RAM Business Confidence Survey shows SMEs and micro firms still need financial assistance to stay afloat

Published on 21 Sep 2020.

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The latest RAM Business Confidence Survey indicates that SMEs and micro businesses still need supportive policies to stay afloat. This is because the economy remains fragile, with uncertain prospects through the next three months. The overall RAM Business Confidence Index (RAM BCI) for 3Q 2020 (online survey conducted between July and August) hit a low of 33.7. This is substantially below the neutral point of 50, and reflects the disruptions plaguing small businesses amid the COVID-19 pandemic. Almost 90% of the survey’s respondents cited weak economic conditions as their most significant challenge in the next three months.

Firms need help to remain going concerns

The Government has made commendable efforts to assist SMEs and microenterprises during the pandemic. These include the loan moratorium, which has been a highly sought-after financial relief; some 86% of the survey respondents have taken up this offer. Of these, almost 90% need an extension beyond the expiry date of 30 September 2020, as cashflows remain tight. More than half of the firms surveyed said that without an extension, they would face negative repercussions of either having to scale down or cease operations, or even default on their loan. Most of the respondents also value wage subsidies (68%), loan subsidies (62%) and grants (66%) as aids to keep themselves afloat. 

Targeted assistance for firms of different sizes

A targeted approach by the Government, based on firm size and sector, is the best way to assist firms. The BCI survey suggests that the extension of the loan moratorium is most useful to bigger SMEs as they may have heftier loan commitments; up to 85% of larger SMEs needed an extension, as opposed to 69% of microenterprises. However, the impact of not having an extension is more detrimental to the latter. Some 20% of microenterprises stated they would have to shutter their operations, compared to just 8% of SMEs.

In terms of the type of assistance needed, a respective 79% and 75% of medium and small firms indicated the need for wage subsidies to continue, as opposed to 51% of microenterprises. In contrast, microenterprises expressed their preference for subsidised loan schemes. 

Amid the gloom, a silver lining emerges in that our survey reveals the resilience of SMEs and microenterprises. Even when prospects are bleak and challenges appear daunting, the majority of firms surveyed wanted to keep their businesses at status quo instead of scaling down through the next three months. It also indicates that businesses are hopeful demand will eventually recover in the medium term.

To this end, we urge policymakers to keep engaging with SMEs and microenterprises. They need to understand the specific requirements of and provide the necessary targeted financial aid to SMEs and microenterprises – the backbone of Malaysia’s economy - to tide them over the current crisis.


The RAM Business Confidence Index (RAM BCI) is a comprehensive survey conducted by RAM on forward looking business sentiment and topical issues faced by the small and medium business community in Malaysia. Released quarterly, the index offers a timely barometer of future economic activity to guide businesses’ investment decisions and planning as well as provide inputs for strategic policymaking by various stakeholders of the economy. This is done through the indication of positive and negative sentiment on five key aspects that are pertinent to their business operations over the next three months. The five business aspects surveyed are turnover, profitability, hiring, capital investment and capacity utilisation. An index value of 50 is the neutral benchmark while a value above 50 indicates positive sentiment by the firm; below 50 shows negative sentiment.


Analytical contact
Woon Khai Jhek, CFA
(603) 3385 2512

Media contact
Padthma Subbiah
(603) 3385 2577


About RAM Holdings Berhad

RAM Holdings is a leading provider of independent credit research and advisory services. RAM Holdings (formerly known as Rating Agency Malaysia Berhad) was established in November 1990 as a catalyst for the domestic debt-capital market and as the nation’s first credit-rating agency. Its shareholders comprise both local and foreign financial institutions. On 1 July 2007, the rating operations were novated to a newly formed subsidiary, RAM Rating Services Berhad (or RAM Ratings). Today, RAM Holdings spearheads the cultivation of new businesses and continues to provide training as well as economic research that promotes financial and credit expertise, in addition to soft skills. For more information, log on to www.ram.com.my 

No statement in this paper is to be construed as a recommendation to buy, sell or hold securities, or as investment advice, as it does not comment on the security's market price or suitability for any particular investor.

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