Like many countries around the world, Malaysia rolled out various initiatives during the wake of COVID-19 to help the nation brave through the crisis as quickly and effectively as possible.
Some of which included programmes such as the Danajamin Prihatin Guarantee Scheme (DPGS), Employer COVID-19 Assistance Programme (e-Cap), Biz Mula-i, Biz Wanita-i and more, which were crucial in helping SMEs cushion some of the damages and losses as a result of the pandemic.
Yet, with so many grants available, one has to wonder which of them can truly help, not just in terms of recovery, but also in future-proofing themselves against major shocks and disruptions in the upcoming years.
One key focus amongst many companies is the SME Digitalisation Grant, to which this article will focus on.
With that being said, let’s dive straight into the details.
What Is The SME Digitalisation Grant?
To start, let’s look at what this grant offers.
At its simplest, the SME Digitalisation Grant is an initiative by Malaysia’s Ministry of Finance to assist Small & Medium Enterprises (SMEs) in adopting ‘digitalisation’ for their business operations.
This was previously announced in Malaysia’s 2020 Budget presentation, in which the government will provide a 50% matching grant of up to RM5,000 per SME over a period of 5 years for the subscription of digital services (listed below) to enhance their competitiveness and productivity.
In total, there are seven (7) digital services available under this grant:
- Digital Marketing & Sales
- Enterprise Resource Planning (ERP) / Accounting & Taxation
- Electronic Point of Sale System (e-POS)
- Human Resource Payroll System / Customer Relationship Management (CRM)
- Remote Working
The grant also includes other details which are explained in this section:
This matching grant is limited to one (1) application per SME only.
However, SMEs are allowed to apply up to three (3) digital services with one (1) or more service providers, also called Technology Service Provider (TSPs) that is endorsed by MDEC.
This grant will begin from 17th February 2020 for a period of five (5) years or upon reaching 100,000 applications, whichever comes first.
No fees are imposed on the undertaking of this grant.
How Can Businesses Apply?
Before applying, you’ll need to check if your company is eligible for this grant based on the criterias set by the Malaysian government:
i) The SME must be at least 60% owned by Malaysian;
ii) Registered under the relevant laws of Malaysia & classified as SME;
iii) Been in operation for at least one (1) year;
- If operating for more than one (1) year, the SME must have a minimum annual sales turnover of RM100,000 for the first year.
- If operating for two (2) years or more, the SME must have a minimum sales turnover of RM50,000 for the preceding two (2) consecutive years.
2021 Eligibility Update
Following Malaysia’s 2021 budget announcement, the government also plans to relax the grant’s eligibility requirements to allow micro-SMEs and start-ups that have been operating for at least 6 months to apply for this grant.
In turn, this will allow more businesses the opportunity to digitalise their business without having to meet the stringent criteria set in the original guidelines.
After checking your eligibility, businesses can start on the application process by following these steps:
1) Reaching Out To A Technology Solution Provider (TSPs)
For instance, you can appoint CUBEevo as your TSP by contacting us to kickstart the application process as our agency is certified by MDEC as an official Technology Solution Provider.
You can do so by requesting for a quotation on the digitalisation service your company is interested in such as ecommerce development and digital marketing.
For the full list, you can head over to the section titled ‘Our Digitalisation Services’ under this page.
2) Complete The SME Digitalisation Form
Next, you’ll need to download & complete this application form.
Afterwards, the completed form needs to be sent back to your appointed TSP with the required supporting documents (found in the checklist link below) and they will assist you with the submission.
Please refer to this checklist for more information on the documents required for submission.
3) Application Approval
Once your application is approved, your company is then required to pay the TSP on the difference of the total invoice after deducting the subsidised amount granted from the initiative for each digitalisation service.
The bank will then pay the remaining 50% of your total invoice amount, up to a maximum of RM5,000 to the TSP in one lump sum payment or in stages based on the Bank’s discretion.
For more information regarding the application of this grant, you can contact the numbers below:
BSN (Bank Simpanan Nasional)
SME Bank (Small Medium Enterprise Development Bank Malaysia Berhad)
Should Your Business Take The Digital Grant?
Now that we’re clear on its details, the question then shifts to whether companies should consider taking this grant.
To address that, we need to understand the fundamental reasons behind such hesitancy.
For instance, are businesses not taking it because they don’t fully understand the benefits of digitalisation?
Or are they just unsure if this grant is the right solution to help them achieve their business objectives in their various digitalisation projects?
To answer both these questions, we’ll begin by exploring each section, starting with the first on how a company is able to benefit from digitalising their business.
