KUALA LUMPUR (July 16): The Small and Medium Enterprises Association (Samenta) said Malaysians favour using technology and innovation over creating them, which poses a challenge for small and medium enterprise (SME) growth.

Samenta national president Datuk William Ng said the issue of margin compression is not solely due to the pandemic, but rather the result of SMEs' lack of focus on innovation as well as research and development (R&D) over the past 20-30 years to build their own brands.

“We don't own intellectual properties (IPs) and innovation, so when issues like globalisation and focused migration of business from other countries (arise), in this case China to Malaysia, but if we are concerned about the survival of the economy in the retail sector, we should somehow start to make a difference in innovation and branding,” he said during a press conference.

Ng believes that while it may not be a permanent solution, it should still be attempted as a step forward. Additionally, he said that a lot of activities pertaining to supporting the global supply chain are about trading and reselling to the local market.

Meanwhile, touching on the topic of artificial intelligence (AI), he said that its usage will boost brand success for retailers and increase revenue and sales for larger brands.

“Thus, retail brands must invest more in the page of AI,” he added.

On the other hand, Malaysia Retailer Chains Association (MRCA) deputy president Datuk Liew Bin said the influx of foreign retailers, particularly Chinese competitors, is disrupting the SME sector.

“Let's consider Tesla and BYD as examples. BYD has surpassed Tesla, improved upon it, and simultaneously sold their products at a lower price.

“An estimation of 10,000 Chinese retailers in the market and more to come in, which is in fact a challenge for SMEs, not retailers in particular but most people,” Liew said.

Ng also said that before developing policies, agencies must consult with businesses to confirm whether issues exist; otherwise, policy interventions are unnecessary.

“If a particular business does not have any issues, then there should not be policy interventions. The policies should also be validated with the industry so that they do not burden the SMEs,” he added.

https://www.theedgemarkets.com/node/719177