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Shoppers use hand sanitiser as a stallholder checks a customer’s temperature outside a store during a partial lockdown in Kuala Lumpur, Malaysia, last month. Photo: Bloomberg

Coronavirus drives Southeast Asia digitalisation push, raising jobs fears

  • Businesses across the region have been forced to rethink their operations and find new ways to reach out to customers amid pandemic lockdowns
  • Governments have also offered funds to help with firms’ digital transformation, sparking warnings that some jobs might ‘simply disappear’
Third-generation greengrocer Al Hafiz Abdul Rashid was struggling to keep his business afloat after Malaysia entered a period of partial coronavirus lockdown in March. With shops shut and residents staying at home, sales had slowed significantly – giving him the idea of bringing his business online.

“At first, I thought why not? You don’t hear of market vendors using an app to sell their fresh produce,” said Al Hafiz, whose family has sold vegetables, traditional spices and other goods at the popular Taman Tun wet market in Kuala Lumpur for some 20 years.

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After signing up to an initiative from ride-hailing app Grab designed to help market vendors in Malaysia and Indonesia sell goods online, Al Hafiz said he has received 10 times the number of orders he did before the pandemic – with as many as 40 orders placed in one particularly busy 15-minute period.
Businesses across Southeast Asia have been forced to rethink their operations and find new ways to reach out to customers as antivirus restrictions are slowly eased across the region and residents adapt to what governments are calling the “new normal”.
A worker wearing a protective mask checks a customer’s temperature at an entrance to a grocery store in Kuala Lumpur last month. Photo: Bloomberg

This shift to doing business online is reflected in a survey by management consultancy McKinsey & Company which found in April that 58 per cent of shoppers in Malaysia and 74 per cent of those in Vietnam now opted to do their grocery shopping online.

In Singapore – one of Southeast Asia’s biggest e-commerce markets – some 3,500 businesses have embarked on digital transformation projects from January to April this year, according to Enterprise Singapore, an arm of the trade ministry – 20 per cent more than the same period last year.

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Melissa Tan, who owns a waste management firm in the city state, is among those eager to embark on such plans. “Waste management companies rely heavily on workers and with Covid-19, we need to rethink our reliance on workers, and the adoption of technology,” she said.

After the coronavirus reached Singapore’s shores, Tan’s plans to digitalise some of her firm’s processes were expedited and she is now gearing up in case a second wave of infections hit.

A man pushes a cart filled with waste cardboard boxes to sell for recycling in Singapore. Photo: AFP

She said she hoped to ultimately go entirely paperless by automating most of her company’s administrative workflow. Other parts of the business are harder to automate, but Tan said she was studying the use of autonomous vehicles and robotics to replace some of the company’s 100 employees, including drivers who go to residential areas and shopping malls to collect waste as well as those in charge of sorting, segregating and processing recyclable materials.

Across Southeast Asia, governments have committed huge sums of money to helping businesses complete their digital transformation. In Singapore, Finance Minister Heng Swee Keat announced last week that S$500 million (US$359 million) would be committed to support businesses digitalise as part of a S$92.9 billion stimulus package, while Malaysia has pledged some 700 million ringgit (US$163.9 million) to help small and medium enterprises make the move online.

The pandemic has forced businesses to recognise the urgency with which they need to upgrade parts of their workflows, according to Boh Wai Fong, a professor of information systems at Singapore’s Nanyang Business School.

This is especially true for businesses that require customer interaction “because of the inability to physically meet customers or have their storefronts open”, she said, noting that the move online is most evident in the education and food delivery sectors.

Machines can work 24 hours a day, for seven days a week, without human interaction and no need for medical leave
Melissa Tan, owner of a Singapore waste management firm

New technology is also being adopted by the retail, services, and food and beverage sectors at an accelerated rate, said Lawrence Loh, an associate professor of business administration at the National University of Singapore.

He said one of the major driving forces behind the digital push, which he described as inevitable and long-delayed, was changing consumer patterns. Pointing to how social distancing rules would likely stay in place even as many countries ease their lockdown measures, Loh said the trend towards doing business online was “irreversible now” – though the level of digitalisation in any given country will depend upon existing infrastructure.

Singapore, for example, could see businesses embrace the government’s Smart Nation plans to evolve across the digital spectrum, while in Indonesia, where the online economy has been booming in recent years, businesses are more likely to reach out to customers using smartphone applications and the internet, said Boh, the information systems professor.

The difficulties of digitalisation were alluded to by Singapore’s Prime Minister Lee Hsien Loong, who noted in his Labour Day speech this year that the pandemic could pose structural challenges to the city state’s economy. “Some industries will be disrupted permanently. Companies will have to change their business models to survive. Some jobs will simply disappear,” he said.
Singapore Prime Minister Lee Hsien Loong. Photo: EPA

Tan, the owner of the waste management firm, said she expects her company’s investment in technology and artificial intelligence to put about 60 to 70 per cent of the people she currently employs as manual labourers out of work. “Machines can work 24 hours a day, for seven days a week, without human interaction and no need for medical leave,” she said.

Boh, the information systems professor, said the threat posed to jobs by advances in technology was nothing new, but pointed out that the process of automation is as likely to create new opportunities as it is to destroy them.

“From the past, we can see that when technology comes into the picture, people’s focus and work tend to shift to other more value-added paths,” she said.

For business administration professor Loh, meanwhile, it is up to employers to decide how they train their employees so their skills complement technological advancements, as “technology plus labour would give firms greater potential and possibilities”. “We have reached a point where digital is the only way out and moving forward, to put it into perspective, it’s either Zoom or doom,” he said, in reference to the video conferencing software that has seen an explosion in popularity since the beginning of the pandemic.