KUALA LUMPUR (Sept 17): Digitally mature small and medium enterprises (SMEs) could add billions to Malaysia’s Gross Domestic Product (GDP) by 2024, according to a study.
The 2020 Asia-Pacific Small and Medium Business Digital Maturity Study was commissioned jointly by technology company Cisco and market intelligence company International Data Corporation.
Cisco Malaysia managing director Albert Chai said Malaysian SMEs have shown resilience and have leveraged technology to operate during the COVID-19 pandemic.
“As Malaysia continues to overcome the pandemic and business activity starts to pick up, digital transformation of SMEs will play a pivotal role in their recovery and contribute to economic growth,” he said at the Cisco Asia-Pacific SME Digital Maturity Study virtual media briefing today.
The study involved 1,424 respondents from 14 Asia-Pacific countries.
The results of the study noted that digitally mature Malaysian SMEs could add between RM79 billion and RM99 billion to the GDP by 2024.
It added that purchasing or upgrading IT hardware (18 percent) is the top technology investment priority for Malaysian SMEs, followed by purchase or upgrade of IT software (14 percent), and cybersecurity (11 percent).
Among the respondents, 86 percent said they believe digitalisation will help in developing future resilience against crises like COVID-19.
“The resilience, agility, and digital transformation capabilities of SMEs will play a pivotal role in Malaysia’s post-COVID-19 economic recovery,” the study said.
It added that SMEs which are digitally mature enjoy higher benefits in revenue and productivity compared with those that have an indifferent approach to digitalisation.
Cisco ASEAN small business and commercial director Raz Mohamad said SMEs account for over 85 percent of the total business establishments and are main contributors to private-sector employment in the region.
“While SMEs are currently facing the biggest challenge to their operations, they also have an unprecedented opportunity to accelerate their digital transformation.
“Technology can not only help solve some of their key challenges and revitalise their operations, but also help them sustain long-term growth,” he said.
According to the study, about 64 percent of Malaysian SMEs are looking to digitally transform to bring new products and services to market, a huge jump from 33 percent last year.
“These are positive and significant developments, given that SMEs account for 98.5 percent of all businesses, 66.2 percent of the country’s total employment and contribute 38.3 percent to the overall GDP, making them a critical component to Malaysia’s trade and commercial landscape,” the study added.
In addition, 59 percent of the respondents recognised that competition is transforming and they must keep up with the pace, while 43 percent said they are transforming due to demand from customers.
The study also stated that SMEs are facing challenges in adopting digitalisation strategies.
According to the respondents, the shortage of digitally skilled talent is the biggest hurdle they face (21 percent), followed by a lack of budget and commitment from the management (16 percent).
SMEs are also found to be lacking the proper digital transformation roadmap that is critical to any organisation looking to drive substantial change (12 percent).
It highlighted that nearly 70 percent of SMEs in Asia-Pacific are accelerating the digitalisation of their businesses because of the pandemic.