KUALA LUMPUR: Business sentiment turned pessimistic going into 2024, with the micro, small and medium enterprise (MSMEs) sector especially bearish, according to the RAM-CTOS Business Confidence Index (BCI).
The index fell for the second consecutive quarter in the fourth quarter of 2023 (Q4 2023), to 48.9, pulled down by the negative sentiments from MSMEs respondents.
The overall index fell to 48.9 from 50.4, signalling pessimism about business prospects in the next three months.
"Bearish sentiments were particularly pronounced for MSMEs. Expectations for sales growth, profitability and capacity utilisation were weak across the board. "Rising costs of doing business and weaker economic growth were the key reasons attributed by the 141 firms polled for this survey," it stated.
It noted business conditions largely worsened among surveyed firms towards the latter portion of the year.
Nearly 40 per cent and 50 per cent of respondents reported lower sales and profit in Q4 2023 compared to Q1 2023. This was particularly acute among MSMEs due to rising costs, with limited ability to fully pass on cost increases to customers.
Meanwhile, it highlighted that while half of respondents would welcome government assistance in dealing with the rising cost of doing business, their needs differ.
Financial assistance is required by micro firms, while for SMEs and larger companies, support for business enhancements, including automation and training are more relevant asthey move up the value chain.
"At CTOS we'll focus on leveraging our strengths to support the broader business ecosystem,offering various innovative solutions to mitigate cost pressures and enhance cashflow such as CTOS credit manager, CTOS eKYC digital onboarding solutions, CTOS application and decisioning platform and so on. "It is also worth noting that in Budget 2024, the government is offering substantial funds to assist SMEs in digitalisation, providing a unique opportunity for businesses. "Therefore, it is crucial for businesses to adapt and take advantage of this funding," said CTOS Digital Bhd group chief executive officer (CEO) Erick Hamburger in a statement.
Although the recent Budget 2024 announced various grants and schemes to support and strengthen MSMEs, the survey indicated that access to these support programmes remains a challenge, particularly for micro firms.
Close to 70 per cent of micro firms do not plan to utilise the automation and training schemes announced under Budget 2024 and the main reason cited was simply not knowing where and how to apply for these schemes.
For SMEs, around 80 per cent intend to utilise the schemes for automation and/or training and around a quarter expressed facing similar barriers to access.
"Government schemes are needed to support MSMEs to scale up and innovate, but they should be preceded by effective communications and outreach programmes to reach the right target groups. "Onboarding and administrative processes should also not be overly complex or cumbersome for applicants," said RAM Holdings Bhd group CEO and executive director Chris W.K. Lee.
