COLUMN

| November-December. 2025

▶ While digital tools offer SMEs access to markets, efficiency, and scale, these advantages flow mainly to digitally ready, urban-based, and younger entrepreneurs, leaving many rural, older, and micro-businesses behind.

▶ Reliable connectivity, devices, and digital skills are essential enablers. Without sustained investment in digital literacy, confidence-building, and local support, digitalisation risks deepening structural inequalities.

▶ Government, technology providers, financial institutions, SME associations, and communities must collaborate to ensure digitalisation empowers SMEs without creating platform dependency or new forms of exclusion.

BY ANIS NAJIHA AHMAD

International Institute for Halal Research and Training( INHART), International Islamic University Malaysia( IIUM)

BY MOHD FIRDAUS MOHAMED KHAIRI

UTM Big Data Centre, Universiti Teknologi Malaysia( UTM)

In Malaysia, small and medium enterprises( SMEs) are positioned as prime beneficiaries of this digital wave. Yet beneath this optimism lies a more complex reality.

Digitalisation can be empowering, but it can also be exclusionary. It can lift forwardlooking SMEs into new markets, but it can leave behind those unable to adapt.

Thus, a critical question emerges: Will digitalisation become a great equaliser for Malaysian SMEs, or will it deepen the divide between the digital-ready and the digitally-struggling?

Looking through an inclusion lens, this article re-examines the opportunities of digitalisation not merely as tools or platforms, but as pathways toward a more equitable and resilient SME ecosystem.

DIGITALISATION AS AN OPPORTUNITY

The transformative power of digital tools is undeniable. SMEs equipped with e-commerce capabilities can now access national and global markets with unprecedented

If the algorithm changes, if advertising fees increase, or if a platform introduces new seller requirements, the SME’ s survival could be at risk. ease.

Social media platforms like TikTok have democratised marketing, allowing even micro-enterprises to build a brand presence with minimal capital. Technologies such as cloud accounting, digital payments, remote collaboration tools, and AI-driven analytics have reshaped how small businesses operate.

However, these opportunities flow disproportionately to SMEs that already possess some degree of digital readiness. These include urban-based firms, younger entrepreneurs, or those with existing exposure to technology.

For many others, especially microbusinesses in rural or underserved regions, digitalisation feels distant and intimidating. The“ promise” of digitalisation is real, but it is not automatic.

This raises a crucial question from an inclusion perspective: How do we ensure that digitalisation becomes a rising tide that lifts all SMEs, and not just the most prepared?

THE INVISIBLE BARRIER

According to the Good Things Foundation( 2024), meaningful digital inclusion is only possible when individuals have a device, connectivity, digital skills, and adequate support. In other words, digitalisation assumes the presence of three fundamental enablers:

■ Reliable internet

■ Digital devices

■ Basic digital literacy

Yet in Malaysia, access to these enablers remains uneven. Rural SMEs face unstable connectivity, limited access to hardware, and fewer digital support channels.

A rural tailor or food micro-vendor may not have the bandwidth, literal or figurative, to manage e-commerce storefronts or digital payment systems. This gap creates an invisible barrier.

When digital tools become prerequisites for market participation, SMEs without such access risk being pushed to the margins.

Instead of digitalisation levelling the field, it may widen inequalities unless these foundational gaps are addressed decisively.

FUTURE OF UNDERSERVED SMES

Different groups of SMEs experience digitalisation very differently:

■ Women-led micro-businesses: Many Malaysian women operate home-based micro-enterprises. These include catering, beauty services, modest fashion, and home crafts. Digitalisation could transform these businesses by enabling flexible work, online sales, and remote customer engagement. Yet social constraints, time poverty, and limited digital exposure mean many are still excluded from formal digital ecosystems.

■ Older entrepreneurs: Young entrepreneurs tend to adopt digital tools more readily, allowing them to scale quickly. This creates a new generational divide: the young become digital-native competitors to older entrepreneurs who rely on traditional methods.

■ Halal micro-enterprises: For halal SMEs( e. g. food stalls, small food manufacturers, and personal care businesses), digitalisation offers the chance to formalise processes, engage customers more transparently, and participate in platforms that prioritise traceability. But the majority of halal micro-SMEs remain early in their digital journey.

■ Rural-based SMEs: Digitalisation could be a lifeline for rural entrepreneurs, enabling them to bypass geographical constraints. Yet access, cost, and capability gaps limit uptake.

A truly inclusive digitalisation strategy must recognise these diverse realities, as digitalisation does not start from the same baseline for all.

BRIDGING THE DIVIDE

To advance a more inclusive digital ecosystem, the Malaysian government has strengthened its interventions in 2025