Regional governments know moving small and medium enterprises towards newer technology will boost productivity and grow the overall economy. This is why they are offering grants and other carrots to encourage such initiatives.
By the myBusiness techblog team
It is a well-established fact that many small and medium enterprises (SMEs) rely heavily on IT to better compete with the bigger businesses in their respective fields, but many tend to hold back on regular IT upgrades or adopting new tech because of the costs and expertise needed.
These concerns have not gone unnoticed by Asian governments. In fact, many of them are developing or have developed policies to spur the adoption of new technology among the SMEs. We take a closer look at what three such countries – Singapore, Malaysia, and Hong Kong – are doing to boost ICT uptake among local companies.
Singapore
The city-state has been one of the foremost proponents for ICT adoption among local businesses in the region. In this year’s Budget, for example, the government once again enhanced the Productivity and Innovation Credit (PIC) scheme to offer more financial incentives for businesses to raise productivity through training and IT usage.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in February this year that for businesses spending a minimum of S$5,000 in PIC activities in a year will receive a one-for-one cash bonus capped at S$15,000 per year. This will be paid over and above existing PIC benefits.
The PIC scheme offers a 400 percent tax deduction on up to S$400,000 spent on a range of productivity-related expenses such as training or procurement of equipment, including IT resources.
Such government initiatives resulted in Singapore being one of only two Asian cities named in the list of top 20 startup hubs globally, according to a 2012 study by Startup Genome and Telefonica Digital. It was ranked 17th, while India’s Bangalore came in at 19th.
Malaysia
Across the Causeway, Malaysia is also actively encouraging companies to increase their ICT adoption.
One of such pro-IT policies is the Accelerated Capital Allowance (ACA), which provides an initial allowance of 20 percent and an annual allowance of 40 percent for expenditure incurred in acquiring computers and other IT assets including software, according to the Malaysian Investment Development Authority (MIDA).
It also stated that time allowed for ACA claims between Year of Assessment 2009 and 2013 has been accelerated from two years to one. For companies that engaged IT consultants to improve their management and production processes, they are also entitled to a single deduction of operating expenditure although the exact amount is not stated.
Hong Kong
The Special Administrative Region of Hong Kong is another strong advocate of equipping local workers to be proficient at cutting edge technology.
Its Innovation and Technology Commission, for one, is offering a New Technology Training Scheme to companies that wish to have their employees trained in a new technology that would be useful to their business. These new technologies include “those which are not widely applied in Hong Kong and the absorption and application of which will significantly benefit” the city, the website stated.
Such initiatives are especially crucial in sectors such as its electronics industry. The ITC noted its electronics industry is facing “severe competition” from Mainland China’s enterprises in the lower end market, while those from Japan, South Korea and Taiwan pose challenges in the higher end.
“Most Hong Kong manufacturers are SMEs engaging in OEM (original equipment manufacturer) business. They generally do not possess very strong technological capabilities in product innovation or manufacturing processes, and are cautious in investing in R&D (research & development) of new technologies,” the ITC noted.
“They may be losing out to their competitors if they do not upgrade their technological capabilities quickly.”