Small and medium enterprises (SMEs) in Singapore and the ASEAN region see the need to invest more in technology in order to succeed under increasingly challenging conditions. These are the findings of the ASEAN SME Transformation Study by United Overseas Bank (UOB), EY and Dun & Bradstreet. The study found that three in five (60 per cent) of ASEAN’s SMEs will focus their investments on technology over other fixed assets in 2018 to help drive business performance. Singapore SMEs (63 per cent) echo the same preference for technology over investments in assets such as factories and machinery. Seventy-eight per cent of ASEAN’s SMEs say they would invest specifically in software such as improving their websites and creating mobile apps. They believe such innovations would enable them to create better customer experience and to increase customer loyalty. Hardware and infrastructure investments rank second (65 per cent) for the SMEs across the region.
While SMEs see the need to innovate, they are still reliant on current tools such as licensed software, customer relationship management and content and database management. Mr. Liew Nam Soon, Managing Partner, EY Asean Markets, Ernst & Young Advisory Pte. Ltd. said, “There is significant opportunity for SMEs in the region to improve their digital agility. SMEs have typically been cautious in adopting cutting-edge applications. But that is changing as we see disruptive offerings such as robotics process automation, artificial intelligence and 3D printing beginning to rouse the curiosity of SMEs. In time, we expect that SMEs will increasingly subscribe to web-hosted applications to free themselves from managing IT functions internally.
The study found that the SMEs generally have an optimistic outlook despite global economic headwinds and challenges such as rising costs, flagging productivity and not harnessing new technologies. Fifty-two per cent of the ASEAN respondents anticipate revenue growth while 25 per cent project a double-digit expansion. This optimism is highest among SMEs in the agriculture, manufacturing and financial services sectors. Ms. Audrey Chia, Chief Executive Officer, Dun & Bradstreet Singapore said, “This optimism reflects the region’s positive environment – nations experiencing muted growth are approaching the tail end of their economic slowdown and restructuring while those approaching a ‘demographic sweet spot’ will benefit from multiple factors to fuel SME growth. The growth outlook for Singapore and ASEAN has remained robust as the region continues to achieve greater economic, trade, financial and social integration.
“The improving outlook for ASEAN SMEs does not discount the intensifying need for change. Technology will be the catalyst for growth and transformation. Enterprises must continually progress through proactively implementing productivity improvements, upskilling talent and embracing technological enablers to enhance and differentiate their product and services. With greater support from the ASEAN-6 governments in the form of grants and subsidies for digitisation and technological innovation, we believe that these will help SMEs attain sustainable growth in today’s digital economy.”
The ASEAN SME Transformation Study was conducted in late 2017 with 1,235 SMEs across the six largest ASEAN countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – to understand how ASEAN SMEs are positioning themselves to participate in the region’s growth and to adapt to the changes ahead.