Progressive need for technology | The Star

THE limitations placed on businesses today is driving the need for greater technology deployment to cope with challenges aggravated by the pandemic.

Companies are increasingly faced with manpower shortages, capacity constraints, curtailed market access, the need to operate remotely and rising operational costs, among other things.

Since the commencement of the movement control order last year, local businesses have had to make haphazard adjustments to leverage various digital tools to keep their operations and sales going given the difficult environment.

The past year has, undoubtedly, been a learning curve for many firms and the adoption of ICT applications among businesses has been on the rise.

However, Industry Revolution 4.0 (4IR)-readiness for digital and technology adoption among micro, small and medium enterprises (MSMEs) remains generally low.

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In a webinar earlier this week organised by the UNDP, titled Building Back Better: Supporting MSMEs for a More Sustainable and Resilient Recovery, SME Association of Malaysia president Datuk Michael Kang (pic) urges small businesses to change their mindsets and to drill down on technology adoption to be positioned for market recovery.

“Covid really hit the MSMEs hard because many of them were operating in a very traditional way before the pandemic. They did not really focus on transformation, mindsets did not change and they did not embark on digital transformation. That is why during the pandemic, they suffered the most.

“What MSMEs can do now is to make the change, ” he says.

Kang highlights that one of the main focuses in most of the stimulus packages announced by the government so far has been the digitalisation of the MSME sector. These include budget allocations for the SME Digitalisation Grant and efforts to get small businesses to sell their products on online platforms.

With most government agencies under the Entrepreneur Development and Cooperatives Ministry ready to assist small businesses, Kang says MSMEs should also gear up to adopt technology and digitalisation.

However, he emphasises that businesses need to take the initiative to not only find out what assistance is available, but to also take steps to embark on digitalisation oon their own.

“We should not just wait for the government to come and help us. We should take our own initiative to face these challenges and to equip ourselves with the technology while we wait for the economy to open up.

“If you want to expand your business, you must have a mindset change, you have to adopt technology and be equipped with the necessary product. Your company must be more competitive, ” he says.

Industry observers note that while many retailers have moved to online sales channels, this is merely scratching the surface of going digital.

Notably, many small businesses are only at the early stages of digital maturity and have yet to explore more advanced technologies like artificial intelligence (AI) and the Internet of Things (IoT). Companies will also need to relook how they can further automate their processes, practices, operations and resources and adapt their business models to the technological developments.

“A lot of businesses don’t do digitalisation, they just rely on other e-commerce platforms to sell their products. I wouldn’t call that digitalisation. I think most businesses may revert to their physical business, with the added element of delivery services, ” says an observer.

Last Thursday, the government launched the National 4IR Policy to drive greater transformation via advanced technology and digitalisation.

The 4IR policy will have four main thrusts – equipping the rakyat with knowledge, forging a connected nation through digital infrastructure development, future-proofing regulations to be agile with technological challenges, and accelerating its innovation and adaptation.

The policy has 10 sectoral focuses and 60 sectoral initiatives.

According to Science, Technology and Innovation Minister Khairy Jamaluddin, the five foundational technologies of the 4IR policy include AI, IoT, blockchain, cloud computing and big data analytics, as well as advanced materials and technologies.

The emergence of 4IR is estimated to increase productivity by 30% across all sectors by 2030.

PriceWaterhouseCoopers (PwC) notes that the policy underscores the need for the private sector to help champion change and execute meaningful and equitable initiatives to impact the rakyat, and move the economy up the value chain.

“With the growing emphasis on digital transformation within the private sector, organisations are in a unique position to not only adopt digital solutions, but to develop innovative businesses, functions, processes and infrastructure to address economic, social and environmental challenges.

“With their clout, there are opportunities for businesses to co-create and collaborate in new partnership models by leveraging 4IR platforms, ecosystems and digital marketplaces.

“These are some ways to achieve the outcomes envisioned in the policy by 2030, which includes increasing investments in 4IR-enabling infrastructure and the number of homegrown 4IR technology providers, ” it says.

Given that the private sector plays an important role in driving the national 4IR agenda, industry players have called for policies that will encourage and spur more domestic direct investments.

As MSMEs make up 97.2% of business establishments, a conducive ecosystem is needed to support technology investment among these businesses. This includes funding, infrastructure, talent, awareness and leadership-driven change management.

The 4IR policy report notes that strong growth in 4IR technology adoption is anticipated in the manufacturing, ICT and education sectors within the next five years.

The National 4IR Policy aims to help key sectors introduce new products and services as well as 4IR-enabled business models through 4IR technologies. It also intends to help local businesses integrate with the global value chain and enhance their capacity and capability to reap new markets domestically and globally.

This would help create new high value-added jobs and reduce Malaysia’s over reliance on low-skilled foreign labour.

To help businesses enhance their technological capabilities, government support is needed in terms of facilitating collaboration, providing incentives and removing regulatory constraints.

“The pandemic has accelerated digitalisation of the world in general, as the nations transition into the new normal. Malaysia needs to be better prepared for similar shocks in the future including those stemming from disruptive technologies and climate change.

“Malaysia has invested substantial resources to cope with technological changes and laid the foundation for the 4IR through rapid digitalisation, ” says the report.

Among the early initiatives the government intends to roll out include establishing 4IR-skills development centres and an AI-enabled data platform to facilitate human capital planning, and providing incentives for 4IR technology applications and for the industry to upskill and reskill.

It is also looking to minimise the risk of job displacements through incentives and to mobilise co-investment funds for 4IR technology adoption.

These are expected to be completed by 2022.

The report acknowledges that Malaysia faces some issues and challenges in embracing 4IR such as insufficient innovation-led mindset, inadequate 4IR-ready talent and lack of quality basic infrastructure.

However, there is a growing breed of local 4IR innovators who are capable of developing new products or services and who would be able to help beef up companies’ capabilities. This signals the growth potential in innovation and technology development in Malaysia.

But as with all things, implementation will be crucial in ensuring businesses, particularly MSMEs, are indeed equipped with the right technologies and skillsets to benefit from the technological advancements.

Moving forward, the country needs a clear governance structure and implementation framework to roll out a whole-of-nation approach to drive the 4IR agenda to ensure that Malaysia is on a sustainable growth trajectory in the coming decades.

More importantly, MSMEs will need to embrace the technological trends coming their way.

According to Kang, a survey carried out among members of the SME Association showed that most companies are willing to invest in technology, albeit at different timelines. Some expect to do so within the next six months, while others are looking at a one-year or above horizon.

Less than 10% of the survey respondents say they are not embarking on any digitalisation plans; these are mainly companies that are planning to fold over the next three to five years.

“If MSMEs do not change and adopt technology, they won’t be able to survive. This is a new norm.

“They must adopt technology to improve productivity and improve their competitiveness instead of staying as labour-intensive businesses. This is the only way for MSMEs to survive. If they stay as is, they will definitely run out of business in the next 3-5 years, ” says Kang.

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