Helping smaller businesses and micros go cashless

By Jason Loh

Even as the digitalisation of small and medium-sized enterprises (SMEs) gather more momentum, we should not neglect the smaller (i.e., more than five but less than 25 employees within the small enterprises category) and micro-businesses (micros, i.e., five and less employees). 

With the reimposition of the movement control order (MCO 2.0), assistance for the smaller businesses and micros by now should include more help to digitalise, specifically to adopt e-payment or cashless payment methods. Compared to the rest, micros are not only more vulnerable to economic shocks but also the least digital-savvy group around, generally speaking. 

Despite the stimulus packages last year, the reality on the ground was that many smaller businesses and micros have had to close shop permanently and we know that this is due to them not quickly adapting to a new business model in the form of e-commerce and online platforms. 

It is not uncommon to see sights of shuttered shops shielded by banners emblazoned with the words, “for sale” and “to let” simply because of such inertia. 

Nonetheless, since last year with MCO 1.0, some micros have adapted and adopted e-commerce and online platforms with help from Grab, Foodpanda and Zalora, according to Muhammad Azmi Zulkifli, CEO of InvestKL. 

The Malaysian Franchise Association (MFA) has collaborated with Shopee (one of Malaysia’s leading online shopping platforms) to provide e-commerce facilities for micro and small and medium-sized enterprises (MSMEs) to promote and sell their products online. 

This should open up more online opportunities for smaller businesses and micros, going forward. Participating smaller businesses and micros can also leverage Shopee’s vast business network in the region, for example. 

According to CPA Australia’s Asia-Pacific Small Business Survey 2019-20, over half of Malaysian small businesses (51.7%) generated “greater than 10% of their sales online” in 2019. 

Nonetheless, that still leaves nearly 50% small businesses including micros out there who have yet to adapt to and adopt digitalisation. 

For example, A Joty, President of the Indian Petty Traders Association of Kuala Lumpur and Petaling Jaya have expressed that many members are not interested in going online – due to wariness.

As such, they continue to struggle to stay afloat. 

Another example of struggling smaller businesses and micros are the coffee shops and by inclusion, the hawkers. 

Datuk Ho Su Mong, chairman of Malaysia Singapore Coffee Shop Proprietor’s Association has been reported as saying that nearly 80% of the 20,000 members were forced to shut down during the MCO 1.0, with many closed down for good. 

Expecting this category of small businesses to adapt to and adopt digitalisation in the form of e-payment would be a big challenge to overcome – requiring a paradigm shift and change in business culture and model that is grounded in entrenched attitudes and mindset. 

And what about the micros such as hawkers as well as peddlers plying the streets, for example, selling pisang goreng and yau chau kuai and vade? What about the pasar malam trader?

Smaller businesses and micros that have legacy issues and established for many decades should be given more time and help to go online. 

The urgency now for these smaller businesses and micros that have yet to digitalise can be conveniently divided into a two-fold strategic approach:

  1. Current and short-term – digitalisation for smaller businesses and micros should start with the introduction of e-payments or going cashless. 

We need not look further than Singapore where its digitalisation programme for the hawkers came with financial incentives of a one-off payment of SGD500 to go online during their version of the MCO called the “circuit breaker” in May last year. 

Here, we can extend the one-off financial support amounting to RM1,500 for 2021. 

In addition, the government through the Ministry of Entrepreneur and Cooperative Development (Medac), for example, could provide card reader facilities free of charge. 

In addition, much closer to home, Penang leads with its phased e-payment or cashless payment initiatives which commenced in Jan 2020, i.e., even before the Covid-19 outbreak. 

According to Chief Minister Chow Kon Yeow, by Dec 2020, 90% of the total 56 public markets and 70% of the total 5,000 merchants would have been in a position to accept e-payments. 

The digitalisation process was facilitated by 250 digital trainers. At the same time, 32 digital trainers were stationed within the community to educate the public and help them use phone apps for e-payments.

And the Malaysian Digital Economy Corporation (Mdec)’s timely rolling out and spearheading of the MSMEs e-Commerce Campaign last year – under the Penjana Recovery Plan – have benefitted 394,894 MSMEs which had received training through the e-entrepreneur programmes via off and on line learning to provide digital entrepreneurship knowledge to generate income and to improve marketing and sales. 

According to Minister of Communications & Multimedia Saifuddin Abdullah, from that total, 155,885 entrepreneurs had reported sales amounting to RM965.48 million as at Nov 2020.

There is much definitive scope for the MSMEs e-Commerce Campaign to be extended in duration throughout 2021 – and by roping in the online platform providers. 

Lazada’s ringgit-for-ringgit co-funding programme that benefitted an estimated 30,000 MSMEs the first time could be replicated. 

  1. Medium- and long-term – there is also the critical need to have a universal QR code that is simplified and in multiple languages and dialects. 

The QR code should also be available in vocal form, to especially assist semi-literate hawkers for example who may be familiar in his/her own dialect.

There needs to be a sustained campaign to promote the practice of going cashless. We need “ambassadors” or “commissars” to inculcate the fact that hawkers wouldn’t have to count their earnings, or make trips to the bank to deposit cash with the adoption of e-payment. 

Unemployed graduates could be hired for this purpose, among other things of course. Again, both Penang and Singapore are examples to emulate. 

Indeed, the time has perhaps come for the digitalisation of smaller businesses and the micros – and in this e-payment will be a critical driver. 

In this, the digitalisation of smaller businesses and micros should take place on the basis of a centrifugal model – with the urban areas in the centre followed by the sub-urban areas and so on. 

Following this, the digitalisation of smaller businesses and micros should also help bridge the urban-rural divide. 

At the end of the day, digitalisation is and remains a journey. It’s not a sprint but a marathon. We are in this together – for the long-haul. 

For the smaller businesses and micros, it starts with going cashless. 

Jason Loh Seong Wei is head of social, law & human rights at Emir Research, an independent think tank focussed on strategic policy recommendations.

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