KUALA LUMPUR: The RAM-CTOS Business Confidence Index (BCI) survey, shows that businesses remain generally optimistic about their business performance, but expect costs to continue to weigh on profit in the future.
TheBCI was up less than a point to 54.0 in the second quarter of 2024 (2Q24), from 53.4 in the first quarter (1Q24).
The survey also corporates were more bullish on their prospects compared with small and medium enterprises.
Crporate sentiment hit a high of 59.3 in 2Q24, increasing by 2.2 points from 57.1 in 1Q24.
Meanwhile, small and medium enterprises (SMEs) remained positive with a score of 52.6, slightly down from 53.0 in the previous quarter.
The BCI survey said respondents were more optimistic about their business performance outlook, showing quarter-on-quarter (QoQ) improvement in both the sales and profitability sub-indices.
"However, profitability sentiment remains relatively soft, just above the 50 neutral mark, inhibited by ongoing cost pressures."Rising cost of doing business continues to top the list of challenges, cited by nearly 80 per cent of the 109 respondents, although this is a decrease from 90 per cent in the previous quarter," it said.
Around 61 per cent of firms are most concerned about the impact of higher labour costs from the implementation of the progressive wage policy (PWP).
"This is followed by uncertainties regarding productivity benchmarks (46 per cent) and compliance costs (42 per cent)."Despite these concerns, about 78 per cent of firms foresee some benefits from the adoption of PWP, with enhanced employee morale and satisfaction (53 per cent), greater talent attraction and retention (47 per cent), and improved employee productivity (40 per cent) being the most cited benefits," the survey noted.
RAM Holdings Bhd group chief executive officer and executive director Chris W.K. Lee said the implementation of the PWP is welcome due to the potential benefits of a restructured wage system, which connects wage increases to training and upskilling."However, a more broad-based adoption is needed to realise its full benefits to the nation as a whole," he said.
Regarding diesel, the survey results revealed that the recent retargeting of diesel subsidies did not seem to negatively impact sentiment.