Manila, Philippines – Small businesses in the Philippines are the most bullish compared to its counterparts in the Asia-Pacific region, with nearly nine of ten SMBs expected to grow this year due to technology investment. This is according to the latest data from professional accounting body CPA Australia.

According to the data, three quarters of Filipino small businesses grew in 2022, an increase of 10 percentage points from 2021. A robust economy contributed to 89% predicting growth this year. This optimism is reflected in plans of around 58% of local businesses to hire more staff this year.

A strong focus on maintaining customer relationships and using social media contributed to growth. Around 44% of businesses nominated customer loyalty as a positive factor. Meanwhile, over 90% used social media for business purposes, including promoting to potential customers (65%) and selling products or services (59%).

The data also remarked that Filipino small businesses’ ability to identify the right technologies to invest in and profit from further strengthened their competitiveness. Seven-in-10 of businesses said their investments last year had improved profitability, strongly surpassing the survey average of 55%.

Nonetheless, increasing costs and difficulties accessing external funds may hamper financial returns and development plans. Four-in-10 businesses said increased costs were negatively affecting their businesses, the highest result in all surveyed markets. The cost of materials (42%) ranked as the cost most felt by local businesses, followed by fuel (38%) and utilities (36%).

Nicklaus Wee, regional manager for emerging markets, said, “Due to increasing domestic demand and a speedy recovery in the services sector, particularly in tourism, many Filipino small businesses expanded solidly. They continue to be one of the most dynamic in the Asia-Pacific region.”

He added, “The COVID pandemic has fundamentally changed consumer behaviour. The survey shows that Filipino small businesses are adopting a more customer-oriented approach, including increasing their interaction with potential customers. Using customer feedback allows them to swiftly identify the best options, including technological solutions to meet customers’ needs.”

Singapore – Companies in Singapore are the most likely in the Asia-Pacific region to use data analytics and visualisation, with about 83% of Singapore companies reporting having a digital transformation strategy. This is according to the latest data from CPA Australia.

About one-third of respondents said their organisation will start or continue implementing a digital transformation or technology strategy in the next 12 months. Meanwhile, About two-thirds of Singapore respondents said their business worked with technology companies or vendors in the past year to supplement their technology needs.

In addition, Singapore-based businesses are already the top users of robotic process automation (RPA) in the region, with 57% of local respondents saying their company deployed RPA as a business tool.

However, the survey reveals many companies need external support to overcome barriers to digital transformation. High financial costs and a low return on investment were a challenge for 37% of respondents while 35% pointed to a shortage of technology talent

CPA Australia Singapore Divisional President Max Loh said the take-up of technology by businesses in Singapore would pay dividends.

“New technologies enhance organisational efficiencies by automating many mundane as well as high volume tasks. This allows employees to focus on work that needs strategic thinking, such as customer engagement or creating more value for organisations and stakeholders,” he said.

Loh added, “Technology will play a pivotal role in an evolving future workplace. It’s critical for companies to invest in and fully embrace advanced technologies to maintain their advantage in a globally competitive marketplace.”

New Delhi, India India’s small businesses are reportedly the most innovative in the Asia-Pacific region, for the second consecutive year, according to a survey by a professional accounting body, CPA Australia. Combined with a very strong domestic economy, this is expected to make Indian small businesses one of the Asia-Pacific’s top performers in 2022. 

Sixty-two per cent of Indian small businesses reportedly started growing last year, with 46 per cent experiencing very strong growth – the highest result of the markets surveyed. As a result of this, 77 per cent of respondents said that they had hired more employees, outperforming all other markets.

India’s small businesses are likely to be strong creators of new jobs this year, with 83 per cent expecting to increase employee numbers, ranking first among all markets. Sixty-eight per cent of respondents forecast their small business will grow this year.

Leslie Leow, general manager – Emerging Markets, CPA Australia said, “The survey results confirm that Indian small businesses are very ambitious. Despite the pandemic, most undertook actions such as making substantial changes to the product or service and made investments associated with high growth businesses.

Leow mentioned that India’s small businesses take the crown as the most innovative in the region with ninety-four per cent will introduce a new product, process or service this year, surpassing all other markets surveyed for the second year in a row. 

India has a strong and competitive local economy, growing access to skilled workers and government policies such as the recently signed India-UK Global Innovation Partnership is anticipated to trigger a golden era of innovation for the sector according to Leow.

Reflecting their strong innovative culture, Indian small businesses are investing in technology with a very high success rate. Of local businesses that invested in technology last year, 80 per cent reported that such investment had already improved their profitability, well above the survey average of 54 per cent.

