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|Most ASEAN small businesses are increasing their technology budgets, despite falling revenues|
This is according to a recent survey of 1,000 ASEAN small businesses with an annual turnover of $20 million and below before and during the COVID-19 pandemic, across five ASEAN markets – Indonesia, Malaysia, Singapore, Thailand, and Vietnam – conducted by United Overseas Bank (UOB), Accenture, and Dun & Bradstreet. The research sought to understand how the small firms were adapting to the business environment given the changes brought on by the pandemic.
Across ASEAN, Thailand had the highest proportion (71 per cent) of respondents prioritising technology investments in 2020, followed by Indonesia (65 per cent), Vietnam (63 per cent), Singapore (60 per cent), and Malaysia (59 per cent).
The survey also found that small businesses across ASEAN are persevering in their efforts to invest in technology even when faced with the prospect of declining revenue. Although close to nine in 10 (88 per cent) of these businesses have lowered their revenue expectations for 2020, almost half of them (44 per cent) still plan to increase their overall technology budget. This suggests that ASEAN small businesses are looking beyond the present challenges and are set on adopting technology to improve their competitiveness and sustainability.
Lawrence Loh, head of Group Business Banking, UOB, said, “The unprecedented economic, business, and social impact of the COVID-19 outbreak has underscored the importance of technology for many small businesses across the region. Having had to cope with the disruption to their operations as a result of COVID-19, many of these firms realised quickly that technology can make all the difference to their business. Whether in revising their business models or even transforming their operations, small businesses are responding to the changes brought about by the pandemic by turning to technology to ensure their long-term viability and competitiveness.”
By industry sector, small businesses from the food and beverage (F&B), ICT, and healthcare sectors (50 per cent) indicated the strongest desire to boost their technology investments, followed by those in construction (48 per cent) and retail trade (46 per cent).
Loh said, “We at UOB have been keeping close to our small business customers to help them navigate the challenges in these difficult times. Apart from supporting their financial needs, we help them identify and implement digital solutions that enable them to manage their operations effectively and virtually. For example, for Singaporean small businesses in sectors which have been affected more severely, such as F&B, we have been helping them shape their predominantly physical business in response to consumers shifting more of their purchases online. Through our collaboration with Google, we have also made it easier for such firms to register for digital tools such as Google My Business and to set up strong online profiles to attract more customers.”
Beyond technology, ASEAN small businesses are looking to invest in developing their employees’ skills (51 per cent) and in machinery or equipment (40 per cent). Their lowest investment priority is in motor vehicles (18 per cent).
ASEAN small businesses are also easing their cash flow pressures by seeking deferment on their loan repayments (75 per cent) and renegotiating the terms of their contracts with suppliers and landlords (75 per cent). Small businesses also look to increase their working capital through COVID-19-related financing schemes (73 per cent). One example of such a financing scheme is UOB’s initiative to provide its eligible small business customers in Singapore with pre-approved financing of up to $200,000 so they have access to a ready source of funds should the need arise.
Audrey Chia, CEO of Dun & Bradstreet Singapore, said, “Despite the uncertainties on the trajectory of COVID-19, the long-term growth potential for ASEAN remains, given the region’s favourable demographics and rising consumption. While ASEAN small businesses are facing the current challenges brought about by COVID-19, we can see that they are still taking practical steps to increase their business’ resilience to prepare for the future. Firms which transform their business models for the long-term, even after COVID-19, will be better poised to tide through these current challenges and to create new business opportunities.”