KUALA LUMPUR, Aug 7 — Malaysia’s small-and-medium enterprises (SME) as well as its corporates are largely optimistic about their business prospects in the second half of this year, according to the latest survey by credit ratings firm RAM.
Its RAM Business Confidence Index for the third and fourth quarters released today showed positive sentiments among SMEs rising from 52.1 to 54.0.
The sentiments among the corporate sector recorded a slight dip of 0.5 but remained positive; its record at 55.3 was still above the 55 value on the confidence scale.
According to RAM, businesses in the export line showed more confidence about its prospects for the second half of the year compared to domestic-oriented companies.
Companies in agriculture and mining showed the best index reading of 57.6, which RAM attributed to a recovery trend in the oil palm sector.
RAM noted that the retail sector is still the most cautious about its prospects in the next six months, which it attributed to current belt-tightening habits among consumers on certain items.
But the survey results also indicated that businesses across the board were expecting to expand, which translates to increased hiring activities.
However, RAM said Malaysian businesses were still concerned about their profit rate for the next six months due to economic headwinds and were still stuck balancing rising cost of production and slow demand.
It noted that the profitability component index for both SMEs and corporates were behind all other sectors at 50.6 and 51.9 respectively.
“That said, we highlight that the previously negative profitability sentiment among SMEs has rebounded for this period, as firms generally expect to chart a higher turnover in 2H 2017,” RAM said in a statement.
It added that the corporates are expecting a pile up of their inventory, which will force companies to price their goods more competitively; a higher production cost will eat into their future profit margins too.
