PETALING JAYA: Business confidence in Malaysia remains upbeat despite signs of downward moderation in the first quarter (Q1) of 2017, Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study revealed.
According to the study, overall BOI has remained in the expansionary region, slipping for the third consecutive quarter, from +3.83 percentage points in Q4 2016 to +1.65 points in Q1 2017. On a year-on-year (y-o-y) basis, BOI fell moderately from +4.75 percentage points in Q1 2016 to +1.65 points in Q1 2017.
For Q1 2017, four of six indicators have moderated downwards while two indicators have improved on a quarter-on-quarter (q-o-q) basis. On a y-o-y basis, only two of six business indicators have improved.
Both agricultural and transportation sectors have emerged as two of the most optimistic sectors with six and five indicators respectively in the expansionary region. Business sentiments within the wholesale trade and mining sectors remain downbeat for Q1 2017.
The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. This is the 16th D&B BOI study being released in Malaysia.
The overall outlook for 2017 appears to be cautiously optimistic as the majority of firms have anticipated investments for business expansion to remain unchanged. According to D&B Malaysia, 71% of Malaysian businesses surveyed have expected investments to remain unchanged.
The proportion of firms which has expected investments to increase stands at a minority of 8%. The remaining firms have anticipated a reduction in investments at 21%.
Firms have identified machinery and capital equipment (31%), skills upgrading of employees (24%), marketing and brand development (23%) to be the top three important areas of investment for 2017.
Global uncertainties (53%) have been highlighted as the main challenge in 2017 facing local firms, followed by higher business costs (27%), reduced sales (11%), lack of financing (4%) and increased competition (4%).
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.
This is commonly used, worldwide, to assist in analysing major trends and issues concerning the business community through tracking business parameters including net profits, selling prices, new orders, inventory levels, and employee count.
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