KUALA LUMPUR: Businesses are firmly optimistic about their three-month outlook, with some concerns over rising cost pressure, according to RAM-CTOS Business Confidence Index (BCI) survey for the second quarter (Q2) 2022.
The overall index clocked in at 65.0, up from 55.4 recorded in the preceding quarter and is well above the threshold of 50, which indicates positive sentiment.
The survey, jointly conducted by RAM Holdings Bhd and CTOS Data Systems Sdn Bhd, showed that all other sub-indices tracked also showed positive momentum.
It is not all smooth sailing, however, as over 80 per cent of the 116 respondents polled are reporting rising cost pressures which could cap business recovery.
Meanwhile, the survey also showed that about 60 per cent of respondents - the majority comprising small and medium enterprises (SMEs) and micro firms - cited a need for more financing in the next six months to fund growth.
These same firms reported more hurdles in securing additional external financing.
The survey further showed that more than 40 per cent of SMEs and micro-firms have had their financing applications rejected in the last six months, compared to just 10 per cent of corporate respondents.
Lack of collateral was cited as among the key impediment to obtaining financing.
Consequently, smaller firms in our survey tend to rely more on personal funds to grow their business.
"It is, however, noteworthy that over 90 per cent and 60 per cent respectively of corporate and SME respondents have successfully raised funds from banks and other sources in the last six months, survey findings show.
The firm optimism observed this quarter points toward a strong business recovery this year.
However, most firms face labour shortages and escalating input costs from high commodity prices and supply chain disruptions.
The imposition of a higher minimum wage and rising interest rates further compound the challenges faced by smaller firms with fewer resources.
The survey also noted that against these headwinds, policymakers and financial institutions are urged to continue to support SMEs and micro-firms by facilitating access to financing and other market initiatives.
This will ensure the nation's economic recovery remains on track this year.