By Ida Nadirah Ibrahim
IN recent years the global economic scene has been rapidly moving towards digitalisation. So too, has the state of Selangor.
However, Malaysia as a whole is still catching up as the e-commerce and digital marketing ecosystem has yet to develop to reach a competitive level.
Speaking to Media Selangor in a recent interview, Selangor Information Technology and e-Commerce Council (Sitec) chief executive Yong Kai Ping said the challenge faced by Malaysia is the insufficient number of small and medium enterprises (SMEs) as well as e-commerce traders.
“Our population is at about 32 million, therefore the number of SMEs should be about 10 per cent out of that figure, which is about 3.2 million. But right now, we only have about 1.3 million SMEs because we rely too much on FDI (foreign direct investment).
“When the Covid-19 outbreak happened, FDI could not come in so we had to rely on the circulation of the internal economy. So what we need to do now is to increase the number of SMEs,” said Yong, adding that the estimated number of homegrown e-commerce traders is less than 100,000.
According to Yong, SMEs and micro-SMEs include e-commerce merchants and startups, and they can help in creating jobs and wealth for the people.
The old supporting the new
Yong said Sitec aims to create an ecosystem for both e-commerce merchants as well as startups in Selangor to be able to work hand-in-hand as the former requires the use of technology service providers, which are obtained from the startups.
He said the state agency also aims to create a balance between the new economy (e-commerce and startups) and the old economy (traditional businesses) and form a hybrid business model with the two.
“We are transferring from the old economy to the new economy and that is from offline to online. So there is a mix, a hybrid model is what we are looking at now.
“What we are doing is to promote the automation industry to digitalise themselves. Digitalisation does not mean having an online presence and selling items online alone. It means that whatever business decision is made, it is based on data,” he said.
Yong said Sitec aims to see the synergy of the old economy supporting the new economy instead of having conflict arise between the two.
“Old money must support new money. We need more startups and more people to do their own business and sell online but at the same time see traditional industries support the new economy.
“This means that money from traditional businesses can support the new technology. It is a good time to support startups and to invest in e-commerce.
“That is what we are looking at. From there, we can build a good ecosystem of the digital economy,” said Yong.
Taking the plunge
Yong said one of the main reasons the number of SMEs and e-commerce in Malaysia is low is because many people are still in their comfort zone of being wage earners.
He said Malaysians must take a step forward and be brave enough to delve into the business sector in order to have a more competitive market.
“The movement control order (MCO) was actually a blessing in disguise as it pushed the transformation of digitalisation faster. In our previous experience in working with merchants, we found that our local merchants are working in the comfort zone because the market is not very competitive, unlike in China and Indonesia. We don’t have enough merchants so it is not competitive.
“Malaysians also have to start to really love the concept of building their own startups, the idea of e-commerce sellers having to become their own boss. Malaysians are still used to the concept of ‘makan gaji’ but they have to take the plunge to jump into the business sector.”
Yong said the safe and familiar path for Malaysians is to work in a firm or company after graduating.
He said to become your own boss is the unfamiliar path, and involves having a lot of courage, taking risks, and experiencing uncertainties and high pressure.
“But with enough support in education and technical funding, we have seen the growth of Malaysian-owned SMEs and startups,” he said.
In the lead
In comparison to other world-leading economies, such as the US and China, or Japan and Taiwan, Yong said Malaysia has a lot of potential in e-commerce.
“Maybe we are a few years behind but we are catching up,” he said.
Yong said within Malaysia, the state of Selangor is leading in the digital economy.
“When we recently worked together with Invest Selangor (Bhd) to do a business presentation in Johor and Penang, we saw that many had admired Selangor for leading in the digital economy.
“Klang Valley has always been at the centre (of digital advancement) but with the efforts we put in to build this ecosystem, we were able to grow faster. Sometimes when we get lucky we would stumble onto world-leading technologies,” said Yong, citing as an example the use of artificial intelligence (AI) cameras at oil palm plantations that have the ability to identify the different grades of oil palm fruit. That particular technology, said Yong, had been formulated by a Selangor startup consisting of two programmers.
“In terms of job creation, we have a lot of startups in Selangor working in the gig economy. For example in delivery, we have one startup that lends motorbikes to riders. They have about 80 bikes and are based in Shah Alam.”
Yong said since Sitec has started early in assisting businesses in digitalisation, the state agency was at an advantage during the MCO as they have already built a solid base of merchants from as long as five years ago.
“It was easier for us when the pandemic happened, easier to get the merchants on board because we knew how to… we have the experience in assisting the merchants in growing their business and we also have startups equipped with technology and funding opportunity to assist them.
Selangor as launchpad
Yong said from the time Sitec was first formed in 2015, the Selangor government state agency has been playing three main roles — being the incubator for e-commerce merchants, being an accelerator for startups in Selangor, and helping with the digitalisation of SMEs.
He said over 600 e-commerce merchants in Selangor have been trained to enter the online digital marketplace, which includes getting traders to come on board as well as equip them with a full-scale website that comes with a payment gateway and a shopping cart.
“Through our Selangor Accelerator Programme, we have nurtured more than 90 Selangor startups that have the minimum viable product ready for investment.
“We have also introduced various digital processes that can be utilised by the SMEs through our digitalisation initiatives, such as getting the businesses equipped with cloud HR and business intelligence, including AI.”
Yong cited the recent Selangor e-bazaar initiative launched by the Selangor Menteri Besar Dato’ Seri Amirudin Shari as one of the success stories as it was able to rope in 6,400 traditional businesses and make good profits.
“For example, we have an aunty selling ‘baju melayu’ who used to make about RM2,000 a month in sales but after coming onboard, her business improved to RM50,000 a month in sales. And this was done through the Selangor e-bazaar Raya campaign.
“People were starting to buy things online out of fear of Covid-19. They opted for online (shopping) as it is safer and faster in terms of delivery and provides a variety of choices as well,” he said.
“We saw the tremendous growth of e-commerce the past six months especially during the MCO period and have forecasted that the sales in e-commerce may have increased three-fold in Malaysia.”
This article first appeared in the Selangor Journal October monthly edition, published on October 12, 2020.