The Benefits of Digitalisation
1) Business Continuity
One of the most obvious benefits to digitalisation is that it helps ensure business operations will not be severely impacted in the event of a physical emergency or crisis.
For instance, COVID-19 forced many traditional brick and mortar stores to close their physical fronts, which affected revenues and cash flow as they had to rely on remote working and online selling to ensure business continuity and survival.
Without proper digital infrastructures in place, they were not able to operate smoothly (let alone profitability) as they had to rely on whatever ‘quick-fixes’ they could find in order to get the same amount of work done.
However, those problems could have been addressed or avoided completely if the right digital infrastructures were put in place beforehand as it would have enabled them to mitigate such detrimental risks.
To emphasize this point, take a look at this quick example from this flooring company’s website:
When buying floor tiles, most would travel down to the physical stores in order to get a ‘feel’ of the product itself. But amidst a pandemic, lockdowns and physical restrictions make that impossible to do so.
To solve that, the brand implemented a unique feature in its website to closely replicate the ‘in-store’ experience, which allows customers the option to match their chosen floor tiles to a pre-designed room.
This lets them visualize how each room could potentially look like with a certain product in place, right from the comfort of their own devices (desktop, tablets & mobile phones) while allowing them to get a quote for the products they’re interested in.
Not to mention, this functionality also provides a hidden benefit for the company by acting as a 24/7 sales representative to help service customer inquiries from both domestic and international fronts, which can potentially be used to boost product sales or help store-facing employees lighten their workload on high retail customer traffic days.
Essentially, digitalisation protects your company from unforeseen physical disruptions.
It ensures operations are able to run smoothly at 100%, allowing you to easily maintain commercial contact with customers at all times regardless of the physical emergency or crisis.
2) Business Transformation
To demonstrate how digitalisation helps businesses transform themselves, let’s use the education sector as an example.
Traditionally, schools and various educational institutions relied on in-person learning as the only way to offer their services. This however, came with a set of limitations such as:
- Number of customers (students) they could serve at any given time
- Physical dependencies (i.e. Whiteboards & Classrooms)
- Poor learning schedule flexibility
But when the pandemic hit, many were forced to digitalise and carry out their services online (a.k.a cloud-based or e-learning). While this exposed the various risks and vulnerabilities faced by the institutions, it also revealed brand new ways for offering their services as well.
Using the same example stated above, these institutions who embraced digitalisation will no longer be restricted to a certain number of individuals per classroom as teachers can reach an even larger portion of students across the world by streaming their lessons online.
Put simply, the platform provides educators valuable insights into their students’ attendance, participation rate, learning progress and various other metrics to tailor each of their learning journeys according to their individual situation.
It also offers other unique features such as:
- Lecture recordings
- Live chat & discussions
- Adopting or creating customizable & interactive textbooks
- Creating secure online tests & exams
- Accessibility features to tackle online learning challenges (i.e. dial-in to lecture via phone, lecture replays and mobile-optimized learning materials)
As such, these institutions are then able to capture new markets alongside a wider consumer base with ease to generate additional revenue sources on top of existing ones.
Besides that, it also leads to the creation of higher-value offerings, which results in world-class products and services for customers everywhere.
This not only leads to better customer loyalty for the business going forward, but also disrupts the industry as competitors have to keep pace and provide similar offerings or risk losing out in the long term.
In essence, digitalisation enables these institutions to reinvent their businesses into better and stronger versions of themselves, which not only creates various opportunities for expansion, but also in future-proofing themselves against the challenges posed in the 21st century.
3) Time & Cost Savings
In this section, let’s use the concept of prospect outreach to better understand how digitalisation can help your business save valuable time.
For instance, imagine the amount of hours needed for any sales or marketing executive to reach out to a list of 200 potential customers per day.
From personalizing their outreach emails to each individual’s profile to tracking the updates for each prospect’s reply, these little tasks can compound and eat into their day when not managed properly.
Not only is this task physically taxing on its own, but it’s also an incredibly inefficient use of their time and resources as it will most likely result in only a small number of people who are interested in the business’s products and services.
So how can digitalisation solve this problem? Simple - Automation.
While it’s worth noting that automation has the potential to replace certain tasks or jobs, it’s important to consider that the same technology can also give rise to new ones that leads to better value creation for the business as well.
But that in itself is a discussion to be had on another day.
Coming back to the subject at hand, when employees are given the tools (and know-hows) to utilize these technologies, businesses will not just be able to reap benefits in terms of time-reduction but also in cost-savings as well.
