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MDeC reveals 4 keys to urge Malaysian SMEs to eBusiness success

AvantiKumar | Aug. 12, 2014
SMEs in Malaysia make up 99.2 percent of industry yet only generate 33 percent of revenue to Malaysia’s GDP, says MDeC's Ng Wan Peng.

Ng Wan Peng - MDeC modified

Photo - Ng Wan Peng, COO, Multimedia Development Corporation [MDeC]

 

According to Malaysia's national ICT agency Multimedia Development Corporation [MDeC], Malaysian small and medium enterprises form 99.2 percent of nation's industry yet generates only 33 percent of revenue to Malaysia's gross domestic product.

MDeC chief operating officer Ng Wan Peng said it was critical for the country's small and medium enterprises [SMEs] to make full use of ICT to realise the national goal of achieving high income nation status by 2020.

SME owners need to be inspired by the government's drive for the Internet and e-business adoption in SMEs to speed up their growth and productivity, said Ng.

She said that MDeC's latest move in the SME space was to commission a study by Ipsos Business Consulting on the Internet and e-business SME adoption, which presented the following four keys as part the findings"

1. Did you know Malaysians now spend RM1.8 billion [US$560 million] shopping online and this is expected to grow to RM5 billion [US$1.56 billion] in 2014?

Ng said Malaysians were "definitely getting more tech savvy and rapidly embracing technology in every part of their lives. However SMEs have been slow to enter the world of e-commerce, with more than 70 percent of local SMEs not having an online presence. With the bulk of economic activities taking place online, business owners should start to embrace this trend to increase growth."

 "Technology in business will not only ensure SMEs growth in the country, but it will also spur further growth as businesses start to engage in foreign markets and benefit from the global Internet economy," she said. 

"Consider that by 2016, there will be 3 billion Internet users globally and the Internet economy will reach RM13.47 trillion (US$$4.2 trillion)," said Ng.  "MDeC through its Digital Malaysia initiative has collaborated with SME Corp Malaysia to drive the adoption of e-commerce solutions for SMEs and micro enterprises. By providing them with easier access to affordable terminals and readers, more SMEs in Malaysia will be encouraged to offer e-Payment services and join the e-commerce bandwagon."

2. Did you know that 76 percent of SMEs that adopt e-business received more revenue growth upon adoption?

"In general, most SMEs that take their businesses online via the Internet achieve higher economic growth compared to SMEs that do not," said Ng. "They use the Internet to conduct various business functions such as promoting their products and services, receiving or placing orders for their offerings, conducting commerce and also video conferencing."

Pn Mawarni Hassan, CEO and founder of local company Vanity Cosmeceuticals, a company that makes Cosmoderm, a range of skin care products with Halal and natural ingredients has been successful in adopting technology to increase her company's profits. Upon joining DagangHalal Portal in 2011, she started marketing and selling her Cosmoderm products online and was able to reach out to international customers. As a result, her sales increased to 60 percent in 2012 compared to only 15 percent in 2011.

In addition, by using ICT, the company is able to attract younger customers and customers from the Middle East. ICT has helped Pn Mawarni and her team to organise and manage their client database systematically and also penetrate the global Halal industry.

3. Did you know that 68 percent of SMEs in Malaysia do not have a website for their business?

Despite the benefits, a majority of SMEs have yet to have their own proper website with 72 percent indicating that they would not consider having a website in the next six months, said MDeC's Ng.

She said they have cited cost factor, lack of expertise in managing a website and the company "being too small to need a website as reasons for not having one. As most owners (59 percent) are from the digitally disengaged group of 30-50 years old, this could also explain the limited role that the Internet plays in their business."

"There is a need to help SMEs recognise that adopting new technology can help them overcome their current business challenges, simplify processes, and grow their business, regardless of its size. In partnership with Telekom Malaysia (TM) and easyparcel, MDeC has recently launched an e-commerce reward programme to raise SMEs productivity by doing business online and further boost adoption in Malaysia. Through this programme, they will be taught how to set-up an online presence, drive traffic to their sites which can be converted into sales, and use related programmes and partners to increase it."

4. Did you know that though 78 percent of Malaysia SMEs subscribe to broadband, most choose slower Internet speeds?

The study found that although broadband subscription was high, 53 percent of SMEs subscribed to less than 5MBps of broadband usage. "A slow internet connection may hinder any attempt for SMEs to benefit from e-business," said Ng.

"As SMEs operate on a lower operational expenditure budget, most perceive that current broadband packages in Malaysia are expensive. A sizable 60 percent are not willing to pay more than RM200 [US$62.58] per month for broadband," she said.

"We can take a leaf out of the United Kingdom's (UK) book by giving out broadband vouchers to help SMEs purchase faster and better broadband connectivity. 10 out of 22 cities across the UK have already started to benefit from up to £100 million [RM16,461 million] of broadband vouchers, which are worth up to £3,000 [RM$16,105] ]each. In Malaysia, these vouchers can be used as incentives to entice SMEs to adopt ICT thereby encouraging e-business," said Ng.

 

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