SMALL businesses (SMEs) not moving towards digitalisation because they lack training in automation or artificial intelligence (AI) technology, business associations said.

They said the government must provide help, including bringing in foreign experts, to improve the SME owner skill base.

The World Bank in a report last year stated that, despite the SME sector’s position as the backbone of the country’s business environment, SMEs were lagging behind their regional counterparts in adopting digital technology.

It added that Malaysia’s SMEs have been underperforming compared to peer countries, both in terms of output and productivity levels.

SME Association Malaysia president Ding Hong Sing said without government support, SMEs would not be able to adopt and use digitalisation in their businesses.

He suggested that the government hire foreign experts to train industry players.

“If you want SMEs to be able to use IR4.0 or high-end digital technology, the government should train micro and SMEs to improve productivity,” Ding said.

“SMEs need to be taught. Coffee shop owners for example won’t be able to use the technology if there is no training provided.

“Get foreign experts to train them here. It may take two to four years but it is the fastest way.”

Ding said there were 1.4 million SMEs in Malaysia with 76% of the businesses in micro industries.

Meanwhile, SME Association of Malaysia vice president Chin Chee Seong said solution providers can also assist entrepreneurs to establish digitalisation.

“Training is a must, that is for sure. They may not have good knowledge but there are many solution providers who can assist them,” Chin said.

Last year, Malaysia’s e-commerce value soared 33% to RM896 billion after registering an income of RM675 billion in 2019, according to latest data from the Department of Statistics Malaysia.

Majority of them used technologies on social media (60%) and mobile internet (63.8%) while only a small minority explored frontier technologies like data analytics (6.3%).

This is supported by a survey commissioned by SME Corporation and Huawei Technologies, which revealed that usage of internet, cloud computing and data analytics were uncommon among micro, small and medium enterprises.

A study conducted by SME Association of Malaysia revealed that only 26% of SMEs had chosen digital technologies as their main post-pandemic growth strategy. The majority of SMEs (57%) have not even started digitalising their business.

In his 2022 budget speech, Finance Minister Tengku Zafrul Abdul Aziz announced that special focus would be given to help local entrepreneurs to switch to digital services.

Tengku Zafrul had said entrepreneurs of micro, small and medium enterprises (SMEs) were eligible to receive benefits adopting e-commerce, online marketing and digital payments.

This included the SME digitalisation initiative where a 50% matching grant of up to RM5,000 per SME would be provided over a period of five years for the subscription of digital services that would enhance their productivity and competitiveness.

There are seven areas of digitalisation services available under this scheme: electronic point of sale system, human resource payroll system/customer relationship management, digital marketing/sales, procurement, enterprise resource planning/accounting and taxation, e-commerce and remote working. – February 4, 2022.