Going digital remains a struggle for MSMEs

CEBU, Philippines — Although the lure to fully embrace the online platform is too attractive for micro-small and medium enterprises (MSMEs), it remains a fact that developing countries like the Philippines are still facing bottlenecks to go digital.

According to a study conducted by International Trade Centre, entitled “ New Pathways to E-Commerce: A Global MSME Competitiveness Survey”, engaging into eCommerce or online business is too challenging as infrastructure is not yet supportive, plus the cost of putting everything online is just too high.

The survey, which polled more than 2,200 MSMEs in 111 countries, identified lack of online visibility and business knowledge, lack of technical and language skills, the high cost of membership fees in e-commerce platforms, poor internet access, limited access to finance, and difficulty in registering or complying with platform requirements, are the top common concerns why smaller businesses are having difficulties in taking advantage of the digital transformation.

If MSMEs are able to overcome these initial barriers, many move on to struggle with limited access to international e-payment solutions.

According to the survey, the limited availability of e- payment solutions was frequently reported as a bottleneck, with a visible gap between developed (14 percent) and developing countries (20 percent).

Main e-payment challenges reported in the survey include a missing link between third- party e-payment service providers and local banks, foreign exchange controls, no availability of e-payment providers, no online banking system, lack of knowledge in e- payment, and difficulty in signing up for encryption solutions.

E-commerce is transforming the global trade landscape and opening up the international market, but for MSMEs in developing countries, like the Philippines, this is still considered an uphill battle.

Countries like the Philippines, which are still developing, are facing considerable challenges preventing MSMEs from tapping into its potential, the report said.

Barriers to setting up an online international presence often limit firms to the domestic market. This matters because e-commerce offers great potential to deliver economic growth, jobs and entrepreneurial opportunities.