RAM BCI: Business sentiment rebounds in 3Q 2026, but firms remain cautious amid economic and cost pressures

Published on 08 Oct 2026.

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KUALA LUMPUR, 8 October 2026 – The RAM Business Confidence Index (BCI) showed a notable recovery in forward-looking business sentiment in 3Q 2026, with the overall index rising to 43.8 from 33.4 in the preceding quarter. Despite the 10.3-point improvement Q-o-Q, the headline index remained below the neutral threshold of 50 for the third consecutive quarter. This indicates that firms remain pessimistic about their business prospects over the next three months, suggesting continued caution amid the spillover effects of the military conflict in the Middle East. The improvement was broad-based, with all sub-indices recording higher readings compared with 2Q 2026, led by improvement in the profitability, capital investment and hiring sub-indicators.

Concerns about weak economic conditions intensify while cost pressures remain a top challenge

Despite the broad-based recovery in sentiment, survey respondents indicate a still challenging operating environment. The survey, conducted between 24 August and 26 September, found that weak economic conditions and rising cost of doing business remained the two most-cited business challenges. Weak economy re-emerged as the top concern, as the share of firms citing this challenge rose markedly to 78% in 3Q 2026 from 66% in 2Q 2026. Concerns over the rising cost of doing business remained the second-largest concern, cited by 65% of surveyed firms, down slightly from 68% in the preceding quarter.

Investment tax allowance incentives and e-invoicing relief among most beneficial Budget 2026 measures

This quarter’s special focus examines businesses’ experience with Budget 2026 support measures as well as the types of assistance they would prioritise under the upcoming Budget 2027. Among the measures introduced under Budget 2026, investment tax allowances and capital allowance incentives, together with e-invoicing-related relief measures, were most frequently cited as having delivered meaningful business benefits. Around 30% of firms surveyed identified each of these measures, followed by SME financing schemes at 25%.

Relevance and eligibility clarity are key barriers to support

Around 40% of respondents indicated that they did not access the Budget 2026 support measures listed in the survey. Among these firms, the main barriers cited were uncertainty over eligibility (50%) and the perceived relevance of available measures to their business needs (29%). Exhausted funding allocations or unsuccessful applications and lack of awareness were comparatively less prominent. This highlights the importance of ensuring that support measures are relevant, accessible and clearly communicated to businesses.

Direct cost relief tops firms’ Budget 2027 priorities

Looking ahead, businesses appear to place greater priority on measures that provide more immediate support. When firms were asked to rank the measures that would most improve their prospects for survival and growth over the next 12 months, direct cost relief emerged as the most frequently cited Rank 1 priority, selected by 50% of respondents. Other measures assessed included easier and faster access to financing, investment-related tax incentives, simpler compliance and reduced red tape, and support to find new customers or markets. Preference patterns varied across measures, with simpler compliance and less red tape as well as help managing new regulations featuring more prominently as a Rank 2 priority, while support to raise productivity were more commonly concentrated in Rank 3.

The Budget findings therefore point to a broader consideration for policymakers. The effectiveness of support depends not only on the availability of measures, but also on their relevance and accessibility to businesses. More targeted support and clearer eligibility criteria could help better align future measures with firms’ needs.

 

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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