Negative business sentiment lingers

By HARIZAH KAMEL / Pic TMR

RAM Business Confidence Index (RAM BCI) survey for the first quarter (1Q21) showed businesses remain pessimistic through the next three months.

Having polled a total of 229 firms across Malaysia — about 93% of which are small and medium enterprises (SMEs) and micro-enterprises — the overall BCI reached 38.7, representing an improvement over the index readings of the preceding two quarters, but still significantly below the threshold of 50.

Notably, about 83% of the firms polled cited weak economic conditions as their main concern, with around half of them expecting their revenue and profit to keep declining in the next quarter.

The rating agency highlighted that apart from the hardest-hit aviation, hospitality and tourism sectors, many firms in the non-manufacturing and services sectors still need some form of support to remain viable.

The overall RAM BCI readings for business services and retail are relatively low at a respective 38.9 and 40, compared to 43 for the manufacturing sector.

“It is therefore timely that the government launched the RM20 billion Pemerkasa (Strategic Programme to Empower the People and Economy) scheme on March 17. About 83% of the firms surveyed indicated that they would welcome yet another round of stimulus.

“It is also heartening to highlight that 12% of the surveyed firms try to manage on their own resources instead of over-relying on government handouts, hinting at a strong survival instinct that bodes well for entrepreneurship,” it said.

Meanwhile, in PwC’s Global Crisis Survey 2021, 83% of Malaysian respondents said their business was negatively impacted by the Covid-19 pandemic, with only 47% saying they were well-prepared for the crisis.

PwC Malaysia cyber forensics and crisis leader Alex Tan said the pandemic is likely to have been the first time organisations put their crisis response plans to the test, with 25% of Malaysian respondents saying they did not have a plan in place before Covid-19.

It showed 58% felt they had the right technology in place to help facilitate the coordination of their crisis response team, and 67% felt technology has promoted their organisation’s ability to gather and use the right information for decision-making.

While according to survey by Dun & Bradstreet (M) Sdn Bhd (D&B Malaysia), business sentiment among Malaysian firms improved for the fourth consecutive quarter since the second quarter of 2020 (2Q20) despite remaining downbeat for 2Q21.

According to the study, Business Optimism Index (BOI) inched up slightly by 2.58 percentage points from -9.39 percentage points in 1Q21 to -6.81 percentage points in 2Q21.

On a year-on-year basis, BOI rose visibly by 15.05 percentage points, up from -21.86 percentage points in 2Q20 to -6.81 percentage points in 2Q21.

“Despite the slight improvements seen, the growth outlook remains uncertain due primarily to the resurgence in infections over the past couple of months, which necessitated the reimposition of lockdowns and restrictions.

“Hence, the path to recovery will also be subject to how well the economy is able to navigate through these downside risks. With strong financial buffers and financial policy response in place, we foresee that these risks will be mitigated,” D&B Malaysia CEO Audrey Chia said in a statement yesterday.

Volume of sales rose slightly from -11.91 percentage points in 1Q21 to -9.17 percentage points in 2Q21, while net profit increased to -12.50 percentage points in 2Q21 from -20.63 percentage points in 1Q21.

However, inventory levels increased to -5.83 percentage points in 2Q21 from -10.32 percentage points previously, while employment levels decreased from -9.52 percentage points in 1Q21 to -10 percentage points in 2Q21.