KUALA LUMPUR – The digitalisation of small and medium enterprises (SMEs) in Malaysia could add between RM79 billion to RM99 billion to the country’s GDP by 2024 and contribute to economic recovery post-COVID-19, according to the 2020 Asia Pacific SMB Digital Maturity Study.
The study, commissioned by Cisco and conducted by International Data Corporation (IDC) maps out the four stages of digital maturity; Digital Indifferent, Digital Observer, Digital Challenger and Digital Native, experienced by SMEs across Asia Pacific.
It also found that SMEs that are more digitally mature enjoy higher benefits in revenue and productivity compared to those that have an indifferent approach to digitalisation
Now in its second year, the study shows that Malaysia’s SMEs have moved into the Digital Observer stage, up from Digital Indifferent in 2019. According to the study, 64% of SMEs in Malaysia are looking to digitally transform to bring new products and services to market, a huge jump from 33% last year.
In addition, 59% recognise that competition is transforming, and they must keep pace, while 43% said they are transforming due to demand from customers.
These are positive and significant developments, given that SMEs account for 98.5% of all businesses, 66.2% of the country’s total employment and contribute 38.3% to overall GDP, making them a critical component to Malaysia’s trade and commercial landscape.
The resilience, agility, and digital transformation capabilities of SMEs will play a pivotal role in Malaysia’s post-COVID-19 economic recovery.
The results of the study show that purchasing or upgrading IT hardware (18%) is the top technology investment priority for SMEs in Malaysia, followed by purchase or upgrade of IT software (14%) and cybersecurity (11%)
“However, SMEs are also facing challenges in adopting digitalisation strategies. According to respondents, shortage of digitally skilled talent is the biggest hurdle they face (21%), followed by lack of budget and or commitment from management (16%).
“They are also found to be lacking the proper digital transformation roadmap that is critical to any organization looking to drive substantial change (12%),” the study added.
Raz Mohamad, Director Small Business and Commercial for ASEAN at Cisco said SMEs are the backbone of ASEAN economies, accounting for over 85% of total business establishments and making up the main contributions to private sector employment in the region.
“While they are currently facing the biggest challenges to their operations, they also have an unprecedented opportunity to accelerate their digital transformation,” he added.
The study also highlights that nearly 70% of SMEs in Asia Pacific are accelerating the digitalisation of their businesses because of COVID-19. Among the respondents, 86% say they believe digitalisation will help in developing future resilience against crises like COVID-19.
The 2020 study aims to further the understanding of how SMEs can progress in their digital transformation journey and the impact of digitalisation among SMEs to drive economic activity.