RAM BCI: Business confidence turns negative in 1Q 2026, dented by greater downside economic risks and ongoing cost pressures

Published on 04 May 2026.

Share Tweet Email

KUALA LUMPUR, 4 May 2026 – The RAM Business Confidence Index (BCI) for 1Q 2026 recorded a notable decline in forward-looking business sentiment. The overall index fell to 42.2 from 53.1 in the preceding quarter, marking a return to pessimistic prospects for the next three months after briefly surfacing above the neutral threshold of 50 the preceding quarter. All sub-indices declined Q-o-Q, with a more pronounced weakness observed in the sales, profitability and hiring sub-indicators. The pullback in business sentiment suggest firms are increasingly unsettled by external developments, particularly the escalation of military conflict involving Iran.

“The escalation of military conflict involving Iran has amplified uncertainty in global energy markets, with spillovers to oil prices and global supply chains and knock-on effects on operating costs,” said Chris W.K. Lee, RAM Holdings Berhad Group CEO and Executive Director. “Against this backdrop, firms are understandably reassessing risks, which has weighed on business confidence. That said, capital spending intentions remain marginally positive despite ongoing uncertainty,” he added.

Weak economic conditions and rising costs dominate concerns

Business worries over weak economic conditions intensified significantly in 1Q 2026, with 71% of firms citing it as a key challenge, up from 44% in the previous quarter. Rising cost of doing business remained among one of the major challenges cited by firms in 1Q 2026, although the share of respondents identifying it as a major concern eased to 57% (4Q 2025: 66%). These two concerns are reflective of the impact of energy markets disruptions caused by the Middle East conflict on business operations, both currently and in the foreseeable future

E-invoicing readiness broadly intact, but implementation hurdles persist

This quarter’s special focus is on e-invoicing readiness and execution risks. Encouragingly, survey findings indicate that most firms report being mostly ready for the upcoming e invoicing transition in 2026, with preparedness strongest among the larger corporates and SMEs. Among firms that have begun preparing for implementation, the key challenges cited centred on understanding compliance requirements and, staff training and workflow adaptation, highlighting the need for clearer guidance and technical support during the rollout phase.

With respect to regulatory compliance, firms surveyed have also cited other regulations that presented greater challenges to their business. Tax compliance, cited by 33% of firms surveyed, was among the dominant pain point. Compliance related to labour and foreign workers (21%) was also a major challenge to businesses that participated in the 1Q 2026 survey.

 

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 
© Copyright 2026 by RAM Holdings Berhad