KUALA LUMPUR, June 28 — Malaysian companies big, medium and small are confident business will improve with the Pakatan Harapan (PH) government in charge.

Research house RAM said its latest Business Confidence Index which surveyed 3,500 firms across five industries after the 14th general election found a general increase in optimism in both corporations and SMEs.

The Corporate and SME indices again charted positive sentiment at 56.8 and 52.1 points each, with continued improvement in their turnover and profitability sub-indices.

The continued positive readings indicate Malaysia’s economic resilience in 1H 2018 is likely to flow to the second half of the year, supported in particular by the corporate segment’s firm optimism.

The results of the survey demonstrated that the outcome of the 14th General Election (GE14) may have partly contributed to the more upbeat sentiment among firms.

Both the corporate and SME segments displayed higher overall indices after GE14 compared to before the event.

The survey results shows that on the domestic front, a slew of potential new measures, such as the change in tax regime, the review of major government-linked projects and the proposed increase in minimum wages, by the new administration may impact domestic businesses.

Meanwhile, on the global front, the impact of the US Federal Reserve’s rate hikes and the repercussions of the ongoing US-China trade war also present challenges.

While businesses have shown more positive confidence following the results of GE14, these prevailing uncertainties may dampen the prospect of business optimism translating fully into eventual tangible results.

The better business sentiment post-GE14 is showed across all sectors for both corporations and SMEs, except for the corporate construction sector, which shaved off 1.0 point.

The uncertainties over various property and infrastructure projects following the election victory of Pakatan Harapan may have slightly dampened the prospects of incoming contracts for corporate construction firms, as depicted by its lower turnover sub-index for the post-GE14 sample.

"Corporate construction firms remained firmly optimistic post-GE14, with an overall index value of 55.0, indicating still bullish prospects for the rest of the year,” RAM said in a statement.

Meanwhile, the proportion of firms citing "rising cost of doing business” as their main challenge was also much lower after GE14, likely on expectations that the zero-rating of GST and the three-month tax holiday until the SST is reintroduced in September will allow businesses to achieve some cost savings.

Among the firms surveyed after GE14, only 22.3 per cent of corporations and 17.1 per cent of SMEs cited "rising cost of doing business” as their primary challenge, as opposed to a 32.2 per cent and 22.1 per cent before GE14.

SMEs are still negative about access to bank financing as the RAM BCI sub-index covering this aspect has been hovering within the "negative sentiment” territory for the last four surveys; it stands at 48.1 (-0.4 points) for 3Q-4Q 2018.

RAM said this suggests some concerns over their funding conditions. This appears to also be an issue pertinent to only SMEs, as their larger corporations have consistently recorded positive readings for this sub-index in the last six surveys, suggesting generally less difficulty in obtaining bank financing.

In the latest survey, 28 per cent of SMEs indicated that they expected it to be more difficult to access bank financing. This is roughly double the proportion of corporates (14.3 per cent) with the same response.

This issue is especially dominant for the SME construction sector, where 33.4 per cent of firms expected increased difficulty in this area.

The RAM Business Confidence Index is a comprehensive survey jointly conducted by RAM Holdings Berhad and RAM Credit Information Sdn Bhd, on business sentiment in Malaysia. Released on a quarterly basis , the index is based on data from a survey of close to 3,500 SMEs and corporations across five main industry segments respectively.

The index, designed to measure forward-looking expectations, offers a timely barometer of future economic activity to guide businesses’ investment decisions and planning as well as provide inputs for strategic policy making by various stakeholders of the economy.