This article first appeared in Digital Edge, The Edge Malaysia Weekly on May 12, 2025 - May 18, 2025

Malaysia has positioned itself as a regional frontrunner in digital transformation, leveraging technology as a key driver of unlocking economic growth. Through strategic investments and robust policy frameworks, the country has established a solid foundation for innovation and making the country competitive versus other tech hubs across the region.

Notable initiatives, such as the widespread adoption of artificial intelligence and the integration of no-code platforms, have empowered businesses of all sizes and sectors to modernise operations, streamline workflows and boost productivity. This has cultivated a more agile and efficient business environment across Malaysia.

This progress can be seen in Malaysia’s Budget 2025, which allocated RM50 million to support small businesses and entrepreneurs in advancing digitalisation. Key initiatives like the Digital Matching Grant for SMEs and Digital Grant for Vendors will help local small and medium enterprises access tailored, user-friendly digital platforms to meet their specific needs.

Malaysia’s digital transformation is gaining strong momentum, with businesses in traditional sectors increasingly embracing the shift. While some may encounter initial challenges, such as adapting legacy and analogue systems, optimising resources and building IT expertise, these challenges present valuable opportunities for growth and innovation as they transition to digitalisation.

Digitalisation requires more than adopting new technologies; it necessitates a comprehensive overhaul of existing processes. In specific industries, these challenges are more pronounced.

For example, in the construction sector, projects often occur in remote locations where limited internet connectivity makes real-time digital solutions more difficult to implement.

Meanwhile, in the tourism sector, tasks like customer management, cleaning and employee shifts often function in isolation. This presents an opportunity for a company-wide operational shift towards tech-enabled platforms that can streamline processes and enhance efficiency, paving the way for a smoother and more integrated and innovative way of working.

Take, for example, a small family-run hotel that relies on word-of-mouth marketing, phone reservations and manual record-keeping. While the benefits of digitalisation are clear, adoption goes beyond suggesting new technologies or platforms; it requires a fundamental shift in mindset and company culture. Some 40% of Malaysian firms have reported a shortage of digital skills among employees, which signals optimism once businesses start to integrate digital solutions effectively.

Without the technical know-how, employees often struggle with operating new systems, interpreting data or adapting to modern workflows. These challenges may slow progress and limit Malaysia’s businesses from fully realising their digital potential, which is crucial for staying competitive in an increasingly digital economy.

However, this also presents an opportunity to prioritise upskilling, with accessible training solutions enabling SMEs to equip their teams and foster a culture of continuous learning, even within budget constraints.

In addition to structural and talent-related challenges, the cost of adopting digital technologies remains a significant consideration. Many businesses may not have the resources for large-scale infrastructure upgrades or advanced software and hardware investments.

However, this creates an opportunity for cost-effective solutions and scalable technologies, enabling businesses in Malaysia to access affordable digital tools, cloud services and cybersecurity measures that support their growth without exceeding their budgets.

Whether due to hesitancy or previous challenges, the key to successful digital adoption is first assessing current needs and identifying areas where technology can deliver the most value. By starting with a single workflow or process, businesses can minimise disruption while gradually building confidence in digital tools and setting the foundation for broader transformation.

However, a common misconception is that success hinges on the tool when, in reality, it is all about the people and the team.

Choosing the right digital technology goes beyond just selecting a tool because it is about finding a solution provider that supports long-term success. Businesses should look for providers that offer hands-on training, expert consultations and ongoing support to ensure smooth adoption.

A scalable platform is key, allowing companies to start small and expand as their needs grow without costly overhauls. The right partner will not only provide the technology but also empower teams with the skills and confidence needed to maximise its value, ensuring sustainable digital transformation.

For businesses and individuals in traditional sectors or rural areas, digital transformation must align with their existing infrastructure and the gradual development of digital skills.

By building a supportive ecosystem that understands their unique challenges, Malaysia’s SMEs in construction, retail, tourism and other traditional industries can confidently embrace digitalisation. With the right tools, training and guidance, they will be well-positioned to innovate, grow and thrive in an increasingly connected world.

Tsubasa Nakazawa is managing director of Kintone Southeast Asia, a customisable workplace platform that allows teams to build, share and automate custom workflows and processes

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