As businesses start to shift in the digital space, more small medium enterprises (SMEs) in Malaysia are planning to develop new products or services and increase online marketing in the near term. According to a recent survey conducted by SME Corp. Malaysia and Huawei Technologies, this is particular SMEs in the manufacturing and service sectors across all regions in Malaysia.
The study also found around 79.7% of the total respondents realising the importance of ICT adoption and its role in improving business productivity and efficiency. Productivity is also on the rise following the use of different digital tools such as data management services which were able to increase productivity up to 60%. This is compared to SMEs that utilised e-business and social media initiatives which increased productivity to only about 27% and 26%, respectively.
Currently, ICT usage among SMEs predominantly comes from personal devices, such as smartphone (91.4%), basic internet connection (90.1%) and computer or laptop (86.5%). Usage of back-end business processes such as enterprise resource planning (ERP) and customer relationship management (CRM) are also seen “very low” among SMEs.
“Likewise, limited usage of social media and e-commerce also showed that SMEs have achieved high computerisation but struggle to cross the chasm to digitalisation that could significantly enhance business and productivity gains,” the study explained.
Most used social media platforms for SMEs
The survey also found around 70.5% of total respondents utilising social media for their businesses, with WhatsApp, Facebook and Instagram being the most used social media platforms. This is mainly for engagement or interaction with customers.
The utilisation of social media for customer engagement is generally high in Malaysia, except for the Northern Region, which sees almost one-third of the total respondents not planning to use social media.
When it comes to e-commerce, around 43.8% of respondents were found to be adopting e-commerce, of which, about 89.6% of them were using online banking transaction, such as Maybank2u and CIMB Clicks. Around 70.2% were using cash for payment and only about 22.8% were using integrated payment gateways such as PayPal and AliPay.
One-third of the total respondents still do not plan to use e-commerce, mainly SMEs in the manufacturing and construction sectors. Reasons for not doing so include e-commerce not being necessary for their businesses and that they prefer traditional ways of doing business.
“These findings showed that SMEs are highly computerised but they face difficulties to digitalise their businesses which require mindset change and development of digital workforce as key focus areas for industry ecosystem to work upon,” the study said.
Utilisation of cloud and IoT services ‘relatively low’
Cloud services and Internet of Things (IoT) utilisation was also found to be “relatively low”, according to the survey. Although around 54% of respondents reported use of some form of data analytics, majority were only using spreadsheets on their computers.
For cloud services, about 44.0% of the total respondents used the services, largely driven by online storage demand, such as Dropbox and Google Drive. Only about 35% of the total respondents utilised IoT in their businesses that is mainly used for security and surveillance as well as for fleet management.
Other issues include internet connection issues, with 90.1% of the respondents stating they are still faced with issues, such as high price, low internet speed and poor connection despite having one.
In terms of affordability, majority of respondents in the Northern Region and East Coast said the cost of internet was “relatively expensive”. Low internet speed remains a common concern, highlighting the need to strengthen broadband infrastructure, as broadband remains an issue holding back SMEs digitalisation.
Survey findings discovered that fixed broadband, such as Streamyx, Unifi and Time is a preferred broadband channel in all regions in Malaysia. Meanwhile, mobile broadband which is wireless internet access through smartphone is more preferably by the respondents outside the Central Region.
Aside from poor broadband quality, other challenges faced by SMEs in digitalisation are lack of understanding of digital tool usage, lack of technology knowledge, lack of awareness on financing options and limited access to technology.
The study said that majority of the respondents require assistance in financing, followed by technology and development of employee skill set. About one-third of the respondents also require networking and regulatory assistance, highlighted the need of a more engaging and collaborative ecosystem.
Digitalisation Survey of SMEs was conducted from May to June 2018, cutting across all economic sectors, industries, business sizes and regions, with a total respondent of 2,033 SMEs. The survey cuts across all economic sectors, industries, business sizes and regions, with a total respondents of 2,033 SMEs. The services sector (55.8%) makes up the largest group of respondents followed by manufacturing (27.8%), construction (13.4%) and agriculture (3.0%) sectors.
Microenterprises, which are mostly business operators with less than five full-time employees constituted 52.4% of the total respondents. Meanwhile, about 41.2% of the respondents are small-sized firms and the balance 6.4% are medium-sized firms.
Geographically, the Central Region accounted for 25.3% of total respondents surveyed, followed by South (22.5%), North (21.0%) and East Coast (18.3%) Regions as well as Sabah & Sarawak (12.9%).
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