Small businesses in Malaysia are facing a seemingly insurmountable hurdle. With the nationwide lockdown being extended to help curb the spread of COVID-19, small and medium enterprises, or SMEs—which make up the majority of Malaysia’s business establishments—are being forced to reduce or even momentarily shut down operations.
In June 2020, YCP Solidiance released a white paper that emphasized the importance of digitalization for Malaysia’s businesses as the country grappled with the initial stages of the pandemic. A year later, experts in the fields of economics, business development, and technology still see digital acceleration as the answer to keep SMEs afloat.
The Current Landscape of Digital Business Solutions
Despite the country’s high rate of digital penetration (80% of Malaysians are internet users, according to Hootsuite’s We Are Social 2019 report), Malaysia’s SMEs are still not up to par with their regional counterparts when it comes to digital business know-how. Techwire Asia reports that only one out of every three businesses in the country has a digital presence, and emphasizes the need for further strategy-building in this area.
However, the ever-changing times have led more small business ideas in Malaysia—whether it be retail, food, or other categories—to be realized through digital-first means on e-commerce or other online platforms. The Companies Commission of Malaysia stated in an article by The Edge Markets that 360,000 new online businesses were registered between March and December 2020.
Even established SMEs are going digital—Malay Mail reports that legacy businesses in Kuala Lumpur’s Chinatown, some of the country’s oldest establishments, have pivoted to online delivery by partnering with food delivery providers like Grab and foodpanda to reach customers. As the lockdown rolls on, these traditional businesses are beginning to see the value of a digital reach.
Opportunities to Invest
SMEs still have a long way to go to fully reach their digital potential. A study by the SME Association of Malaysia referenced in a piece by MalaysiaKini saw that while social media is strong with SMEs, 57% had not yet embarked on a larger digitalization process.
To remedy this, both the national government and larger business players are formulating strategies to aid SMEs in operations and help the overall economy bounce back. At the onset of the lockdown extension in late June, the government unveiled a 150-billion ringgit (USD 36 billion) aid program that provides special financial grants for SMEs. A few days later the My Assist MSME portal was also announced: a digital-based portal that aims to encourage SMEs to shift to digitalization and to facilitate help for all their pressing business needs.
Improved connectivity will also go a long way in helping the shift to digitalization, which is why the country’s telecommunications providers have allotted a free daily 1GB of data to all users until the end of 2021. These measures, while small, will be helpful in encouraging the adoption of digital solutions.
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