By LYDIA NATHAN

Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study revealed that the business sentiment among local companies has improved greatly in the first quarter of 2018 (1Q18).

The study showed the overall BOI climbed to 7.25% in 1Q18 from 5.52% in 4Q17, on the back of four business indicators which rose based on a quarter-to-quarter basis, while five indicators improved on a year-on-year basis.

The services and transportation sectors emerged as the two most optimistic sectors, while the construction sector the least.

D&B said that firms are more optimistic to invest in business expansion this year, while the proportion of firms anticipating investments to decrease fell from 21% in 2017 to 15% for 2018.

“There is a visible increase in firms expecting investments to increase from 8% in 2017 to 18% in 2018,” it said.

D&B CEO Audrey Chia said besides global economic uncertainties along with the rising business costs, increased competition is one new area which has been identified as a key challenge for Malaysian companies.

“The overall positive outlook for 1Q18 bodes well for the business community in Malaysia. Both the services and transportation sectors have benefitted from strong private consumption and government spending in public infrastructure. We expect the manufacturing sector to be boosted by sustained global demand for semiconductors and stronger export growth,” she said.

D&B noted that the most important area of investment for the year is in machinery, as well as capital equipment, which accounts for 40% of surveyed companies, an increase from 31% in 2017.

Investments in information technology, meanwhile, has emerged as the second area of importance at 28%, while skills upgrading of employees accounts for the third most important area of investment for 2018 at 12%.