To support their innovations, India’s small businesses were the most likely to access external finance for business growth last year, and are the second most likely to expect accessing finance for growth this year. Financing this growth shouldn’t be difficult with 69 per cent expecting “easy” or “very easy” access to external finance this year, the highest result of the markets surveyed.

India’s small businesses are also one of the leaders in selling online, with 83 per cent generating more than 10 per cent of their revenue through that channel. Related to that, they are also one of the leaders in receiving payment through new payment technologies such as PayTM and PhonePe.

Indian small businesses were the most likely to have sought advice from IT consultants (49 per cent), business/management consultants (40 per cent) and accountants (35 per cent). Seeking external advice is a characteristic of high-growth businesses as professional advisers can guide small businesses through challenges and help them take advantage of opportunities.

Leow said, “Policy measures such as the Special Credit Linked Capital Subsidy Scheme are likely to accelerate technology adoption and meet strong demand for external finance. Indian small businesses should make full use of these government initiatives to expand and innovate, however, some may wish to consider whether they are striking the right balance between short-term growth and sustainable development.”

Taipei, Taiwan Small businesses in Taiwan are most likely to unlock hidden growth opportunities, while wreaking havoc on others during the pandemic. In a new data from CPA Australia, it shows that half of Taiwan’s small businesses grew in 2021, while 63 per cent expect to expand this year. Both results are the highest among the advanced economies included in the regional survey. 

Of the markets surveyed, includes 4,252 small business owners or senior managers across 11 Asia-Pacific markets, including 310 from Taiwan. The survey was conducted from November to December 2021, was designed to understand local business conditions, challenges and confidence. 

Based on the characteristics of high-growth small businesses from the survey, CPA Australia recommends that small businesses in Taiwan consider the following actions: increase their focus on online sales and digital transformation, seek professional advice to improve the profitability of their technology investments, and explore opportunities to innovate through new products, services or processes.

Elic Lam, FCPA (Aust.), honorary Taiwan adviser to CPA Australia, said that COVID-19 is a double-edged sword for Taiwan. Fifty-two per cent of small businesses nominated COVID-19 as a major negative factor in 2021, up from 45 per cent in 2020. However, 38 per cent also said it was a major positive influence on their business. For the second consecutive year, COVID-19 was nominated as both the top positive and negative influence on local small businesses.

“This is not a coincidence. Taiwanese small businesses in export-oriented and technology sectors such as manufacturing, transportation and information technology continue to benefit from surging global demand,” Lam explained. 

Lam added, “The rise of the Otaku (“stay‑at‑home”) economy in Taiwan has boosted domestic demand for computer and internet-related devices, delivery services and gaming. Many small businesses have grasped these opportunities, even under strict social restrictions. However, tourism-related industries such as retail and hospitality registered relatively weaker performance due to a drop in local consumption and overseas travellers.” 

In response to COVID-19 last year, Taiwanese small businesses were most likely to reduce capital expenditure to 27 per cent, followed by seeking government support and subsidies 22 per cent. 

The government’s relief measures aided many small businesses to overcome major COVID-related challenges last year. However, with small businesses facing a new COVID-19 outbreak, increasing costs and the possible end of government support in June, they should be proactive in transforming their business model, especially increasing their focus on digitalisation.

Last year, several Taiwanese small businesses improved their digital capabilities. In 2021, 45% of businesses reported receiving more than 10% of their revenues through new digital payment technologies, a new high for Taiwan. Another 45% reported that online sales accounted for more than 10% of their revenue last year, which is a new high for Taiwan. These rates, however, were still well below the survey averages of 65 and 61 percent, respectively.

Aside from digitalisation, the survey findings indicate that high-growth small businesses in the Asia-Pacific were more likely to focus on innovation. It’s pleasing to see expectations to innovate in Taiwan this year rose to a record high of 67 per cent.This is further evidence that COVID-19 has caused many businesses to look for hidden growth opportunities. 

Lam emphasised, “Stimulus voucher programs such as the ‘5000 Quintuple Stimulus Voucher Program’ were successful initiatives that not only helped to stimulate the local economy but also accelerated the adoption of digital payments. The government may consider introducing similar stimulus measures to continue encouraging adoption of technology and to boost Taiwan’s digital economy. 

Manila, Philippines – Amidst a strong recovery from COVID-19 in 2021, small businesses in the Philippines are bullish about their growth for this year, new data from CPA Australia shows.

According to the data, 65% of respondents reported growing and 41% increased employee numbers. This can be attributed to the fact that there has been evident strong customer satisfaction and business strategy. Over the past three years, respondents nominated customer loyalty and improved customer satisfaction as the top factors positively influencing their businesses.

