It is encouraging to note that Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz is committed to continue helping small and medium enterprises (SMEs) along their recovery path by accelerating the adoption of digitalisation under the upcoming Budget 2021.
Many fiscal efforts have been put in place prior to the Budget, yet SMEs are repeatedly shocked by recent events and financially pressured. Below are three strategic fiscal measures that can have lasting effects in helping SMEs and the nation as a whole, both recover and build resilience.
Intensive Incubation Program for SMEs
Incubation programs as seen in other Asian markets have proven to be extremely effective for their digitalisation journeys. Fully brick-and-mortar SMEs who want to go digital have found extensive, step-by-step onboarding assistance to be most important.
Business owners often do not possess the relevant knowledge on how to effectively leverage e-commerce’s potential. Incubation programmes are incredibly useful in equipping SMEs with the necessary skills for a successful online strategy.
We suggest incubators specifically for SMEs and small business owners on their next stage of digitalization. Guidance on what, when and how to continue leveraging technology will lay a strong foundation for them to continue their digitalisation journey into the future.
Funding for these programs is needed to mobilize resources such as software licenses, industry expert consultation, help centres, comprehensive user guides, training hubs, technology partner support and a portal for peer-to-peer support.
Stimulus to Encourage Digital Payments
A report by Google, Temasek and Bain & Co. show digital payments in South East Asia are expected to reach US$1.1 trillion in value by 2025 with e-Wallet transactions likely to exceed US$114 billion of this figure.
Government stimulus to further optimize e-commerce and frictionless spending platforms are critical at present economic conditions. Accelerating the adoption of e-wallets would curb the spread of Covid-19, given the decreased use of physical cash.
Increased usage of digital payments also make it quicker for businesses to have an instant influx of e-payments of invoices. In current unprecedented times, it means healthy cash flow, vital to keeping businesses afloat.
Additionally, digital payments can drive local businesses towards expanding overseas by enabling them to enact digital trade beyond their borders.
Stimulus packages to subsidise onboarding and reduce commissions paid by businesses to e-commerce platforms can encourage SMEs to transact more online.
If implemented, we propose that these SMEs are entitled to tax deductions when they achieve target volumes of online transactions.
Whilst there are three top players in the e-wallet business, incentives to help other firms enter the industry will allow a more even playing field. Operators should be required to implement “universal e-wallets”, allowing transactions across borders as well as cross-transfer funds between different e-wallets.
This will reduce barriers to spending, encourage higher adoption, resulting in higher volumes of transactions, stimulating the economy in the process.
Platform for Gig Economy to assist “jobless” segment
As unemployment rates continue to rise, we see unutilised labour that grows daily. To mitigate this, the government could drive and finance the development of a dedicated portal to grow the gig economy – which consists of freelancers, project-based workers, independent contractors as well as part-time hires.
This would be a free market system where temporary positions by industry or skill set could be made available. Struggling businesses would greatly benefit as this would reduce labour overheads incurred with full time employees and enable the jobless to find quick suitable work.
Though similar platforms are currently available, they are yet to become mainstream or enter everyday conversation. As moratoriums end, the pressure to find work and income intensifies, this is the most apt time to connect businesses to the gig workforce and enable continued employment and earnings for them.
Such an agenda championed by the government can greatly help the workforce regain some level of productivity and become a source of economic growth for the nation.
I believe the economy – the government, SMEs, and individuals, stand to benefit greatly from these suggested fiscal measures.
Private firms like ours, at Sage, are eager to play our part in supporting the ecosystem. We are keen to help businesses leverage on continually evolving technology, to better face disruptions and capture unexpected opportunities as we brace for 2021.
Article by Azlan Ahmad, Head of SSB Sales, Sage Asia