A select number of small to medium enterprises (SMEs) in Malaysia can now enjoy a boost to their digital operations, in the form of government-matched grants.
The Malaysian Finance Ministry has recently appointed Bank Simpanan Nasional (BSN) to lead a collaboration between SME Bank Group and Malaysia Digital Economic Corp (MDEC) to provide grants to SMEs.
According to Finance Minister, the Malaysian government will provide 50 percent of the one-off grant — with a ceiling of approximately US$ 1190 per company — for companies who subscribe to digital services from technology solution providers (TSPs) for business operations.
SMEs may choose to subscribe up to three out of five digital services, namely, Electronic Point of Sale (e-POS) systems; Customer Relationship Management (CRM); Digital Marketing; Procurement, as well as Enterprise Resource Planning (ERP).
The strategic collaboration is part of the government’s initiative to digitize SMEs. This, in turn, is part of the bigger government plan towards the development of “digital applications, digital companies, and digital Malaysians,” outlined in the National Budget 2020.
The government emphasizes the need to strengthen the digitization process, especially in the SME sector, as it is important to ensure that local companies can continue to compete in the future.
These matching grants will amount to US$ 119 million for a period of five years and will be limited to the first 100,000 SMEs applying each year.
Under MDEC’s watch, there are currently 42 Technology Solution Providers (TSPs).
All 42 TSPs provide the latest digitization services and are listed on BSN’s website. For other TSPs looking to provide digital services through this channel will have to submit their application forms alongside the supporting documents to MDEC for processing by 31 March 2020.
For SMEs that would like to obtain this matching grant, applications must first be submitted to the banks for processing.
Once approved, they would make payment to the TSP chosen. At the final stage, BSN will pay the remaining amount to the TSP.
The Finance Minister stated that BSN, SME Bank, and MDEC will set up roadshows nationwide to create awareness and provide SMEs with information and guidance to obtain this digitization matching grant.
The digital economy is a significant contributor to the nation’s GDP. More than 21 percent of GDP will come from the digital sector.
It is imperative, therefore, that SME entrepreneurs take digital technology seriously, and actively participate in programs that would facilitate the digitization of their businesses under the 2020 budget.
The Chairman of the bank noted that it has a responsibility in ensuring SMEs receive the financial assistance needed to integrate digital applications into their business operations.
It is committed to providing an integrated financial services platform that is accessible to its customers. This is its mandate, and the firm’s continued efforts to ensure financial inclusion amongst Malaysians.
With its size and limited funding, SMEs ought to capitalize on such government-backed grants. This will give them a good leg up when it comes to digitization, which is already non-negotiable in today’s business landscape.
