.
The QoQ drop in the sales (-6.7 points) and profitability (-7 points) sub-indices was particularly pronounced, consistent with slowing demand and further inflationary pressures.
Unsurprisingly, the report noted that the manufacturing sector registered the lowest overall index reading (-8.4 points to 40.8), given its higher exposure to exports, relative to the business services (55.9), and retail (53.8) sectors.
CTOS Digital Bhd group CEO Erick Hamburger commented on the decline in 3Q23 BCI, saying, “The shifting landscape of business sentiment is due to the prevailing challenging operating conditions. In such times, cash flow management takes centre stage in sustaining a business.
The report also highlighted concerns, stating that rising costs and a weak economy top the list of concerns for the next three to 12 months.
It emphasised that tight cash flow will be a prevalent challenge to micro firms in the next 12 months, more so than to small and medium enterprises (SMEs) and corporates.
In terms of what businesses want from Budget 2024, around 64% of the 165 firms surveyed in 3Q23 cited lower income tax rates as the most beneficial measure, while 44% wanted utility tariff cuts.
The report noted that these measures, if introduced, would help alleviate cost pressures for businesses.
Additionally, about 60% of businesses polled said they had not benefitted from government assistance, citing reasons such as ineligibility, overly stringent conditions, and a lack of awareness of such programmes.
“Given the prevailing challenges, the upcoming Budget 2024 will be especially pertinent to extend assistance and support to MSMEs to help them ride through the challenging environment and help realise the vision of the Madani Economy,” said RAM Holdings Bhd group CEO and ED Chris WK Lee.
Provisions of the Madani Economy framework and the New Industrial Masterplan 2030 indicate that the government is well aware of the need to support MSMEs. Access to financing is a primary challenge often cited by these firms.
The key is to communicate support programs clearly and ensure onboarding or administrative processes are not overly complex or cumbersome for applicants.
CTOS said it has successfully assisted SMEs in recovering bad debt over RM1 billion annually, reaffirming its dedication to fostering SME financial resilience.
Source: https://themalaysianreserve.com/2023/10/16/challenging-conditions-affect-business-confidence-in-3q/