The government will continue to improve the digital ecosystem, including streamlining related regulations and upgrading infrastructure to accelerate digitisation among the small and medium enterprises (SMEs), said the Finance Ministry.

In the Economic Outlook 2019 Report, it said SMEs were not using the Internet optimally to unlock opportunities available due to lack of digital skills and access to talents, high costs, low speed and unreliable connectivity.

So far, initiatives such as the Digital Transformation Acceleration Programme and the Digital Free Trade Zone (DFTZ) have been introduced to assist SMEs in leveraging digital technologies in their operations.

The report said most subsectors in the services sector were not optimising the Internet usage except real estate and business services; finance and insurance; and information and communications technology (ICT).

“Given that 88.9 per cent of all SMEs is in the services sector, there is a need to accelerate digitalisation to enhance productivity,” it added.

It said RM1 billion additional investments in ICT would increase output by RM1.9 billion.

“At the same time, the services sector is expected to benefit the most from the investment through a multiplier effect, followed by the manufacturing and construction sectors.

“It is evident that investment in ICT significantly increases output. Therefore, SMEs need to transform their businesses to compete and stay relevant in the current rapidly changing environment,” it noted.

The report said services such as wholesale and retail could expand further with the e-commerce platform and reach a wider market by providing information at a lower cost compared with traditional business models.

It said towards this end, DFTZ was established as part of the national objective to boost the country’s e-commerce growth to 20.8 percent in 2020.

“While about 3,800 SMEs have come on-board the DFTZ platform up to September 2018, the number remains low compared with the total number of establishments in the country.

“Accordingly, the formation of the e-World Trade Platform hub in Malaysia, which is the first outside China, provides extensive training programmes to assist the SMEs in taking advantage of digital innovations and opportunities in global trade,” the report said.

It said SMEs could also apply the sharing economy model, which relies on digital platforms and advanced technologies such as artificial intelligence, big data and Internet of Things.

“This model enables instant access to resources and allows seamless communication among businesses.

“In this regard, SMEs need to take concerted efforts to benefit from the opportunities emerging from the sharing economy,” it said.

--- Bernama