For instance, CRM (Customer-relationship management) softwares such as Pipedrive:
The outreach process is automated by providing employees with pre-written email templates (customizable to each prospect’s details), which cuts down significant time spent on drafting them to personalize it according to their individual situation.
Not only that, but it also automatically creates reminders for them so they can remember to follow up with their prospects on days where their workload is heavier than usual, which would likely sidetrack them from continuing their progress of nurturing said leads.
Other features also include:
i) Visual Overview of All Sales Deals
Businesses can easily understand the current progress of each prospect being outreached and determine which deals are moving forward.
ii) Chatbot & Web Form Integrations
To automatically qualify leads from digital channels & connect them with available sales reps.
iii) Customizable Dashboards & Sales Reports
Helps with creating interactive dashboards that provides easy-to-understand sales reports based on individual business needs (i.e. revenue from each product category)
In terms of cost saving, businesses can also expect benefits such as:
i) Lower Customer Acquisition Costs
Getting new customers will no longer be extremely expensive as employees can utilize the testimonials of existing clients as a marketing tool or ‘social proof’ for those reluctant to try out their products and services.
ii) Reduced Operating Expenses
Personnel and equipment costs (i.e. customer service reps & physical help desks) can be reduced as the CRM can act as a self-service portal for prospects to resolve general issues without increasing the overall load on customer support.
In addition, travelling expenses for sales reps can also be reduced by utilizing the CRM’s meeting prioritization features, which provides them with the shortest routes based on the meeting’s location and time, allowing them to cut down on travelling time and meet more clients.
iii) Decreased Human Errors
Mistakes such as mixing up customer details or having the wrong packages sent to them can lead to extra costs for the finance department and a potential loss in consumer loyalty.
Having a CRM helps decrease that likelihood from occurring on a regular basis.
In essence, such automation helps employees prioritize activities that are key to value-generation while eliminating those unproductive to bottom-line profitability such as repetitive sales admin work (time) and lost customer opportunities (cost).
But this only scratches the surface of what digitalisation can do in terms of time and cost savings, as it’s benefits can be adapted to other roles and departments as well.
4) Maximizing Operational Efficiency
Besides reducing various errors and bottlenecks, one other benefit to digitalisation is that it maximizes a business’s operational efficiency by expanding or growing their current capabilities.
For instance, most SMEs focused on ‘going digital’ during 2020, which means investing in digital assets (i.e. websites and social media) to keep their businesses running amidst physical restrictions.
And like their brick-and-mortar operations, these digital assets require them to think about how they can optimize certain aspects such as paying the lowest amount for online advertising to attract customers or increasing monthly purchase for a certain product within their website.
In that scenario, businesses can utilize various kinds of digital marketing such as SEM, SEO & Social Media Marketing as potential solutions for those problems.
Here’s a brief overview on the three types of digital marketing mentioned:
i) Search Engine Marketing (SEM)
The use of paid adverts such as (PPC) pay-per-click advertising on search engines to drive traffic to your website from clicks made by users when searching for a product or service.
ii) Search Engine Optimization (SEO)
The process of making your business’s website appear in the top few search results based on a given keyword (i.e. tennis shoes)
iii) Social Media Marketing
Creating and sharing content such as posts, images, videos and adverts to achieve a business's marketing goals (i.e. brand awareness).
For more info on that, you can check out this handy guide on digital marketing.
While these solutions aren’t entirely brand new, many tend to shy away as they have yet to fully grasp on how they can help maximize revenue when they adopt such solutions.
For instance, SEO (when done properly) helps businesses maintain an online competitive edge over others by remaining in the top search results (or ranking) of a given keyword.
To elaborate, here are some statistics provided by a study on why it’s important for businesses to have their websites rank on the top few results:
- The 1st ranking position (page 1) receives 42.25% clicks from all search traffic.
- The 2nd position receives 11.94%.
- The 3rd position gets 8.74%.
- The 4th position receives 6.05%.
- The first 10 positions (page 1) receive 89.71% of all clicks from traffic.
- The next 10 positions (page 2) get only 4.37%.
- Page 3 gets a total of 2.42%, Page 5 gets only 1.07% while all others receive less than 1% of all search traffic clicks.
Thus, it’s clear that the higher your website ranks, the more clicks you’ll get, which means more customers potentially buying your products and services as opposed to ranking on page 2, 3, 5 and so forth.
After all, the behavior of clicking on the first few results out of convenience is very relatable to each and everyone of us as we tend to demand for the things we want (i.e. information) immediately.
