RAM-CTOS BCI: Businesses temper optimism in 4Q 2024

Published on 11 Dec 2024.

KUALA LUMPUR, 11 December 2024 – The 4Q 2024 RAM-CTOS Business Confidence Index (BCI) survey indicated that business sentiment on their prospects for the next three months remained positive for the fourth straight quarter. While staying above the neutral threshold of 50, the overall index dipped to 54.5 from 58.9 in the previous quarter, marking the end of a three-quarter upward streak. Nonetheless, the latest reading is still the second highest since 2Q 2023, reflecting tempered but sustained optimism.

Cost pressures more intense than at the start of 2024 for many businesses

Rising costs still top the list of concerns in the next three months, with around 80% of the 102 firms surveyed identifying this as a key challenge, up from 75% in 3Q 2024. Firms surveyed have also largely reported that cost pressures worsened this year, with around 47% saying cost pressures in 4Q 2024 were more severe than in 1Q 2024. That said, cost pressures appear less pervasive this year compared to last year, when an overwhelming 66% of firms surveyed reported worsening conditions year-on-year in 4Q 2023. Profitability trends mirror this moderation in cost pressures. While only 28% of firms recorded profit improvements in 4Q 2024 compared to 1Q 2024, outweighed by those that reported a decline, this marks a notable rise from the 17% recorded from the same question surveyed in 4Q 2023.

SMEs appreciate Budget 2025’s automation and digitalisation scheme

More than half of respondents (56%) expressed intentions to leverage Budget 2025 initiatives, with the SME Automation and Digitalisation Facility standing out as the most popular programme. Being primarily targeted at SMEs, about 49% of SMEs indicated plans to apply for this initiative. Aligning with this interest, adoption of new technology and digitalisation stood out as a business need that Budget 2025 adequately met among firms surveyed. This was cited by about 35%, 31% and 23% of SMEs, corporates and micro firms, respectively.

Despite the unveiling of several targeted financial initiatives in Budget 2025, about 44% of respondents indicated no plans to utilise the available financial programs, a sentiment particularly pronounced among micro enterprises (77%). This underscores the need for a more inclusive approach and continued awareness and engagement programmes to address business challenges and ensure sustainable growth.

“MSMEs, the backbone of our economy, often face unique hurdles such as access to financing, cost pressures, and scaling challenges. Tackling these issues is essential for fostering a resilient and thriving business environment,” said Chris W.K. Lee, RAM Holdings Berhad Group CEO and Executive Director.

Erick Hamburger, Group CEO of CTOS Digital Berhad said, “Amidst this challenging economic backdrop, we are encouraged that SMEs have clearly prioritised digitalisation as one of the key pillars in navigating the future. We are ready to support this potential uptick in adoption of digital efficiency solutions and data-backed decisioning, which will not only strengthen the business landscape but also complement nation-building initiatives.”

Analytical contact
Woon Khai Jhek, CFA
(603) 3385 2512
khaijhek@ram.com.my

Nur Rasyidah Abd Karim
(603) 3385 2490
rasyidah@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

Lu Choi Wan
(603) 2789 2256
choiwan.lu@ctos.com.my

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. The 4Q 2024 edition marks the final release of the RAM-CTOS BCI series, with the joint survey scheduled for discontinuation from 2025 onwards.

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.

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RAM-CTOS BCI: Businesses temper optimism in 4Q 2024