RAM BCI: Business sentiment improved in 3Q 2025

Published on 02 Oct 2025.

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KUALA LUMPUR, 2 October 2025 – The RAM Business Confidence Index (RAM BCI) rose to 48.4 in 3Q 2025 (2Q 2025: 40.0), reflecting a significant easing in pessimistic business sentiment for the next three months. The rebound in the overall index was broad-based, with all sub-indices improving Q-o-Q except for the hiring sub-index. While the improvement from the trough in 2Q suggests some relief in business pressures, the index remains below the neutral threshold of 50, underscoring lingering caution among firms surveyed.

The recovery in sentiment is consistent with easing global trade uncertainties following the conclusion of the US-Malaysia trade deal in early August. The latest BCI survey, conducted between 25 August and 10 September with 126 participating firms, highlights that challenges persist despite better policy clarity. Rising cost of doing business and weak economy remained among the most pressing concerns, respectively cited by 79% and 72% of respondents (2Q 2025: 80% and 63%). 

Impact of fiscal reforms and taxation

The 3Q 2025 survey placed a special focus on the impact of recent government reforms and key policy rollouts. The implementation of e-invoicing and the expansion of the Sales and Service Tax (SST) were identified as the most significant measures, especially for SMEs. About 37% of firms ranked e-invoicing as the top challenge, while 34% pointed to the SST expansion. Revisions to the electricity tariff structure were also highlighted, though to a lesser degree as most firms ranked it at #3 or #4 in terms of impact. Minimum wage hike and diesel subsidy removal were seen as the least burdensome of the five measures assessed.

On how the policy reforms impact their businesses, only 35% of respondents indicated they were managing well. Among those who faced difficulty coping, about 46% reported moderate difficulty and 16% indicated significant difficulty. SMEs were disproportionately affected, with 23% facing significant difficulty compared to just 6% for both microenterprises and corporates.

“Fiscal reforms such as e-invoicing and the expansion of SST are crucial steps to strengthen Malaysia’s revenue base. However, our survey findings show that businesses, particularly SMEs, are struggling to transition and adapt to the new regulatory environment,” said Chris W.K. Lee, RAM Holdings Berhad Group CEO and Executive Director. “As we head into Budget 2026, it will be important for policymakers to strike a balance between broadening the tax base and supporting business resilience, which will be key to lifting business confidence and sustaining Malaysia’s long-term competitiveness”, he added. 

Digitalisation and technological gaps can be addressed in Budget 2026

The survey also covers identifying barriers to the adoption of digitalisation and automation technologies, which continue to hold back business transformation. The most cited challenge was a lack of internal expertise or understanding, as flagged by 60% of firms surveyed, followed by high upfront investment cost, as raised by 53% of respondents.

Budget 2026 presents an opportunity to help businesses overcome these hurdles. Survey respondents expressed a strong interest in greater support for digitalisation and automation in the upcoming budget. Other desired measures cited by firms surveyed include lower corporate tax rates and additional tax reliefs, as well as higher grants and financial assistance, particularly to support digitalisation, automation, and ESG compliance.

 

Analytical contact
Nur Rasyidah Abd Karim
(603) 2708 8208
rasyidah@ram.com.my 

Woon Khai Jhek, CFA
(603) 2708 8286
khaijhek@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my 
 

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, 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 

 

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 by RAM Holdings Berhad 
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