SMEs yet to unlock opportunities via internet

SMEs yet to unlock opportunities via internet
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KUALA LUMPUR (Nov 2): While they are connected to the internet, most of Malaysia's small and medium enterprises (SMEs) have yet to utilise the internet optimally to unlock the opportunities available due to the lack of digital skills, access to talents, high costs, low speed and unreliable connectivity.

Instead, SMEs are only using the internet for browsing and communications including receiving and sending emails, internet banking, searching and posting information as well as instant messaging, according to the Ministry of Finance's Economic Report 2018/19, titled Fiscal Outlook 2019.

The report pointed out that increasing productivity via digital technology is crucial for SMEs to expand further, adding that SMEs could still further improve in areas such as online customer service, product delivery as well as staff recruitment and training.

The report highlighted that the majority of internet users subscribe to internet connection for communication, social networking, obtaining information and entertainment, study, work-related activities, online shopping, government services and financial activity.

This development is expected to drive e-commerce's contribution to the gross domestic product to surpass RM170 billion by 2020, to reach RM400 billion by 2025.

However, for now, besides having to contend with low bandwidth and insufficient secure servers, the report also indicated that the lack of web presence by businesses has resulted in Malaysia underperforming in the Business Digital Adoption Index, which is also below most Asean countries.

This has resulted in SMEs having limited reach to potential customers and being less effective in marketing their goods and services, the report added.

The report also showed that most subsectors in the services sector are not optimising the use of internet except real estate and business, finance and insurance, and ICT.

Given that 88.9% of the country's SMEs are in the services sector, there is a need to accelerate digitalisation to enhance productivity, said the report, adding that RM1 billion additional investments in ICT will increase the subsector's output by RM1.9 billion.

A similar investment will raise the wholesale and retail, as well as real estate and business services subsectors' output by RM1.6 billion per subsector.