This article first appeared in The Edge Financial Daily on June 29, 2018

KUALA LUMPUR: Malaysia firms remain upbeat about their business outlook going into the second half, with the corporate and small medium enterprises (SME) indices again chartering positive sentiment at 56.8 and 52.1 respectively, according to the latest RAM Business Confidence Index (RAM BCI).

The sustained positive readings indicate Malaysia’s economic resilience in the first half of 2018 is likely to carry through to year end, supported in particular by the corporate segment’s firm optimism, particularly after the outcome of the 14th general election (GE14).

“Notably, both the Corporate and SME segments display higher overall indices after GE14 compared with before the event,” said RAM in a statement yesterday, adding the segments were higher by 0.7 and two points on the index, respectively, in the post-GE14 sample compared with pre-GE14.

While better business sentiment post-GE14 is observable across all sectors for both corporates and SMEs, only the corporate construction sector shaved off one point, as uncertainties over various property and infrastructure projects following the election victory of Pakatan Harapan may have dampened the prospects for incoming contracts for corporate construction firms.

That said, corporate construction firms remained firmly optimistic post-GE14.

 This was likely due to expectations the three-month tax holiday between zero-rating of the goods & services tax and reintroduction of the sales & services tax in September will allow for some cost savings.

However, the sub-index covering access to bank financing has been hovering within the “negative sentiment” territory for the last four surveys for SMEs, which suggests the segment is still pessimistic about loans’ access.