Support required to help MSMEs accelerate adoption of digital technologies

Micro, small and medium enterprises (MSMEs) in the Association of Southeast Asian Nations (MSMEs) need support and assistance in utilizing digital technologies so they can benefit from the digital boom, according to an economic expert.

Giulia Ajmone Marsan, director for strategy and partnership at the Economic Research Institute for ASEAN and East Asia (ERIA), said in a recent webinar that many MSMEs still struggle to adopt and use digital technologies and tools compared to larger economies with more resources to invest in training, reskilling and upskilling.

Marsan noted that the ASEAN region is one of the fastest growing economies in the world. The number of digital consumers nearly tripled between 2015 and 2018, from 90 million in 2015 to 250 million in 2018, and is expected to reach 310 million by the end of 2020. The pandemic is dramatically accelerating this trend, she said.

As an example, she said Indonesia’s e-commerce market is growing at the rate of 30% per year, while Singapore, Thailand and Malaysia are also projected to experience double-digit growth.

She added that ASEAN economies are “global leaders” in terms of e-wallets and digital payment adoption. At least 10% of the adult populations of Malaysia, Vietnam, Thailand, Indonesia and Singapore already use e-wallets, well ahead of those of advanced economies.

But MSMEs, even as they represent the backbone of ASEAN’s diverse and dynamic economy and account for more than half of total employment in the region, are unable to keep pace with and reap the benefits from the digital transformation.

A 2019 survey by ERIA found that 56% of ASEAN MSMEs only use basic digital tools, such as Microsoft Office, email, WhatsApp, personal computers and mobiles phones.
Some 34% have reached the intermediate level and have established an online presence through websites, social media, and e-commerce sites, among others.

Only 10% of MSMEs have moved up to the advanced level and have made digitalization part of their core business model. They use advanced digital tools like ERP (an application that automates business processes), CRM (a technology used to manage interactions with customers), analytics, big data, automation, pure online business, scanners, bank card readers, central servers and imaging devices.

To help small enterprises, Marsan said collaborative partnerships among different actors-e.g., higher education institutions, the business sector, and the government-are key to equipping resources-challenged MSMEs with the needed digital skills and tools.
Education systems should also prepare the future labor workforce of MSMEs with a growing set of inter-related and complementary skills including cognitive skills, socioemotional skills, and technical skills. The academe should also improve MSME managers’ and workers’ non-cognitive skills such as teamwork ability, social empathy, leadership and management skills.

In addition Marsan highlighted the need to make digital transformation inclusive by supporting women in technological occupations.

“Women are more likely to lack advanced digital skills and are generally underrepresented in STEM [science, technology, engineering and mathematics], which is an obstacle for them to thrive and become digital leaders,” she said.

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