Malaysia SMEs see local market as more beneficial than overseas: study

BUSINESSES in Malaysia say the domestic market is more beneficial than overseas markets, regardless of whether they are e-commerce adopters or non-adopters, according to research funded by ISEAS-Yusof Ishak Institute.

This finding questions the effectiveness of e-commerce policies implemented by the Malaysian government, which is banking on e-commerce facilitating the exports of micro, small and medium enterprises (SMEs) due to its virtual nature and lower transaction costs. These initiatives include an SME masterplan launched in 2012, which aims to boost the share of exports of SMEs to 23.0 per cent by 2020, and a digital free trade zone introduced in 2017, which encourages SMES to adopt e-commerce to increase exports.

However, getting firms to invest in e-commerce does not automatically translate into export sales, as exporting via e-commerce requires complementary policies that focus on specific issues, such as digital marketing at the targeted export destination.

Two researchers from think tanks in Singapore and Malaysia arrived at this finding after surveying 204 firms in the food and beverage (F&B) and retail services in Malaysia and published their findings in "E-commerce for Malaysian SMEs in Selected Services: Barriers and Benefits" as part of the Trends in Southeast Asia 2019 series.

Further, they also found that out of all four barriers in the adoption of e-commerce, Malaysian SMEs perceive the chief executive officer or decision maker as the most important factor, regardless of them being e-commerce users or not.

However, e-commerce users differ from non-users on how they perceive the importance of the other barriers: organisational, technological and environmental.

Companies of varying sizes also tend to perceive the importance of each factor differently.

The key findings call for a shift from one-size-fits-all strategies to a more nuanced policy response that addresses the differences in perceived barriers of adopters and non-adopters, while taking into consideration the size of the firms.

For example, adopters would prefer some data protection policies in place to ease their concerns with insufficient security to prevent hacking and malware. On the other hand, non-adopters need policies that help overcome their financial or human constraints.

Policies that increase technical knowledge may assist them in solving human resource constraints, while financial incentives may help them overcome their firms' capacity issues.