While businesses understand that going digital is the way forward, many did not actually take action to digitalise owing to various reasons. However, this changed when the pandemic struck last year. Businesses that had digitalised fared better during the tough times.

“More often than not, it takes a crisis for people to realise that we have to move faster. The pandemic was a blessing in disguise that helped us convince small and medium enterprises (SMEs) to digitalise,” says Datuk Teng Chang Khim, Selangor State Executive Councillor for Industry and Trade.

“During the pandemic, people found that sales were still good if you [did business] on [platforms like] Lazada and Shopee. The SMEs that were quick enough [to go online] found that their sales increased more than pre-pandemic times.”

To assist SMEs in the state to digitalise their processes, the Selangor government launched the Selangor SME Digitalisation Matching Grant, which provides a 50% matching grant or maximum of RM5,000 for SMEs.

SMEs can use the fund to subscribe to up to three digitalisation services in the five areas of e-commerce; human resources (HR) and payroll systems; cloud accounting; digital marketing; and electronic-point of sale (EPOS) system and payment gateways. They can choose from a list of digital service providers screened by the state.

“The grant will help SMEs do business on e-commerce platforms. In addition, it will also help them digitalise their accounting and HR process, among other things. When the company expands, it needs all these technologies to help it digitalise,” says Teng. The grant, worth a total of RM5 million, is expected to benefit 1,000 SMEs in the state. It will be opened for application in April and August in two stages.

Rebranding to focus on the digital economy

The Selangor SME Digitalisation Matching Grant is a key strategy for the Selangor Information Technology and Digital Economy Corporation Sdn Bhd (Sidec), which used to be known as the Selangor Information Technology and E-Commerce Council (Sitec).

Sitec was formed five years ago to promote digitalisation in the state, with an eye on using e-commerce as a stepping stone to future trade activities, says Teng. The agency contributed RM334.37 million in gross merchandise value to the state’s economy through its various programmes from 2015 to 2020.

“As time went on, we saw that we should look at the broader future of the digital economy rather than confine ourselves to e-commerce. This was especially so after the pandemic, when so many trends related to the digital economy, such as the use of e-wallets and digital banking, were taking off . Therefore, we decided to change the strategy,” Teng says.

Sidec has been given the mandate to lead the state’s digital transformation and make it Asean’s digital hub by nurturing digital talent, helping the state’s start-ups to become regional tech icons, empowering businesses and SME digitalisation, and encouraging digital investment and emerging technologies.

It focuses on the three key sectors of the digital economy: e-commerce, startups and SME digitalisation.

Sidec’s shift in strategy is timely, given that the digital economy is a significant contributor to the nation’s gross domestic product. According to the Malaysia Digital Economy Blueprint, the digital economy is expected to contribute 22.6% to the country’s GDP by 2025. The state government has allocated RM369 million in 2021 to ensure the success of its digitalisation agenda.

Sidec is set up as a full-fledged Selangor government-linked company.

“Sidec will be able to carry out its programmes more eff ectively and generate cost savings through this arrangement. We can also ensure continuity of the programmes,” says Teng.

Helping businesses do e-commerce

Last year, Sidec launched two rounds of E-Bazar campaigns to help businesses onboard e-commerce platforms during the pandemic.

The E-Bazar Raya and E-Bazar 11.11 successfully onboarded more than 80,000 e-merchants and generated sales (directly from state vouchers) of RM43.76 million, while the ripple eff ect to the economy (including sales not executed through state vouchers) came up to RM1.39 billion.

The E-Bazar continues this year — E-Bazar CNY was held from February to March and the ongoing E-Bazar Raya 2021 will be held from April to May. The E-Bazars are carried out in collaboration with Shopee and Lazada.

“This programme is to encourage SMEs, especially the micro-entrepreneurs, to come onboard and do business on e-commerce platforms,” says Teng. Some of the micro-entrepreneurs managed to increase their sales by four to six times, he adds.

“After the first E-Bazar, one seller shared that when she was running a physical boutique, her monthly revenue was around RM2,000. During the pandemic, when she started selling online with our incentives, sales increased to RM15,000 per month. That’s fantastic.”

Now that Sidec has got many SMEs to get onto e-commerce platforms, the Selangor SME Digitalisation Matching Grant will help them continue their journey in digitalisation, says Teng.

This also complements many of Sidec’s ongoing initiatives, such as its e-commerce classes and training programmes on branding and other topics. Since 2015, it has trained more than 9,000 SMEs and individuals.

Nurturing start-ups

Another important role carried out by Sidec is promoting the growth of digital start-ups. It has already nurtured 90 start-ups from the three cohorts of the Selangor Accelerator Programme (SAP), organised three Pitch@Selangor sessions and planned pitching and trips to Silicon Valley.

“We have gathered start-ups from different fi elds and various business models through our programmes. For instance, we found a start-up that came up with the idea of doing group purchasing and invoice factoring, social entrepreneurs who sell products and channel the profi ts to take care of animals, and a start-up that created artificial intelligence-powered cameras to grade oil palm fruits,” says Teng.

To help these start-ups grow, Sidec brings in venture capitalists (VCs) to offer feedback and funding. It also exposes these start-ups to ecosystems in other countries. “I think it really helps to open the minds of the start-up founders and lets them see how big their market can be, and show overseas VCs the potential of Malaysian start-ups,” says Teng.

Going forward, he hopes to further improve Sidec’s performance and accelerate digitalisation and innovation in the state.

“I hope to obtain more allocations to assist Sidec in running all the training programmes. We are also getting more VCs to help provide financial assistance and support for start-ups, so they can develop their technology and business models,” says Teng.

“We already have the framework; now we just need to enrich our content and create the whole ecosystem.”

– The Edge