SMALL and medium enterprises (SME) in Malaysia comprise approximately 97% of the economy, contributing nearly 40% to the nation’s total GDP.
As such, empowering SME with digital capabilities is not just a “nice to have”; it is essential for economic sustainability and growth.
Malaysian businesses today have an opportunity to adopt emerging technologies that can streamline their operations and enhance productivity.
Initiatives such as MyDigital, the Malaysia Digital Economy Blueprint and the SME Digitalisation Grant as well as digital innovation initiatives for SME announced in Budget 2025 aim to make digital solutions accessible to small local businesses, the backbone of Malaysia’s economy.
These initiatives illustrate an attempt to bridge the gap between traditional local practices and global modern expectations, facilitating greater market access and operational efficiency for businesses.
By strategically investing in digital infrastructure and promoting robust policy initiatives, the government continues to lay the groundwork needed for widespread innovation.
Greater digitalisation opportunities
Malaysia’s economy has traditionally been anchored in three core sectors, with agriculture, manufacturing and services serving as three core pillars of economic prosperity.
These industries, while navigating the complexities of digitalisation, possess opportunities for innovation and growth. They are strategically implementing digital solutions to overcome legacy systems and skills gaps for greater operational success.
The agriculture sector, historically vital to Malaysia as a leading producer of palm oil, rubber and other commodities, is a keen example. Farmers and agricultural businesses are in a prime position to transform their operations.
By exploring modern record-keeping and data management, they can move away from traditional silos and achieve significant growth in operational transparency.
Digital tools such as cloud-based inventory systems, logistics tracking applications and remote sensing technologies for crop monitoring can provide significant opportunities to improve these practices.
For example, the cooperative can automate inventory tracking, enhance transparency across its supply chain, and enable data-driven decision-making.
However, it is important to note that beyond acquiring technology, successful integration relies on empowering people through cultural adaptation and aligning these technologies with daily operational processes.
Malaysia has been making actionable progress through the widespread adoption of digital agriculture technologies to boost its agricultural efficiency and resilience against climate change.
As a result, the economic benefits from adopting technologies like GPS, drones and sensors align with the sector’s recent recovery, evidenced by its notable 7.2% growth in Q2 2024.
The window of opportunity for meaningful change lies in the cultural and mindset adjustments needed to embrace advanced tools within an industry that has grown with generations.
People and process
Implementing digital upskilling programmes across Malaysian businesses is now more critical than ever. As of 2024, studies indicate that four out of 10 Malaysian businesses experience difficulties due to the calibre of digital skills among employees.
This presents an opportunity for businesses to prioritise ongoing training and continuous learning, thereby future-proofing their operations and enhancing industry-wide competitiveness.
SME especially stand to gain from digital training programmes tailored to their specific needs and capacities.
Financial budgets also pose another significant barrier, especially for SME located away from major city hubs.
This causes infrastructure costs, internet connectivity, hardware requirements and software subscriptions to be seen as prohibitively expensive.
Some business owners may find these investments unsustainable burdens rather than opportunities for growth.
Thankfully, the advancing technology landscape offers affordable, scalable digital solutions such as cloud computing services, mobile business management apps and flexible cybersecurity tools.
Even no-code platforms now allow users with limited IT backgrounds to develop customised applications suited to their unique business requirements. This evolution in technology accessibility enables SME to digitalise operations with minimal initial investment.
The success of digital transformation depends on effectively empowering the workforce. Businesses must partner with technology providers who offer comprehensive, ongoing training, dedicated customer support and scalable solutions that evolve alongside their needs. These elements will ensure smoother adoption, greater staff engagement and sustainable operational growth.
For Malaysia, whether in agriculture, manufacturing or consumer services, the digital transformation journey must be gradual and carefully managed.
Businesses must align digital initiatives closely with existing infrastructure and practical capabilities.
Adopting tailored digital solutions combined with robust training and strategic support will enable businesses to confidently embark on their digital transformation journey.
This will foster a culture of continuous innovation, stimulate economic growth in an interconnected global market and solidify Malaysia’s position as a digital-first, highly competitive nation on the international stage.
Tsubasa Nakazawa is the managing director of Kintone Southeast Asia, a leading cloud system for teams. Comments:[email protected]
