Malaysia’s small businesses are experiencing positive business conditions, with many adding jobs and investing in technology, according to the findings of CPA Australia’s eighth annual Asia-Pacific Small Business Survey. The findings followed extensive surveying of nearly 3,000 small business operators in Malaysia, Vietnam, Indonesia, Hong Kong, Singapore, Australia, New Zealand and China.
According to CPA Australia’s head of Policy, Paul Drum FCPA, 27.5 per cent of Malaysia’s small businesses added staff in 2017, reflecting strong growth for many Malaysian small businesses. “A healthy 40.1 per cent are expecting to add additional staff members in 2018. “Small businesses from Malaysia continue to be strong users of digital technologies in their business. Over half of Malaysian businesses surveyed (53.4 per cent) earned over 10 per cent of their income from online sales, and over 80 per cent use social media for business purposes.
“Based on the survey findings, to drive growth, Malaysia’s small businesses have a strong focus on customer loyalty, good staff, cost control and improved business management. “However, these small businesses would benefit from a stronger focus on new digital payment options, such as AliPay, ApplePay and WeChat Pay. Only 29.1 per cent allow customers to pay through this new technology, well below China (65.5 per cent) and the survey average (42.7 per cent),” he said in a statement.
The relatively strong focus on technology by small businesses in Malaysia is flowing through to concerns over the security of systems, with more than half (52.4 per cent) of respondents stating that they believe it is likely their business will be cyber-attacked in 2018. This concern is leading to action, with businesses being highly likely to be taking steps to improve their cybersecurity. The most common steps are using a spam filter on their email systems, making staff aware not to download programs or open attachments from untrusted sources, and running frequent anti-virus, anti-spyware and malware scans. Additionally, businesses should consider a stronger focus on cybersecurity, especially multi-factor authentication before users are allowed onto their system, a stronger password policy (including changing passwords regularly) and immediately removing access for people who no longer work for the business or need access. “With high numbers of Malaysian small businesses having the characteristics associated with growth, such as a focus on innovation, e-commerce and technology, we are likely to see better results in 2018,” said Drum.
Elsewhere, the survey found that small business owners in the Asia-Pacific are feeling optimistic and are successfully leaping into the digital era. Across the region, small businesses with a focus on technology, innovation and exporting are significantly more likely to be growing and creating jobs than those that are not.
The Asia-Pacific Small Business Survey is the eighth conducted by CPA Australia, on 2952 businesses with fewer than 20 employees, including 309 in Malaysia and others from Australia, New Zealand, Mainland China, Hong Kong, Indonesia, Singapore and Vietnam. The CPA Australia Asia-Pacific Small Business Survey provides annual insights into the views of small businesses across the region and forms part of a longitudinal study that began in 2009.
Costs and finance hurt small business
Survey respondents cited customer loyalty, good staff and improved customer satisfaction as having the most positive impact on their business in 2017. Increased costs and increasing competition were seen as the factors most detrimental to their business. Staff costs were a particularly significant cost in Mainland China, and rent costs were again named as a problem in Hong Kong.
Small businesses in Australia and New Zealand are much less likely to have required external finance in 2017 than businesses from Asia. In Asia, as well as Australia and New Zealand, banks are the most common source of finance, and in most cases businesses borrowed to finance growth. In Singapore and Hong Kong, however, there were large numbers of businesses that accessed finance to cover increasing costs. This is a worrying trend, pointing to high cost structures and potentially high levels of debt.
Reflecting the above-average use of social media tools, online sales and new payment technologies, respondents in Mainland China reported a growing use of fintech to finance their business. Over a quarter of these respondents who raised funds in 2017 said that their main source of finance in 2017 was peer-to-peer lending and crowd-sourced funding. The implications of this are not yet clear but it indicates that fintech is a growing field.
Drum says the outlook for 2018 is generally positive across the region, particularly for businesses from Indonesia and Vietnam, and those that make good use of technology, that are expecting to innovate and grow their revenue from exports. “Businesses should be considering how to build their understanding of technologies so that they can invest in technologies that best meet their needs, and take time to learn about new markets. While such research may not result in an exporting opportunity, it may give businesses new ideas they can roll out,” he says.
