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Small Business and Self-Employed

What is the Business Optimism Index?

The Business Optimism Index (BOI) is one measure of the strength of Malaysia’s economy. It’s worth knowing what it is and how it’s developed because of the effect it can have on your business. Each quarter, the New Jersey-based information company Dun and Bradstreet does a survey of major economic indicators, and the way Malaysia’s big players feel about the direction of the economy is near the top of its interest.

Dun and Bradstreet develops its index by asking 200 business owners and high-level executives how they see things going in the next quarter. The subjects who represent Malaysia’s major industries are asked whether they expect to see increases, decreases, or no changes in several key factors. These factors are sales, profits, employment, new orders, inventory, and selling prices, and are often referred to as the key indicators for business optimism in Malaysia.

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If you own a company, either domestic or doing business in Malaysia, this metric probably has an impact on how you’re likely to do going forward. If, for example, the BOI is down for a quarter, your large clients and vendors are more likely to cut back on their orders, perhaps expecting a downturn in their own sales. Good forecasts can signal the opposite. For instance, the BOI for the first quarter of 2018 hit a record high of 7.25%. This sends a strong signal that major business leaders expect good times ahead, and it might be time to plan an expansion or other local investment.

Malaysia’s Business Optimism Index has been a reliable predictor of the economy. In early 2018, the figure hit new highs, indicating a very positive outlook in general.