KUALA LUMPUR: The latest RAM Business Confidence Index (RAM BCI) revealed a slight moderation in firms’ sentiment on business performance and demand prospects in the next six months due to the escalating trade wars and the transitional period of the Sales and Services Tax (SST).
The survey said that corporate index stood at 55.7 while the small and medium enterprises (SMEs) index came in at 53.5 - an improvement, but lagging behind its corporate counterpart.
“Although still in positive territory, the corporate index declined 1.1 points for the third quarter-fourth quarter 2018 survey,” the agency said in a statement today. The survey also noted that firms with more exposure to the on-going trade spat between the US and China were less optimistic.
“The export-oriented corporate index has declined since last year and the trend is consistent with the slower export growth observed to date, following the rebound last year,” it said.
On the SST, Ram Ratings said apart from the external outlook, the transitional period of the reinstatement of the tax affected expectations on future demand and profitability, as corporate turnover and profitability sub-indices dipped 9.9 points and 10.3 points to 50.8 and 49.5, respectively.
Moving forward, it said short-term economic uncertainties would remain, most notably from the repercussions of the on-going US-China trade war and the ensuing second-round effect on the domestic sectors.
“Guidance on future economic policies that shapes the overall business environment is crucial to business confidence among firms and will help drive sustainable economic activities,” it added. - Bernama
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