This article first appeared in The Edge Financial Daily on October 11, 2017

KUALA LUMPUR: Business sentiment among Malaysian companies has improved for the third consecutive quarter, judging by Dun & Bradstreet Malaysia’s Business Optimism Index (BOI) for the fourth quarter of 2017 (4Q17).

The index, gauging businesses’ confidence of the economy, climbed to 5.52 percentage points — its highest in six quarters — from 3.4 percentage points in the same study on business sentiment for 3Q17.

“We expect the outlook for Malaysian businesses to end on a relatively good note for 2017. This is largely attributed to positive growth in the construction sector as well as an increase in electronics, food and beverage manufacturing activities over the recent months,” said Dun & Bradstreet (M) Sdn Bhd chief executive officer Audrey Chia in a statement yesterday.

“Domestically, the government has a development plan in place, which focuses on boosting the country’s labour productivity, upgrading of skills among employees as well as infrastructure, which bodes well for businesses here and making Malaysia competitive in high value-added sectors.”

However, Chia said Dun & Bradstreet remains cautiously optimistic in its outlook for the country for the remainder of 2017.

“As an open economy, Malaysia is highly vulnerable to any increase in protectionism, a non-negligible possibility in the current antiglobalisation environment. With the acceleration in inflation rates, a slowdown in consumer spending and dampening of household sentiments are expected. Hence, we remain cautiously optimistic in our outlook for the rest of the year.”

The company’s BOI, released quarterly, is based on data from a survey — its 19th in Malaysia — of 200 business owners and senior executives from major industries across Malaysia.

The survey, designed to highlight business expectations, is one of the most effective ways to track how the business community perceives the business environment, and where they think it is moving.

It looks at six business indicators: sales volume, net profit, selling price, inventory level, employees and new orders. At 5.52 percentage points in 4Q17, the index shows there has been a clear improvement in business sentiment from 3.83 percentage points in 4Q16.