SMEs get over S$500 million funding boost to go digital - starting with F&B and retail

Singapore

THE Fortitude Budget's measures to support digital transformation may be able to give small and mid-sized enterprises (SMEs) that final push to digitalise, but experts say proper change management will be needed to ensure the firms can stay the course on digitalisation.

The government has allocated more than S$500 million to support digital transformation for SMEs, targeted first at the food and beverage (F&B) and retail sectors.

These include S$1,500 bonuses to encourage e-payment adoption in eateries and wet markets, and a Digital Resilience Bonus of up to S$5,000 for adopting PayNow Corporate and e-invoicing as well as other business process or e-commerce solutions. There will be an additional tier of S$5,000 for adopting advanced solutions as well.

"Digitalisation has been encouraged by the government and everybody else for a long time, but many corporates have been distracted by other things to attend to while the economy was doing well, and never got around to fully digitalising their company," said Ng Siew Quan, Asia Pacific entrepreneurial and private business leader at PwC Singapore.

"SMEs are being forced to do this by the circumstances, and when you're forced to do something, there's always inherent reluctance. But once we pass the first hurdle, it will get easier."

Ng Li Lian, head of business banking at HSBC Singapore, noted that digital transformation will not only help these SMEs access new customers and markets, but will also enable them to manage their finances better.

"Digitalising the finance function can have significant cost benefits and efficiencies; making it easier to conduct payments online, manage accounts, liquidity and forecasting, and accessing finance and documentation in real time," said Ms Ng.

KPMG deputy head of tax Ajay Kumar Sanageria said: "Covid-19 has forced the acceleration of digital adoption in our new ways of working and living.

"The S$500 million support for digital transformation is timely, and it is now on businesses to adopt and transform more aggressively as we will not return to pre-Covid ways of working and engaging with customers."

PwC's Mr Ng noted that employers will have to get staff invested in order to succeed at digitalisation.

"Digitalisation needs the software element to make it work - reskilling workers not so much in skillset but in mindset. Change management is critical. What you don't want is to buy all these machines, and let's say things recover, then these become white elephants."

He added that if older folks can learn to use iPhones and reap their benefits, they could adopt the same attitude in learning how to use digital tools at work.

"If we can delink digitalisation from being something difficult, mysterious and not user-friendly, adoption will be high. People will actually enjoy using it because it's convenient and fast, and the experience is positive."

Tony Gomes, managing director for digital and technology strategy and advisory for South-east Asia strategy and consulting at Accenture, suggested that SMEs pick an area they are very familiar with to start digitalising, and carefully judge factors such as ease of use and overall cost.

"In addition, SMEs must make sure the new ways of working are embedded into the business before embarking on other business areas for digitalisation," said Mr Gomes.

Just about every sector will benefit once the scheme is expanded beyond F&B and retail, said Mr Ng, as the usefulness of digitalisation is not limited to certain industries.

HSBC's Ms Ng said while smaller companies may hesitate, thinking that the investment is not worth it for their scale, they should see their size as an advantage instead.

"Unwinding old processes from traditional SMEs can hold them back from making the switch, whereas microenterprises can determine how their business kicks off. The generational factor also plays a hand in this; younger budding entrepreneurs are more digitally savvy and open-minded to the benefits it brings."

Benson Ong, senior lecturer at Nanyang Polytechnic's School of Business Management, said microenterprises should seize this opportunity and fresh funding to build up their internal capabilities through available courses, and strengthen their marketing reach by joining networks like merchant associations.

"The funding is available at generous levels now, and they can even get a programme tailored for their needs," said Mr Ong.

"They should really grab the opportunity to skill up and build a new business model as the world becomes one where online business is the norm."

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