Malaysia’s economy is heavily based on a large MSME and SME community that also drives employment. During the pandemic and the ensuing Movement Control Orders (MCOs), it took a heavy toll on the businesses all over the country, but especially the MSME and SME community.

As the world moved online, the knowledge and financial hurdles for smaller businesses made it difficult to move online easily. This led to closures and an increase in unemployment. Businesses were struggling to adapt to a digital world and for the most part, there was little that could be done.

To further understand the issues and explore potential successes, we spoke to Dato’ Westin Chew, CEO and Founder of SMEGO, which provides a mobile app to help MSMEs and SMEs digitize easily and fast. Also joining the conversation was Wong Kah Meng, who is CEO of Funding Societies Malaysia. They are a digital financing platform targeting MSMEs and SMEs in Malaysia.

SMEGO is currently running a crowdfunding campaign to further build out their SME ecosystem of services and products.

Amidst the pandemic and political turmoil, what is the fate of the Malaysia startup ecosystem?

Both Westin and Kah Meng were good enough to share some of their time with us and help us better understand the recovering ecosystem in Malaysia.

What are the main factors that have been hurting MSMEs and SMEs in Malaysia?

Westin Chew (WC): According to World statistics, the number of failing businesses is rising not only due to Covid 19 hit as it has been the struggle for a conventional business owner to digitalize their business fast enough. Worst as pandemic indeed hit hard on most business owners with low demand, rising cost, and crucial to moving to digital to survive. Although there are many solutions out there but is unable to fulfill the ever-changing digital landscape, need, and growing demand.  

Many new businesses fail within 1-3 years of operating due to a lack of business knowledge and support required. Systems in the market are rather expensive versus user function capabilities which there is a need for know-how in using it. This has created a huge problem for smaller businesses in trying hard to survive rather than taking time to study to operate the confusing system. Mostly rather stick back to conventional manual and paper recording rather than spend much money with less effectiveness and also unable for them to scale their business.  Nevertheless, with the growing numbers of social marketing or marketplace are there for the business owner to do business, but rather difficult as competition is high and many has suffered huge losses when spending on ineffective marketing out there.

Wong Kah Meng (WKM): MSMEs play a significant role in job creation, driving the economy’s wheels in both urban and rural areas of Malaysia, thereby pivotal to addressing unemployment and poverty. Nevertheless, the pandemic and lockdowns have hampered MSMEs activity negatively.

This has had a deeper impact on micro small and medium enterprises (MSMEs) because they have historically been more limited by resources and are especially susceptible to disruptions to their supply chain.

Most of the problems faced in the development of MSMEs are concerning aspects of business management capabilities and limited access to productive resources.

Other than that, MSMEs also face constraints when it comes to securing financing from traditional banks due to the collateral requirements and lengthy application and approval process, which undoubtedly leads to problems with their capital or cash flow.

As such, what we do at Funding Societies is to serve creditworthy MSMEs that are underserved by financial institutions and offer them valuable digital financing products that meet their varied business needs. Having a fully online platform also eliminates the hassle for the MSMEs as everything is documented digitally and the application process and approvals typically take only up to a week or less.

Could you share some insight into what needs to be done to solve these issues?

WKM: Innovation will be key for MSMEs to recover and thrive going forward. The failure to adapt to digitalisation and innovation means many of these enterprises will disappear as the “new normal” will require changes in business and infrastructure management.

During the pandemic, most activities have transitioned online. Therefore, knowledge and expertise to thrive in this new normal is critical for business continuity. 

MSMEs face technological constraints that can be caused by many factors – including capital limitations, limited information about the development of new technologies or production methods as well as talent development, thus making it challenging to upscale innovative products and production processes.

WC: Based on our experience and market research, The ability to leverage digital tools has become a must for entrepreneurs, to survive the ongoing and post-crisis MSMEs and SMEs require technology in assisting with two main major problems which are 1st how to manage the business effectively at cost-saving easy to manage method and 2nd how to increase in sale thru multiple channels with a solution on enhancing product selling, To address the problem of business owners, SMEGO builds and ready to join an effort to help revitalize business owners to sustain and digitalize theirs by offering Offline which assist in managing the inventory, POS system, accounting, and online e-store ready to sync to marketplaces and increase selling channel at lowest onboarding entry.

With the focus on digitalisation (RMK-12 announcement), could you explain what needs to be done to move this along faster?

The SMEGO ecosystem

WC: In line with the government framework initiative with the implementation of E-Commerce prosperity and assistance for entrepreneurs, SMEGO would like to give full support to the government and to gain government support to introduce SMEGO to all Malaysians as one of the cooperation initiatives to get faster access Assist to  b40 community, the disabled, women, micro and other urban digital assistance or in areas that have never been led before to overcome the current and post-pandemic economic situation forward by offering the right training skills solutions and education to nurture and generate entrepreneurs effectively to strengthen the national economy. 

SMEGO, by providing a simple easy to use yet a low-price solution to onboard, is the first step to the benefit of digital usage. Thru our on-ground and online digitalization campaign and most important are on a long-term e-learning program. By getting to excess to the untapped market we can assist to the usage of digital with the usage that generates a report to ease micros to obtain further support or grants for their business expansion.

WKM: According to the Malaysian Prime Minister Datuk Seri Ismail Sabri Yaakob, Malaysia will emerge as a high income, high technology nation with better quality of life in 2025 with the implementation of the RMK-12 plan.

In my opinion, COVID-19 was a wake-up call on the importance of enhanced implementation of digital technologies, and this includes lending assistance to our country’s backbone, the MSMEs.

For starters, upskilling and reskilling Malaysians and adoption of cloud technologies and digital tools need to be accelerated so that Malaysian MSMEs can catch up and succeed alongside their global counterparts. 

What’s next for you?

WKM: Funding Societies is moving forward with our goal of empowering MSMEs with digital financing solutions, and we are humbled by the opportunity to have been able to contribute to supporting Malaysian SMEs in obtaining financing to expand or tide through these challenging times.

We want to continue doing what we do best, and we aim to be the preferred digital financing platform providing tailor made solutions for our customers. Stay tuned for more announcements in the near future!

WC: We are aiming to change the landscape of running a business from a conventional method to fully on a smartphone by completing our Business ecosystem solution with multiple solutions so that users are able to stay in SMEGO for all usage and focus on a few missions which are to increase the country’s GDP economic growth in the shortest time, enhance made in Malaysia Product, Improve quality to compete & enter the international market and lastly to elevate the quality of entrepreneurs in long run.

Technology can bring many things forward and with a simple click of a button, it enables us to fulfill the job fast and easily. We are developing future technology which is AI product matching capabilities to increase the potential of selling yet reduce necessary advertising costs. As for the company direction, we are moving forward to ASEAN development and potential partner M & A to increase our market and move faster.