Small businesses turn to tech as insolvencies loom

AFTER laying off six of his eight staff at the onset of the coronavirus pandemic, owner of vegetarian eatery Tea Villa Café in Singapore, Abhishek Rathod, was in a bind.

Rathod and his remaining staff were sometimes juggling as many as half a dozen online queries and takeaway orders at once.

So the company expanded its use of automated bots, from Singapore-based IT company Jumper.ai, to handle the most basic questions.

Liberated, Rathod turned to navigating the shoals of the pandemic like developing two-for-one promotions that would work through his inventory of more than 100 different types of tea.

“We needed to focus on how we were going to increase sales,” Rathod said.

From cafes in Singapore to neighbourhood “sari-sari” convenience stores in the Philippines, micro, small and medium-sized businesses are struggling.

The number of insolvencies of small and mid-sized enterprises in Asia will rise 25% by next year, according to the International Finance Corp (IFC), the private sector sister organisation of the World Bank.

At stake is a segment that employs as much as 97% of the workforce, as is the case in Indonesia.

But the pandemic has also accelerated the penetration of tech among those smaller businesses left standing, as they adopt or double down on automated bots, online ordering and cashless payments.

Indonesian payment platform OVO, for example, has said that e-commerce traffic through the platform has more than doubled and the number of new users has jumped nearly fourfold since the start of the pandemic in March.

Still, conditions will be tough for now. Some 60% of Indonesia’s SMEs may close in six months, according to a UN report released on Tuesday.

Getting more businesses online may help. If businesses in the developing world went online at the same rate as their peers in richer countries, it would add US$2.2 trillion (RM9.16 trillion) in GDP and 140 million jobs, the IFC said.