Leslie Leow, general manager for emerging markets at CPA Australia said, “To stand out from competitors and win more customers, it’s pivotal for micro, small and medium-sized enterprises (MSMEs) to adopt a customer-oriented strategy. This will assist them to provide the products or services customers’ demand.”

He added, “Filipino small business owners are typically young, vibrant and skilful at using digital technologies in their business and to engage with customers and potential customers.”

The data also noted that 91% expect to grow, far outstripping the survey average of 62%. Around 45% stated they will introduce a new product, service or process to the market in 2022, while 62% expect to hire more employees. Both results are the second highest among all surveyed markets. In addition, 62% of respondents expect revenue from overseas markets to grow, outperforming the region.

“The Philippines are investing resources in revitalising industries hard-hit by COVID-19, such as tourism and hospitality. With border restrictions set to relax this year, foreign tourists and opportunities from overseas markets should spur MSMEs’ confidence and expansion prospects,” Leow added.

Aside from the pandemic, increasing costs remains the biggest barrier to Filipino small businesses. Materials costs (42%) and utility costs (39%) were the costs that caused the most detriment.

In terms of financing, 66% of respondents sought external funds last year while 80% expect that they will require additional funds this year. Covering increasing expenses was one of the major reasons for seeking finance. Financing conditions improved significantly for Filipino businesses in 2021. About 38% of respondents found access to finance ‘easy’ or ‘very easy’, up from 13% in 2020. However, this result is still below the survey average of 46%.

Leow further explained, “Easier access to finance is most likely due to the strong shift by local businesses to family or friends as their main source of finance, which was up from 21% in 2020 to 45% in 2021. The survey shows that family and friends are typically the easiest source for finance to access. While the Department of Trade and Industry Philippines released a total of PHP5.9b this year to MSMEs, funding roadblocks are still hindering local MSME’s growth.”

Kuala Lumpur, Malaysia – With Malaysia aiming to attain a ‘high technology nation’ status by 2030, small business culture in the country, with one in four of Malaysian SMBs planning to introduce a new product or service this year locally or globally, according to a survey from CPA Australia.

According to CPA Australia’s Malaysian Digital Transformation Committee Chairman Bryan Chung, the findings on Malaysia’s innovative culture are encouraging when compared to small businesses from Australia, Hong Kong, New Zealand, Singapore and Taiwan.

“The findings are indicative of a new generation of entrepreneurs who are tech-savvy, innovative and eager to promote what their business has to offer, both to the region and the world. Malaysian respondents are typically younger with 55.9% under 40, compared with the survey average of 45.2%,” he said.

Chung also added that business owners’ mindsets have shifted, which augurs well. Business owners are now motivated to pursue technological innovations for long-term growth as opposed to short-term survival.

“The focus on technology is reflected in cybersecurity preparedness, with 40.1% of local small businesses reviewing their cybersecurity measures in the past six months, while 38.5% expected their business will be cyberattacked in 2022,” he added.

Reflecting the tech-savvy nature of many Malaysian small businesses, eight in ten earned revenue from online sales and 62.5% received more than 10% of their sales through digital payment options such as Grabpay, Alipay and iPay88. Given the impact of COVID-19, it is not surprising that of those that sought external finance in 2021, close to 55% sought it for business survival and nearly half found that accessing finance was challenging.

Chung further explained that the reasonable rate of technology investment is heartening against a highly challenging business environment where survival and sustainability is paramount. Of the businesses surveyed, close to 40% invested in technology and said their investment improved their profitability. While for some it may have been a knee-jerk response, the positive business outcomes will to a large extent, validate continuous investments.

“This demonstrates that Malaysia’s small businesses are generally pretty good at adopting technology into their business, however there is room to improve. We suggest that more small businesses seek information and advice to ensure they adopt the right technology solutions for their business,” he concluded.

Hanoi, Vietnam – Small businesses in Vietnam are most likely to invest in technology in contrast to their SMB counterparts in APAC during 2021, new data from CPA Australia shows.

This focus in investing in technology was evident by the fact that seven in ten of the Vietnamese SMB respondents expect to grow this year, the third highest result in the Asia-Pacific. Strong investment in technology and government support are likely to be key drivers of this turnaround.

In addition, Vietnam’s small businesses are the most likely to increase their emphasis on online sales and up their investment in technology in reaction to COVID-19. This change saw the percentage that earned more than 10% of their revenue online jump from 60% in 2020 to 73% in 2021.

