{"id":12588,"date":"2021-12-06T15:28:38","date_gmt":"2021-12-06T07:28:38","guid":{"rendered":"https:\/\/newmalaysiatimes.com\/?p=12588"},"modified":"2021-12-06T15:28:39","modified_gmt":"2021-12-06T07:28:39","slug":"digitalization-better-capital-access-for-accelerated-msmes-economist","status":"publish","type":"post","link":"https:\/\/newmalaysiatimes.com\/?p=12588","title":{"rendered":"Digitalization, better capital access for accelerated MSMEs- Economist"},"content":{"rendered":"\n

KUALA LUMPUR, Dec 6 — The micro, small and medium enterprises (MSMEs) form the backbone of Malaysia\u2019s economy. In 2020, MSMEs consisted of 97.2 per cent of business entities in Malaysia.<\/p>\n\n\n\n

Their contribution to the economy was 38.2 per cent of the gross domestic product (GDP) and a significant generator of employment, hiring 7.2 million workers.<\/p>\n\n\n\n

They also occupy a more than 13.5 per cent share of the country\u2019s total exports in which 9.4 per cent was from the manufacturing sector.<\/p>\n\n\n\n

Despite their significant contributions, MSMEs have been one of the most affected sectors by the COVID-19 pandemic since early 2020. As supply chains that supported their operations were disrupted, MSMEs faced great challenges that only got worse in a post-COVID-19 world.<\/p>\n\n\n\n

Fortunately, the government has launched multiple initiatives since the movement control order (MCO) in 2020 to help individuals and businesses cope with their financial burdens.<\/p>\n\n\n\n

A total of 16 financial aid initiatives were launched for Malaysian MSMEs in 2021, which were announced under Budget 2021, PERMAI, PENJANA,\u00a0and PEMERKASA economic stimulus packages.<\/p>\n\n\n\n

\"MSMEs\"<\/figure><\/div>\n\n\n\n

These initiatives provide additional financial assistance to small and medium enterprises and micro-entrepreneurs and help businesses cope with payroll difficulties from MCO and delay loan repayment for MSMEs whose incomes were affected by the pandemic.<\/p>\n\n\n\n

Under the 12th Malaysia Plan (12MP), the MSMEs have been identified as a Game Changer III by transforming MSMEs as the new driver of growth.<\/p>\n\n\n\n

The MSMEs are deemed to be one of the sectors to restore the country\u2019s growth momentum with three main targets; contributing 45 per cent to the GDP and\u00a025 per cent\u00a0to total exports by 2025 as well as higher labor productivity growth by\u00a03.5 per cent annually\u00a0in the period of 2021-2025.<\/p>\n\n\n\n

The 12MP also outlines that 90 percent of MSMEs digitalize their business operations by 2025.<\/p>\n\n\n\n

Accelerate MSMEs via Digitalisation<\/strong><\/p>\n\n\n\n

The importance of digitalization for MSMEs has been discussed during the recently held\u00a027th Asia Pacific Economic Cooperation (APEC) Small and Medium Enterprise (SME)\u00a0Ministerial Meeting.<\/p>\n\n\n\n

The\u00a0ministers\u00a0recognized the critical role of digitalization, innovation, and technology in promoting MSME resilience and business continuity, fostering the development of digital start-up ecosystems, and building and enabling a regulatory environment.<\/p>\n\n\n\n

Closer to home,\u00a0chief statistician Datuk Seri Dr. Mohd\u00a0Uzir\u00a0Mahidin believes digitalizing MSMEs could position\u00a0them in a better spot to reap the benefits from\u00a0various initiatives and programs undertaken at national and global arenas.<\/p>\n\n\n\n

He said MSME businesses are projected to rebound in line with the optimistic national economic outlook ahead, but they need to adopt an agile business model.<\/p>\n\n\n\n

\u201cFacilitate more MSMEs in adopting digitalization services such as e-commerce and e-payment while widening their market outreach to global frontier can boost online businesses.<\/p>\n\n\n\n

\u201cAll the assistance should reach micro-businesses that are illiterate in applying the latest technologies,\u201d he suggested.<\/p>\n\n\n\n

Additionally, he said, quality job creation and reducing unemployment among locals are important to accelerate MSMEs.<\/p>\n\n\n\n

