Small businesses across ASEAN are counting on technology to help them overcome the impact of the COVID-19 pandemic on their operations. Technology was ranked the top investment priority for 2020 by two in three (64 per cent) small businesses, including those who currently have cash flow concerns.
This is according to a recent survey of 1,000 ASEAN small businesses 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 in 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.
Mr 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,” he added.
By industry sector, small businesses from the food and beverage (F&B), information and communications technology 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).
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).
Technology helping small businesses manage cash flow and cost challenges
As small businesses across ASEAN embrace technology as a means of ensuring a more sustainable business model for the long term, they recognise that technology can also help them better manage their cash flow. Eight in 10 (81 per cent) small businesses across the region ranked the use of digital solutions as their most preferred cash flow management method.
Mr Divyesh Vithlani, who leads Accenture’s financial services practice in Southeast Asia, said, “As more small businesses prepare to reopen after a very challenging period, their focus on technology will further intensify as they look to reinvent themselves to ensure long-term competitiveness and resiliency.
“Small businesses that focus on their digital transformation to become more agile and future-proof should see a rapid payback. These investments in technology will be essential because small businesses are the bedrock for countries in the region and also our growth engine, so the rebound of SMEs post-COVID-19 will be fundamental for a speedy recovery of ASEAN economies,” he continued.
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).
Ms. Audrey Chia, Chief Executive Officer, 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 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,” she concluded.