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Malaysian business sentiment hits a new high

KUALA LUMPUR: Business optimism among Malaysian companies hits a new peak in the first quarter of 2018 (Q1 2018) as growth momentum continues to pick up.

According to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, overall BOI jumped from 5.52 percentage points in Q4 2017 to 7.25 percentage points in Q1 2018.

On a year-on-year (y-o-y) basis, BOI rose from 1.65 percentage points in Q4 2017 to 7.25 percentage points in Q1 2018.

For Q1 2018, four of six indicators had risen upwards on a quarter-on-quarter (q-o-q) basis.

On a year-on-year (y-o-y) basis, five of six indicators had improved.

Both services and transportation sectors are most optimistic with all six indicators in positive territory.

The construction sector is least optimistic with only two indicators in the expansionary zone for Q1 2018.

Compared to 2017, firms are more optimistic about investments in business expansion for 2018.

There is a visible increase in firms expecting investments to increase from eight per cent in 2017 to 18 per cent in 2018.

Meanwhile, the proportion of firms expecting investments to decrease fell from 21 per cent in 2017 to 15 per cent for 2018.

Majority of local firms had anticipated investments to remain unchanged at 67 per cent.

Firms have identified machinery and equipment to be the most important area of investment for 2018 at 40 per cent, followed by investments in information technology at 28 per cent, and skills upgrading of employees at 12 per cent.

Global economic uncertainties have been highlighted as the main challenge in 2018 facing Malaysian firms, accounting for 31 per cent of firms being surveyed.

Higher business costs accounted for the second major challenge at 27 per cent and increased competition was the third main challenge for 2018 at 25 per cent.

The D&B Malaysia Index (BOI) is a measure of business confidence in the economy.

Released quarterly, it is based on a business sentiment survey that is designed to capture business expectations and is one of the most effective ways to track how the business community perceives the business environment, and where they think it is moving.

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