Of the markets surveyed, Vietnam was most adversely impacted by the pandemic, with 78% of small businesses nominating it as their biggest barrier to growth last year. In response, many local small businesses invested in improving their business, with 44% increasing their investment in technology and 42% shifting to online sales. Both results were the highest of the markets surveyed.

Can Van Luc, chair of North Vietnam Advisory Committee at CPA Australia said, “While 2021 was a difficult year, 45% of Vietnamese small businesses still managed to grow. Under the government’s dual goals of ‘preventing the pandemic and promoting socio-economic recovery’, inflow of foreign direct investment has grown steadily over the past year–up by 9.2% in 2021. Recovering domestic and overseas demand, together with government policy support, have bolstered small businesses operations and accelerated their digital transformation.”

The data also noted that 60% of Vietnam’s small businesses stated they reviewed their cybersecurity protections in the past six months, nearly double the 32% recorded in 2020. Further, 42% sought professional advice from IT consultants or specialists in the past 12 months.

“Threats of cyberattacks are on the rise as small businesses digitalise. [Around] 64% of respondents are concerned that their business could be cyberattacked in 2022. Given that our country has increased the pace of the development of its digital economy, small businesses should keep investing in capabilities to safeguard themselves against increasing malicious cyberattacks. Measures such as enhancing cybersecurity and consulting IT consultants are crucial to protecting vital assets and customer data,” Luc added.

Hong Kong – Amidst a looming fifth wave of COVID-19, small and medium enterprises in Hong Kong are confident that they will overcome it, according to the data collected by dual studies conducted by CPA Australia.

The data shows that in order for these SMEs to overcome the fifth wave, small businesses may need to increase their investment in technology and innovation, and reset their business strategy. In it, 55% of respondents to the March poll were confident that their business or employer will overcome the fifth wave, with 57% expecting revenue will largely remain the same as normal or grow in the next three months.

Meanwhile, 42% of respondents believe that the relaxation of social distancing restrictions will have the most positive impact on their SME in the next three months, followed by the Employment Support Scheme (18%) and Consumption Voucher Scheme (12%).

Lastly, when asked which areas of their business were most negatively impacted by the fifth wave, over one-third (35%) nominated business operations, followed by cash flow (26%).

Janssen Chan, chairperson of CPA Australia’s SME Committee for Greater China said, “We are aware that many small businesses are suffering during the fifth wave of COVID-19, but they are also demonstrating resilience and adaptability during this period.”

He added, “The pandemic is a major catalyst for transforming business models and consumer spending patterns. In Hong Kong, more consumers are purchasing online and using digital payments. With social distancing restrictions set to relax from mid-April and the roll-out of stimulus measures such as the e-consumption vouchers, small businesses should continue innovating, digitalising and updating their business plans to ensure they are best placed to rebound in the second half of 2022.”

There was also an increase in the number of local businesses that found their investment in technology in 2021 improved their profitability (40% in 2021 compared with 25% in 2020). Revenue generated from e-commerce also increased. Over half (53%) generated more than 10% of their revenue from e-commerce in 2021, the highest result for the city since 2017.

“Although Hong Kong small businesses overall may still fall short of the survey average in technology adoption, another positive to emerge from the 2021 results was that more small businesses embraced digital transformation. This bodes well for the future with the survey results showing that high growth small businesses are significantly more likely to be using digital technologies in many aspects of their business,” Chan concluded.

Jakarta, Indonesia   Despite being hit hard by COVID-19 in 2021, Indonesian small businesses beat their Asian-Pacific rivals in business growth, in part because of their high e-commerce penetration, according to a report by  CPA Australia. The report notes that this growing trend is set to continue until this 2022.

TheAsia-Pacific Small Business Survey polled 4,252 small business owners or managers, including 301 from Indonesia, in 11 Asia-Pacific markets to understand business conditions and confidence. As a result of the pandemic, Indonesian small enterprises were the second most likely to be adversely impacted. Seventy-two per cent of Indonesian respondents named COVID-19 as the most damaging factor to their firm.

When asked about how they had coped with the pandemic, 45 per cent of respondents stated that they had transferred their business online. E-commerce is becoming increasingly important to businesses, with 68 per cent of respondents reporting more than 10 percent of their revenue coming from online sales in 2020. In 2021, 61 per cent of businesses plan to utilise social media to promote their products and services, up from 51 per cent in 2020.

In 2021, seven out of ten Indonesian businesses expect to see a rise in revenue, making the country the region’s business growth leader. When it comes to creating jobs, small enterprises outnumber the larger corporations. Respondents predicted that they will increase their workforce by 35 per cent in 2021.

