RAM BCI: Businesses turn optimistic about outlook in 4Q 2025

Published on 12 Dec 2025.

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KUALA LUMPUR, 12 December 2025 – The RAM Business Confidence Index (RAM BCI) for 4Q 2025 recorded a continued improvement in forward-looking business sentiment. The overall index climbed for the second consecutive quarter to 53.1 in 4Q 2025 from 48.4 in the previous quarter, marking a welcome return to positive sentiment territory (i.e., index reading > 50) after three consecutive quarters of negative sentiment.

All major sub-indices improved quarter-on-quarter, reflecting broad-based improvement in sentiment. Business performance sub-indices such as revenue and profitability posted Q-o-Q gains, signalling strengthening business activity heading into 1Q 2026. Despite the overall improvement, profitability remained below the 50-point threshold, standing at 45.6 (+2.3 points Q-o-Q) in 4Q 2025, attributable to persistent cost pressures. About two-thirds of the 90 firms surveyed this quarter cited rising operating costs as their biggest challenge in 4Q 2025, though this is already an improvement from 79% in 3Q 2025.

“The rebound in business confidence is a welcome development, reflecting the resilience and adaptability of Malaysian enterprises,” said Chris W.K. Lee, RAM Holdings Berhad Group CEO and Executive Director. “While challenges persist, particularly concerning profitability and managing cost pressures, the overall upward trend indicates that businesses are finding their footing and are ready to pursue growth opportunities in 2026,” he added.

Many businesses indicate stronger cost pressures than in early 2025

Despite the improvement in the overall index in 4Q 2025, operational metrics have yet to recover beyond the levels seen at the start of the year. Sales improved for 31% of surveyed firms in 4Q 2025 compared to 1Q 2025, but a larger proportion (38%) noted a worsening trend. Profit margin compression remained pronounced through 2025, with around half of firms surveyed indicating that cost pressures worsened compared to the start of the year. The profitability trend mirrors this challenge, with 41% of businesses reporting lower profits, outweighing the 30% that reported an improvement.

Diversification and expansion remain key focus areas for firms in 2026

A special focus for this quarter’s survey was the strategic focus for businesses heading into 2026. Around 62% of firms surveyed are prioritising the diversification of their product and service offerings in 2026. This indicates a strategic response to evolving customer demands and rising pressures from fiercer market competition. More than half of survey respondents also plan to enter new markets.

Budget 2026 commits to digitalisation and upskilling

Firm surveyed this quarter also lauded the initiatives on technology and human capital development under Budget 2026. Digitalisation and automation initiatives under Budget 2026 are widely recognized as the most well-supported need, as cited by 50% of firms surveyed. This reflects the strong appreciation for the government's focus on technological transformation. Survey respondents also indicated that their needs for training and upskilling programs are well supported by Budget 2026, as cited by almost half of the firms.

As Malaysian businesses move into 2026, the combination of renewed business sentiment, strategic shifts in broadening market reach and targeted government support, positions them for a more resilient growth trajectory. Continued focus on helping firms tap new markets, diversify their product offerings and easing cost burdens will be key to unlocking the full potential of Malaysia’s business community in the year ahead.

 

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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