RAM-CTOS BCI: Business sentiment moderates amid renewed demand and cost concerns

Published on 09 Oct 2023.

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KUALA LUMPUR, 9 October 2023 – The RAM-CTOS Business Confidence Index (BCI) declined to 50.4 in 3Q 2023 from 54.8 in the previous quarter, ending a two-quarter improvement streak. While the sentiment remains positive for the third successive survey, still-challenging operating conditions are likely to have dented business confidence for the next three months. The q-o-q drop in the sales (-6.7 points) and profitability (-7.0 points) sub-indices was particularly pronounced, consistent with slowing demand and further inflationary pressures. Unsurprisingly, the manufacturing sector registered the lowest overall index reading (-8.4 points to 40.8), given its higher exposure to exports, relative to the business services (55.9) and retail (53.8) sectors.


Figure 1: Forward business sentiments deteriorated in 3Q 2023

* The RAM-CTOS sub-index commenced in 1Q 2022. Data points prior to this are derived from the main RAM BCI. The threshold that
indicates positive sentiment is 50.
MCO = Movement Control Order


Commenting on the decline in 3Q BCI, Erick Hamburger, Group CEO of CTOS Digital Berhad said, “The shifting landscape of business sentiment is due to the prevailing challenging operating conditions. In such times, cash flow management takes center stage in sustaining a business. Within CTOS, we continue to support SMEs on multiple fronts. We are dedicated to managing business credit risks, bolstering the resilience of SMEs as they traverse these trying times. In enhancing SMEs' operational efficiency, we provide cutting-edge digital automated solutions that serve to not only cut cost but also streamline core business processes. We also assist SMEs in recovering bad debt by reinforcing good payment behaviour to help alleviate cash flow challenges. Our efforts have resulted in the successful recovery of over RM1 billion annually, further demonstrating our commitment to SMEs and our dedication to fostering their financial resilience."

Rising costs and weak economy remain key concerns

Rising costs and a weak economy top the list of concerns for the next three to 12 months. Tight cash flow will be a prevalent challenge to micro firms in the next 12 months, more so than to small and medium enterprises (SMEs) and corporates.


Figure 2: Rising cost and weak economy top concerns

* Percentages sum to more than 100% as firms are allowed to pick more than one response


Firms want lower income tax rate in Budget 2024

Of the 165 firms surveyed in 3Q 2023, around 64% cited lower income tax rates as the most beneficial measure that Budget 2024 could provide, while 44% wanted utility tariff cuts. If introduced, these would help alleviate cost pressures for businesses.

In a gauge of relief recipients, about 60% of businesses polled said they had not benefited from government assistance. Reasons cited include ineligibility, overly stringent conditions and a lack of awareness of such programmes. Micro firms surveyed seem to be particularly vexed by the stringency tied to aid schemes, with around a third of them citing this hurdle.


Figure 3: Impediments to government assistance



Targeted and timely policy support remains crucial

“Given the prevailing challenges, the upcoming Budget 2024 will be especially pertinent to extend assistance and support to micro, small and medium enterprises (MSME) to help them ride through the challenging environment and help realise the vision of the MADANI Economy,” said Chris W.K. Lee, RAM Holdings Berhad Group CEO and Executive Director. 

Provisions of the MADANI Economy framework and the New Industrial Masterplan 2030 indicate that the government is well aware of the need to support MSMEs. Access to financing is a primary challenge often cited by these firms. The key is to communicate support programmes clearly and ensure onboarding or administrative processes are not overly complex or cumbersome for applicants.


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

Media contact
Sakinah Arifin
(603) 3385 2500

Norine Erica MJ
(603) 2722 8806


The RAM-CTOS Business Confidence Index (RAM-CTOS BCI) is a comprehensive survey jointly conducted by RAM and CTOS, starting 1Q 2022, 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, a value of above 50 indicates positive sentiment, and below 50 shows negative sentiment.


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

About CTOS

CTOS is Malaysia’s leading registered Credit Reporting Agency (CRA), regulated by the Ministry of Finance under the Credit Reporting Agencies Act 2010. Established in 1990, CTOS facilitates credit extensions by empowering individuals and businesses with access to crucial information at greater ease and speed. CTOS delivers a complete portfolio of credit risk management solutions and services and is widely used by the country’s banking and financial institutions, insurance companies, telecommunication companies, large corporations, SMEs, legal firms and state bodies. For more information, visit our website at www.ctoscredit.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.

Published jointly by RAM Holdings Berhad and CTOS Data Systems Sdn Bhd
© Copyright 2023 by RAM Holdings Berhad and CTOS Data Systems Sdn Bhd