MCO pushes businesses to adopt digital transformation

By Chee Jo-Ey

ALTHOUGH we have long been encouraged to digitalise, many companies did not see the transformation as a priority. that is until Covid-19 struck. The recent shift to ways of getting things done remotely has forced most industries to adopt technology to stay afloat.

In her FocusM article ‘Covid-19: Digital financing may become a useful tool’, Dr Sonia Kumari Selvarajan, a senior lecturer at the Faculty of Economics and Administration in the University of Malaya, highlighted how social distancing and movement controls gave birth to new opportunities for financial technology (fintech).

People have come to realise that digital transformation is vital to keeping business running as per usual. People are working from home via video conference apps and businesses are connected to their customers on online platforms – all these are viable thanks to digitisation.

SME Association of Malaysia president Michael Kang said, “Most industries will be digitally transformed after this Covid-19 situation. The SME sector will undergo reformation from the way of doing business to the way we consume things.

“SMEs were reluctant in the past as they were too preoccupied with their daily routines to change but the Covid-19 outbreak has really made an impact and showed them that digital transformation is vital. Companies that did not digitise this round will be hit badly.”

Kang continued, “Businesses used to not prioritise digitisation in storing company documentation but they have come to realise now that a company can only run if it had the right digital infrastructure in place that allows workers to work from home, process bank loans online and so forth.

“Even after the MCO (Movement Control Order) ends, people will still be leery of visiting public spaces so it’s best to plan for the long term. After this crisis, the government is planning to provide a platform to help businesses transform in a digital way and guide them through the provision of facilities or even additional grants for adopting digital transformation.”

Digital tools during the pandemic have indeed helped many SMEs rethink their business approaches so that they can continue making sales and cover their working capital. One way to reform is to form alliances with digital service providers such as Grab, FoodPanda and Lalamove.

Continuity in the use of digital platforms provides SMEs the opportunity to have dual-business models i.e. a traditional brick and mortar concept and an online platform. This allows for better reach of customers.

“Covid-19 has provided an impetus to further deepen the usage of digital platforms, but for these platforms to sustain and grow efficiently in our country, long-term strategic partnerships will have to be set in place between the government, SMEcorp, digital solution providers, banks and private fintech providers,” said Sonia.

Despite the considerable progress Malaysia has made in terms of digital financing, it still has a long way to go, according to Sonia. The SME Automation and Digitalisation Facility (ADF) fund by Bank Negara is a good financing tool to incentivise SMEs to transform digitally and more of that is needed.

While access and use of digital financing platforms have improved over the years fintech is a highly specialised area and very dynamic in nature. Proper regulations and supervision must be set in place to ensure that firms and individuals are not susceptible to cybercrime, money laundering and other risks.

According to Sonia, “We will see a continuation of digital adoption in the food and beverage sector even after the MCO. Firms that have transitioned digitally will continue to carry out their businesses online despite having physical outlets.

“Other consumer goods industries that have operated online during the MCO will continue doing so. Due to the MCO, the education sector is required to adopt various online teaching and learning tools.

“This has made the teaching and learning environment more innovative and creative and I believe that even after the crisis ends, this will be maintained.” – April 17, 2020

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