KUALA LUMPUR: Domestic business sentiment is expected to be positive amid the reopening of the economy, according to RAM Holdings Bhd and CTOS Data Systems Sdn Bhd's joint Business Confidence Index (BCI) Survey for the first quarter (Q1) 2022.
In a joint statement today, both firms said the overall index charted a positive sentiment reading of 55.4, the first since the start of the pandemic.
Readings of the main RAM BCI index for the previous five quarters had hovered below 40.
It said a reading of above 50 indicates optimistic sentiment.
CTOS Digital Bhd deputy group chief executive officer Eric Hamburger said findings from CTOS Credit Manager concur with the joint survey, with its subscribers pulling 17 per cent more business credit reports since the start of 2022 compared to the corresponding period in 2021 to carry out due diligence on new customers and re-evaluate existing customers.
"This is a good sign that businesses are beginning to increase operations and productivity," he said.
This quarter's poll results from over 140 respondents, 75 per cent of which are small and medium enterprises (SMEs) and micro-enterprises, may be interpreted as cautious optimism as many firms continue to report significant challenges in the near term.
Surveyed firms were most bullish about sales and hiring outlook, seen in the respective sub-indices rising to 60.2 and 60.7.
The share of firms citing economic weakness as a significant challenge dropped to 50 per cent from more than 80 per cent in the same period last year.
Most firms surveyed expect capacity slack to persist, implying demand has not fully normalised as the pandemic may have irrevocably changed consumption habits, the survey showed.
Meanwhile, the survey also showed that around 55 per cent of firms have yet to recover to pre-Covid levels, particularly for the business services sector (62 per cent) and smaller SMEs and micro firms (60 per cent).
Most of these firms foresee full recovery only from 2023.
In contrast, only 12 per cent of respondents, mainly from larger corporate firms, said business had surpassed pre-pandemic levels. Large corporates likely benefited from the sharp rebound in export sales last year due to robust external demand.