Malaysian business sentiment improves slightly in 4Q

by HARIZAH KAMEL / pic by ARIF KARTONO

LOCAL business sentiment showed a slight improvement in the fourth quarter of 2020 (4Q20), but still remained heavily depressed, according to data from the Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI).

The index climbed by 0.5 percentage points during the quarter to -12.83 percentage points from -13.33 percentage points in 3Q20.

On a year-on-year basis, BOI fell by -22.41 percentage points from 9.58 percentage points in 4Q19 to -12.83 percentage points in 4Q20.

The index is calculated based on six indicators including volume of sales, net profit, selling price, inventory level, employees and new orders. D&B (M) Sdn Bhd CEO Audrey Chia said the improvement in consumer confidence and rebound in manufacturing activities over the last couple of months are signs of gradual recovery in certain sectors of the Malaysian economy.

“However, it is still premature to predict if sentiments will continue to experience an uptrend as the global economy is still reeling from the impact of the Covid-19 pandemic.

“With the emphasis on new sources of economic growth through the digitalisation, upskilling and reskilling programmes targeted at key sectors for Budget 2021, we expect these new measures to enhance the resilience of the Malaysian business community and be better prepared to tide through the uncertainties ahead,” she said in a statement yesterday.

The study showed that four of six indicators have climbed upwards on a quarter-on-quarter basis for 4Q20.

Volume of sales rose to -16.67 percentage points in 4Q20 from -19.2 percentage points previously, while new orders improved to -1.59 percentage points in 4Q20 from -12 percentage points in 3Q20.

Net profit increased from -22.4 percentage points in 3Q20 to -20.63 percentage points in 4Q20, despite a drop in selling price from -7.2 percentage points in 3Q20 to -11.9 percentage points in 4Q20.

Inventory levels plunged to -15.87 percentage points in 4Q20 from -8.8 percentage points in the previous quarter.

Employment levels inched up from -10.40 percentage points in 3Q20 to -10.32 percentage points in 4Q20.

D&B said both manufacturing and services sectors have seen slight improvements in 4Q20, while the construction and wholesale trade sectors are most pessimistic.

Additionally, the agriculture sector has emerged as the most positive sector with two of six indicators in the positive zone and no indicators in the negative zone.

It also said the transportation sector has shown signs of slight recovery with one indicator in the expansionary zone.