Coming back, the benefits of having good SEO for your website isn’t just limited to acquiring more customers online, as this competitive edge goes beyond other aspects such as:
i) Increased Brand Awareness
Ranking in the top few positions ensures your website is always shown when a given keyword is searched by customers, which translates to increased brand awareness that’s crucial to capturing this ever-increasing pool of online consumers.
ii) Better Business Credibility
To filter out fake products and low quality services, consumers take into account a business’s credibility before making their purchases.
As such, SEO helps businesses build that credibility by showing customer reviews (i.e. google listings) as ‘social proof’ to persuade new ones that the business is authentic, trustworthy and most of all - legitimate.
When managed well, this builds a new revenue source for the business, which can then be combined with the physical operations of the company to improve its overall efficiency in various aspects such as total revenue and monthly sales.
To recap, digitalisation helps businesses expand their current capabilities to further improve the way their business operates, which then has the potential to impact the speed and quantity of its outputs without sacrificing on quality.
Should You Take This Grant?
While some businesses may still be reluctant, there are others who have already decided to move forward with adopting digitalisation for their company.
As such, the important question remains - Is this grant worth it?
To better understand this, let’s look at the various benefits one could expect when taking on this grant:
The Benefits of The SME Digitalisation Grant
1) Cut Down Your Research Time on Searching For The Right Solutions Provider
Understanding which areas of your business require digital transformation takes a long time.
Not to mention, the additional hours needed to search for companies who can not only provide the right solutions but are capable of implementing them as well.
One major benefit to taking this grant is that businesses can save themselves this trouble by using MDEC’s comprehensive list of TSPs when they partner with any of them.
Essentially, the list provides companies with a clear breakdown of each TSP and the solutions they provide, alongside their location, website and other relevant contact details which cuts down the time spent searching for solution providers that offer your required digitalisation services.
Not to mention, the list is also regularly updated in case businesses are unable to find the right ones to work with.
2) Skilled Professionals To Help With Successful ‘Digitalisation'
Continuing from the point above, the list is also certified by MDEC itself, which indicates that each of these TSPs are professionals in their specified areas of digitalisation.
But this certification isn’t just lip-service for boasting, as each of the solution providers had to undergo a stringent selection process before being officially verified that they are indeed skilled and trained to provide expertises that are beneficial to Malaysian SMEs.
In fact, you can get a glimpse of the TSP application process under the ‘apply now’ section of MDEC’s page, which requires several criterias to be fulfilled by the solutions provider, such as client testimonials, case studies, financial statements and other crucial company documents.
Through this, businesses can be assured that these solution providers are professionals in their fields who can competently provide SMEs a roadmap to help them undergo a successful digitalisation.
3) Financial Support Provided By The Government
While some Malaysian SMEs have mixed feelings towards the various grants offered by the government, it’s crucial to view this from another perspective, particularly a financial one.
As most would know, cash flow is king and the current situation for most businesses is to be prudent and cautious with their capital reserves so they can recover and be ready in case of another global crisis.
However, if companies remain too risk-averse and complacent with the way things are (i.e. how they operate), while choosing not to prioritize their business’s digitalisation efforts, then capital reserves and cost-cutting measures alone might not be able to get them through the next crisis itself.
Thus, companies have to decide whether they’re willing to risk holding off on such investments or to accept the financial support offered by the government in helping to future-proof their businesses so they are protected from similar threats and disruptions like these in the future.
Even more so, SMEs are able to reduce their investment costs by as much as RM5,000 (or up to 50%) when undergoing digitalisation through this grant.
While that amount won’t make a large dent for some, it however helps with easing the company’s financials but provides a small liquidity boost that can be directed towards other financial obligations such as paying down upcoming debts instead.
Put simply, this grant can act as an aid for SMEs to not just reduce their financial burdens, but to help with building up their capacity for the future so they can compete effectively against other world-class institutions.
In summary, if your company’s objectives includes:
1) Business Continuity
2) Business Transformation
3) Time & Cost Savings
4) Maximizing Operational Efficiency
But also requiring certain criterias such as:
1) Reducing Research Time to Search for The Right Solutions Provider
2) Having Skilled Professionals to Help You Undergo a Successful ‘Digitalisation' Process or
3) Acquiring Crucial Financial Support From The Government
Then, the SME Digitalisation Grant can be one of the best solutions to help you achieve your company’s digitalisation goals moving forward.
After all, this grant is an initiative backed by the government to help Malaysian businesses in upgrading their company’s digital capabilities to allow them to effectively compete in an ever-changing era where technology dominates every aspect of our lives.
So, if your business is thinking about where or how it can get a hold of this grant, then you can either refer to the links from above or click on this page instead to quickly jump start your digitalisation journey immediately.