SME Sentiment Index increases to 54.7 in first half
These results reflect the optimism, resilience and adaptability of our MSMEs as they navigate Malaysia’s steady economic recovery.
DATUK DR ARIA PUTERA ISMAIL SME Bank group president and chief executive officer
KUALA LUMPUR: The SME Sentiment Index rose to 54.7 in the first half of 2024 from 53.5 in the second half of 2023.
SME Bank group president and chief executive officer Datuk Dr Aria Putera Ismail attributed this increase to better economic outlook, improved cash flow and higher liquidity buffers among micro, small and medium enterprises (MSMEs).
“These results reflect the optimism, resilience and adaptability of our MSMEs as they navigate Malaysia’s steady economic recovery.
“It resonates strongly with the government’s effort under the Madani Economy framework, which aims to rejuvenate the economy by fostering inclusive and sustainable growth.
“The improved sentiment among MSMEs underscores their critical role in this economic revival, highlighting their ability to adapt and thrive in a dynamic business environment,” he said.
SME Bank chief economist Lynette Lee Li Qing said the sentiment aligns with the gross domestic product (GDP) growth forecast of 4.0 per cent to 5.0 per cent for 2024, up from 3.6 per cent in 2023.
“Malaysia’s economy continued to expand 4.2 per cent year-on-year in the first quarter of 2024, surpassing the 2.9 per cent growth recorded in the previous quarter,” she said in a statement.
Lee said other forward-looking indicators, such as the Malaysia Institute of Economic Research consumer sentiment index and the Statistics Department’s business tendency data, also indicate sustained economic expansion.
“Nonetheless, challenges persist regarding profitability, employment decisions and expansion initiatives amid a high-cost environment,” she added.
SME Bank has published the results of its SME Sentiment Index for the first half, which shows a rise in confidence among MSMEs.
The survey revealed that MSMEs now have a more balanced outlook on the economy for the next six to 12 months.
Additionally, 38 per cent of respondents anticipate economic expansion, up from 33 per cent in the second half, while the proportion expecting a slowdown has decreased to 37 per cent, down from 54 per cent in the same period last year.
“This optimism is likely supported by strong household spending, a healthy labour market, government cash aid, robust investment activities and a recovery in exports and tourism,” it added.
Further, 53 per cent of respondents expect higher revenue in the next six to 12 months, down from 66 per cent in the previous survey.
The decline highlights challenges like increased competition and a higher-cost environment.
“By sector, the highest sales expectations are in the manufacture of chemicals (78 per cent), accommodation (69 per cent), and food products (68 per cent).
“Regionally, MSMEs in Sarawak (89 per cent) and Sabah (75 per cent) are the most optimistic, particularly in the construction sector,” it said.