Nearly seven in 10 SMEs in Southeast Asia rely on startup capital from savings, family and friends:
SME Industry Report

  • Study uncovers the need for a solution to improve cash flow management for SMEs

  • High interest rates and dissatisfactory experiences spur SMEs to switch brands

(SME Digital Finance and Payments Behaviours: Southeast Asia Report 2023 Report)

KUALA LUMPUR, 10 October 2023 – In Southeast Asia, about 70% of SMEs (small and medium enterprises) started their business with seed money raised from their personal savings and from family and friends’ financial support. Funding from traditional banks consists of 23% while the remaining 7% turned to alternative sources such as FinTech companies. This finding stood out from a report published by Funding Societies, Southeast Asia’s largest unified SME digital finance platform.

To better understand how these businesses think, Funding Societies surveyed nearly 1,000 SMEs in Malaysia, Singapore, Indonesia, Thailand and Vietnam – all of which are countries the company operates. The report comprises respondents under the SME category, including micro (74%) and business owners themselves (63%) – surveying both customers of Funding Societies (59%) as well as non-customers (41%).

Southeast Asia’s economy is on the road to recovery, after contracting during the pandemic; and despite recent macroeconomic headwinds, the region is still less impacted in comparison to other parts of the world. These factors have brought about innovative solutions for SMEs by both traditional and digital financial companies. Yet, the abundance of choices does not mean greater ease in accessing finance.

Chai Kien Poon, Country Head of Funding Societies Malaysia, commented on the report, saying, "The SME Digital Finance and Payments Behaviours: Southeast Asia Report 2023 provides a valuable insight into the challenges and opportunities faced by MSMEs in Malaysia. It's evident from the report that the majority of MSMEs in Malaysia still rely on personal savings and family support for startup capital. This underscores the need for innovative financial solutions tailored to the specific needs of Malaysian MSMEs."

He further added, "Access to financing remains a critical concern for Malaysian MSMEs. The report reinforces the importance of FinTech platforms like Funding Societies in bridging this gap and providing MSMEs with the necessary financial support to grow and thrive. As we continue to navigate the economic recovery post-pandemic, this report serves as a roadmap for both policymakers and financial institutions to better serve the Malaysian MSME segment, ensuring they have the tools and resources they need to succeed in an ever-evolving business landscape."

Payments by SMEs: reliance on banks; transactions made locally

Bank transfer remains the most popular payment method for SMEs with nearly 90% paying their suppliers and 88% receiving payments from customers through the same method. However, cash transactions still play a big role with:

  • 51% of respondents in Indonesia paying suppliers and receiving payments from customers

  • 63% of respondents in Malaysia receiving payments from their customers

Even though the majority of transactions with both customers and suppliers were done locally, 20% of respondents indicated that cross-border transactions were important for them. This sentiment was seen strongest in Singapore and Vietnam with more cross-border transactions than the other countries.

Business Term loans, are a top choice with SMEs; while woes overpaying their suppliers 

Business term loans were cited by respondents as the most used products (49%). There were exceptions in Singapore and Vietnam though, where card payments are more common in both countries (51% and 49%).

Looking at how these products contributed to an SME’s finances, respondents cited business terms loans as their biggest contributor (41%) – Indonesia and Malaysia attributing 66% and 63% respectively. On the flipside, Singapore SMEs leaned towards credit card payments (33%).

Most SMEs surveyed were more concerned about payables, particularly their capacity to pay suppliers. More than a third of the respondents listed access to financing (including loans and credit cards) and fulfilling payments (to suppliers or vendors who may not offer flexible payment options) as their top payable issues. Other concerns included:

  • Payables monitoring and reporting

  • Getting approval for payments

  • Matching invoices against purchase orders and receipts

Singapore was the only exception, with respondents saying receiving payment from customers is a more critical issue.

Other behaviours of SMEs found in respondents

Across the region, respondents said that their biggest expenses were for daily operations (32%) and inventory and supplies (32%). However, Vietnam deviates slightly from this observation; where the largest expense after daily operations is employees’ salaries.

Low-interest rates are a significant factor influencing SMEs to switch brands, especially in Singapore. It was found that more than half (62%) of SMEs in the region are likely to switch brands due to their dissatisfaction with the experience offered – with the most likely in Indonesia and Singapore.

SME Digital Finance and Payments Behaviours: Southeast Asia Report 2023 aimed to look into the behaviours and challenges SMEs are facing and how using digital financing and payments can capture business opportunities and efficiencies.

For full access to the report, please visit Please refer to the Annex for each country’s highlights from this report. 


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Funding Societies is a SME Digital Financing Platform registered with Securities Commission Malaysia. It does not fall under the jurisdiction of Bank Negara Malaysia. Therefore, financing products of Funding Societies should not be constructed as business loan, SME loan, micro loan, term loan or any other loans offered by banks in Malaysia and it is to be deemed as an investment note as defined in the Guidelines on Recognised Markets.

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