S’pore SMEs lead S-E Asia in tech spending; Asean to invest $173.6 billion in the next three years

SINGAPORE – Smaller firms in Singapore, Indonesia, Malaysia, Thailand and Vietnam are set to spend $173.6 billion on technology – a 70 per cent increase over the next three years, noted a new report.

It found that small and medium-sized enterprises (SMEs) in Singapore are especially keen to employ technology to digitalise their businesses, while more than half wanted to exploit tech services to seek out new customers.

These aims have prompted many local firms to map out what they would like to invest in over the next two years, with about 70 per cent intending to focus on product and service innovation, managing customer experience and improving business processes.

Singapore’s SMEs are already well ahead of their South-east Asian neighbours in this area, according to the survey of 750 companies across the region commissioned by TDCX, a Singapore-based company that provides services in sales, digital marketing and content monitoring, among other offerings.

The study noted that about 36 per cent of local SMEs had already digitalised a significant portion of their operations whereas only between 16 per cent and 26 per cent of their regional counterparts had done so.

At the other end of the spectrum, the number of local SMEs that had either just started or have yet to start down the technology route ranked the lowest in the region.

About 20 per cent of local businesses fell into this category while between 23 per cent and 36 per cent of SMEs in the region were still milling at the starting line.

The three business segments that lagged their peers across all five markets were those in consumer goods, retail and food and beverage.

Only 16 per cent of such SMEs have digitalised much of their operations. In comparison, almost 70 per cent of firms that provide services – either in the financial, insurance or professional sectors – had already done so.

While SMEs here appear to be on a surer footing on the digitalisation path, they continue to face several challenges, including gaining access to knowledge and expertise, the need to train staff and being able to seek guidance on how to digitalise their businesses even further.

The top three pain points local companies cite are creating engaging content, being able to reach customers and the lack of in-house digital marketing expertise.

Meanwhile, TDCX chief executive Laurent Junique said the pandemic had accelerated digitalisation across the region.

He noted that tech providers of cloud services, system integration, cyber security, as well as digital platforms, were all vying for a share of the growing Asean SME market, with companies such as Airwallex, Bytedance and Slack already expanding their regional footprints to capitalise on these opportunities.

Separately, the Singapore Business Federation (SBF) conducted its own survey of 931 Singapore businesses.

It found that around 96 per cent knew the importance of business transformation, with 17 per cent of SMEs placing digitalisation as their top priority because it was vital to strengthen business continuity.

Meanwhile, about 32 per cent of the companies surveyed intend to invest in new technologies and digitalisation in 2023.

However, the survey found that the rising price of tech investments was a thorny issue for local SMEs. .SBF’s executive director of the advocacy and policy division, Mr Tan Chee Wee, said local SMEs recognised the high cost of technology adoption, especially during the current inflationary climate.

Two other key issues confronting SMEs were the lack of management expertise to drive technological change and cyber security threats, he noted.