Why Asia's SMEs hold back on AI and digital transformation
Asia runs on small businesses. Across 26 economies tracked by the Asian Development Bank (ADB), micro, small and medium enterprises make up 99.8% of all enterprises, employ 67.6% of the workforce and produce 38.7% of national output. Yet many still run on paper and spreadsheets, SME digitalisation lags, and AI is widening the gap. In South Korea, a 2024 Korea Federation of SMEs survey of 300 SMEs found only 5.3% using AI, and the obstacle cited most was the lack of AI services built for their needs.
Cost and risk add to the hesitation. In Malaysia, 2026 industry estimates put even a basic first version of mobile software at RM30,000 to RM60,000, and most SME projects at RM60,000 or more. For a first time founder, that is a large bet on one vendor. Owners are avoiding risk, not technology.
"Transformation fails on the first invoice, not on the technology," said Allen Tan Chee Hoe, Co-Founder and Chief Executive Officer of Nexawork AI. "We are not trying to reprice the market. We want to give many SMEs the confidence to take their first step into digitisation, together with more than 100 partners, so a founder anywhere in Asia can build a first digital product without betting the year on it. And we are not here to replace anyone's workforce. Our AI brings productivity to business owners and their teams, so that adoption actually happens."