Dr. Adi Budiarso, chairman of the CPA Australia Indonesia advisory committee at FCPA Australia and the director of the financial sector policy centre at Indonesia’s ministry of finance, said that 2021 was a very challenging year for small businesses in Indonesia because of the pandemic.

“Nonetheless, I am proud to see the resilience and agility of Indonesia’s small businesses. The survey findings not only show their skill in sustaining business operations but also growing through the use of e-commerce. Government assistance programs such as PEN program and Rumah BUMN no doubt assisted with this,” Dr. Budiarso said. 

Strong business forecasts for the year 2022 are a direct result of these competencies. Eighty-seven per cent of those questioned believe their companies will grow this year, making Indonesia one of the most upbeat markets studied. Since many want to hire more workers, this is the most common outcome of 51 per cent.

Indonesians are the second most likely to believe that they will require outside funding in 2022, with 91% of those polled believing this to be true or very likely. 60.8% will look for outside funding to help their firm develop. However, only a quarter of those polled believes that getting a loan will be simple or very simple in the future.

Dr. Budiarso emphasised, “Micro, small and medium enterprises (MSMEs) are major contributors to our economy and employment. A friendly financing environment would enable them to keep expanding. According to the survey findings, banks are their primary source of finance. New rules issued by Bank Indonesia should encourage local banks to increase their lending to MSMEs from June this year.”

New Zealand – Amongst small businesses in New Zealand, about 33.2% grew, compared to 41.9% that shrank, while 56.1% expect to grow in 2022, which is an improvement from last year but still lags the average of 61.9%, according to a new survey by professional accounting body CPA Australia.

The new survey reveals that small businesses in the country continue to be significantly less likely to earn revenue from online sales. More than 35% do not earn any revenue online, compared to just 1.3 % of businesses in Mainland China.

Moreover, the same survey found that NZ small businesses were also the third least likely to begin or increase their focus on online sales as a reaction to the pandemic. Also, nearly 30% made no investment in technology in 2021, compared to just 5.2% of surveyed businesses in Vietnam.

Meanwhile, more than 35% of NZ small businesses have not adopted new payment technologies such as Apple Pay, Paypal or buy now pay later, compared to 0.1% of Mainland Chinese businesses, and about 36.8% did not use social media for business purposes, compared to the survey average of 17.2%.

Gavan Ord, CPA Australia’s senior manager of business policy, noted that results are somewhat surprising given the country’s success in limiting the impact of COVID-19 in 2021.

“Improved expectations for 2022 reflect a more confident economic outlook, along with a higher percentage of small businesses intending to invest in innovation and exporting. However, the economic environment has become more challenging for NZ small businesses recently, with inflation and interest rates rising, oil price shocks from Russia’s invasion of Ukraine, and the effects of Omicron still reverberating throughout the economy,” said Ord.

He further shared that a possible explanation for the lower levels of technology investment by NZ small businesses is the poorer short-term returns they deliver. Of those businesses that did invest, only 32.3% said the investment improved their profitability, compared to the survey average of 53.6%.

“This demonstrates the need to improve the digital skills of our small businesses and for them to seek advice to ensure they adopt the right technology solutions for their business,” added Ord.

CPA Australia noted that another possible reason for a relative lack of investment in digital capability is the demographics of the country’s small business sector. New Zealand was the second most likely of the 11 markets surveyed to have respondents aged 50 or over, and only 24.8% of respondents were aged under 40, against a survey average of 45.2%.

The survey also shows that New Zealand small businesses do, however, take the threat of cyberattack seriously, while 30.3% thought an attack was likely in the next 12 months, about 42.6% reviewed their cyber defences in the last six months, comparable to the survey average of 46.7%.

Moreover, the responses to questions regarding external funding and business growth appeared in part to reflect the different government policy responses last year to the pandemic. Some 45% of NZ small businesses required funds from an external source in 2021. Of those, only 24.8% sought funds for business growth, while 40.4% said they sought funds for business survival. 

New Zealand was also the only market in which ‘government grant or funds’ was the most cited source of funds with 28.4%, and only 24.1% said a bank was their main source of external finance. 

Meanwhile, only 28.1% of NZ small businesses expect to increase employee numbers in 2022, this is a sharp improvement in 2021, when only 11.3%t of businesses expected to increase their staffing levels. 

“This result reflects stronger growth expectations for 2022, but achieving it may prove difficult for many businesses due to labour shortages”, said Ord. 

He added, “Year after year, the survey results show a clear connection between increased investment in technology and digital capability, and business growth. That helps explain why many New Zealand small businesses are confident they will grow faster in 2022 than they did in 2021.”