Currently ASEAN MSMEs have a relatively low level of digital tools usage. There are several factors attributing to this, with the main reason being the digital divide between large and small firms. According to OECD, usage of advanced digital tools differs between sizes of firms even amongst advanced economies. This is only exacerbated in ASEAN amongst the middle and low-income countries. This week’s chart assess digital tools usage amongst SMEs in Asia and the barriers that they face.
- When ASEAN businesses do adopt technology within their business models, they do so to a greater extent than firms in other economies. This is reflected in the chart, where the ASEAN middle income economies are shown alongside other Asian economies.
- ASEAN countries most commonly use digital tools to share information with potential customers and have increasingly started to use tools to sell online. The usage of online tools to manage internal processes to increase productivity, and for online payments are uncommon.
- The first challenge to increasing digital tools usage amongst MSMEs is the limited access to stable internet and affordable digital tools. Overall broadband coverage has improved in ASEAN, but 65% of rural SMEs still cite weak internet connections, and 50% state that they are unable to afford advanced digital tools.
- MSMEs additionally face trade-related challenges such as transacting overseas and engaging in cross-border trade.
- Another significant challenge is digital literacy, with MSMEs expressing their lack of confidence in using digital technology efficiently and conducting business operations in the digital age.
By Sunena GUPTA