Challenges for Growth<\/strong><\/p>\n\n\n\n

To enable a strong economic recovery, the unique needs of MSMEs should continue to be addressed while the challenges that could hamper its growth must not be ignored.<\/p>\n\n\n\n

Mohd\u00a0Uzir said the\u00a0challenges that MSMEs face is a lack of access to working capital, which the formal banking system could meet only a fraction of the demand from the sector.<\/p>\n\n\n\n

\u201cAs a result, MSME may have to rely on other sources besides the formal banking system, often borrowing on steep interest rates. The majority of MSMEs find difficulty to sustain their operations with low to minimal savings backing them up in such a challenging business environment,\u201d he said.<\/p>\n\n\n\n

Besides that, he said poor productivity from inefficient processes in the business as well as unskilled workforce would derail MSMEs\u2019 full potential to drive long-term growth and job creation.<\/p>\n\n\n\n

He also said the ability to have access to marketplaces is also crucial for the growth of any enterprise.<\/p>\n\n\n\n

Most MSMEs produce goods of a certain standard and lack of access to global value chains hinders their ability to increase their revenue besides setting off the upright cycle of growth as mentioned earlier, he said.<\/p>\n\n\n\n

\u201cIn another perspective, MSMEs will be facing a situation to adjust to a new short-term equilibrium that involves workers, wages, raw materials, price hikes, and even activities on the types of business,\u201d he added.<\/p>\n\n\n\n

Meanwhile, SME Association of Malaysia president Datuk Michael Kang said the tight cash flow in light of the pandemic and lack of talents in the market would create difficulties for MSMEs to grow going forward.<\/p>\n\n\n\n

\u201cWe need the government\u2019s assistance on capacity building to adopt technology in order to bring MSMEs to the next level,\u201d he reckoned.<\/p>\n\n\n\n

Allow Associations to Play Significant Role<\/strong><\/p>\n\n\n\n

Kang proposed the government allows SME-related associations to play a bigger role in assisting MSMEs to rebound from the pandemic, especially in terms of the relief packages provided.<\/p>\n\n\n\n

He applauded the government for introducing numerous relief packages but the \u201cmajority of MSMEs did not get the message and did not really enjoy or get the assistance from the government\u201d.<\/p>\n\n\n\n

\u201cWe propose all assistance (to be channeled) through chambers\u00a0of commerce and industry associations. Get them to play the role.\u00a0Perhaps the government can focus on a few key associations,\u201d he said.<\/p>\n\n\n\n

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had said that the government would put a strong emphasis on nurturing Malaysia\u2019s growth in the upcoming Budget 2022, with\u00a0prioritization\u00a0given to MSMEs among others,\u00a0as the country progresses further towards recovery and transition from the pandemic.<\/p>\n\n\n\n

To date, the government has allocated RM6.1 billion worth of financial aid via the Prihatin Special Grant payments to assist over a million MSMEs since the COVID-19 pandemic hit the country in 2020.<\/p>\n\n\n\n

NMT<\/a> as reported by Bernama<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

KUALA LUMPUR, Dec 6 — The micro, small and medium enterprises (MSMEs) form the backbone…<\/p>\n","protected":false},"author":1,"featured_media":12589,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,524],"tags":[],"class_list":["post-12588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-nation"],"featured_image_urls":{"full":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"thumbnail":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22-150x150.png",150,150,true],"medium":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22-300x164.png",300,164,true],"medium_large":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"large":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"1536x1536":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"2048x2048":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"newsium-slider-full":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"newsium-featured":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false],"newsium-medium":["https:\/\/newmalaysiatimes.com\/wp-content\/uploads\/2021\/12\/Screen-Shot-2021-12-06-at-15.27.22.png",587,321,false]},"author_info":{"info":["Editor"]},"category_info":"Economy<\/a> Nation<\/a>","tag_info":"Nation","comment_count":"0","_links":{"self":[{"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/posts\/12588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12588"}],"version-history":[{"count":1,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/posts\/12588\/revisions"}],"predecessor-version":[{"id":12590,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/posts\/12588\/revisions\/12590"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=\/wp\/v2\/media\/12589"}],"wp:attachment":[{"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newmalaysiatimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}