Kota Kinabalu: The small and medium enterprises association (Samenta) Malaysia urges the business community to adopt artificial intelligence (AI) which is transforming how companies operate, how employees work and how businesses compete for greater success.
Samenta Sabah Chairman Dato’ George Lim said this in his speech when officiating the “Samenta 2026 AI FEST” on Monday Oct 26, 2026 at GA Space here with the theme: “Smarter Teams, Bigger Markets – The AI Playbook for Sabah SMEs”.
“At Samenta, our mission is to support SMEs in becoming stronger, more competitive and future-ready. Through initiatives such as the ‘Hyperlokal AI Fest’, we want to bring practical AI knowledge, industry expertise and business opportunities directly to entrepreneurs across Malaysia.
“We believe AI adoption should not be limited to large corporations or businesses in major cities. Every SME deserves the opportunity to benefit from AI. We want Sabah SMEs to be active participants in this AI revolution, not simply observers.
“More importantly, we want to build a business community where entrepreneurs can learn from one another, share experiences and grow together. Because business transformation is not only about technology. It is about leadership, mindset, people and execution.”Representatives of Maybank, CelcomDigi, CGC, Alibaba.com, Salesforce, Funding Societies, also spoke at the event, bringing their expertise, technology and business solutions to help Sabahan business community and empower Malaysian MSMEs in Sabah to grow successfully.
“Today, I want to share one very important message: AI is no longer the future. AI is happening NOW! The question is no longer whether AI will change our businesses. The real question is: Are we ready to change the way we do business?“We are entering a new era where artificial intelligence is transforming how companies operate, how employees work and how businesses compete.
“In the past, advanced technology was expensive and mainly accessible to large corporations. Today, AI is becoming accessible even to small businesses.
“A small company with five employees can now use AI tools to perform tasks that previously required a much larger team. This creates tremendous opportunities for SMEs in Sabah. But at the same time, it creates a new challenge.”He highlighted the new challenge of technology deflation for MSMEs: “I want to highlight something very important that every business owner must understand.
Technology improves productivity, but it can also create deflationary pressure and erode profit margins.
“Let me explain. New technology creates productivity growth in three ways. First – Reduce Input Costs. We can do the same work with fewer resources.
“Second – Increase Output. We can produce more with the same resources. Third – Create New Business Models. We can introduce new products, services and ways of doing business.
“Initially, companies adopting AI may enjoy lower costs and higher profit margins. But what happens when everybody starts using the same technology? Competition increases.
“Companies begin reducing their selling prices. Customers expect better services at lower prices. Eventually, selling prices may fall faster than operating costs. And that is when profit margins start to decline.
“Let me give you a simple example. Imagine your company generates RM10 million in annual revenue with a 20 per cent profit margin. Your operating profit is RM2 million.
“Now, because of stronger competition, your selling prices fall by 10pc. Your revenue drops to RM9 million, assuming your sales volume remains unchanged.
“Even if you successfully reduce operating costs by 5 per cent, your operating profit falls to RM1.4 million. That is a 30 per cent reduction in profit!“This is the danger of technology-driven deflation. AI can make your business more productive, but productivity alone does not guarantee profitability.
“So, as business owners, we must ask ourselves: Are we using AI simply to reduce costs? Or are we using AI to create greater value for our customers?“Because in the AI era: Reducing costs helps us survive. Creating value helps us grow.”Lim elaborated on the challenges facing Sabah MSMEs: “Today, many SMEs in Sabah are facing three major challenges. First – Rising Operating Costs. Businesses are dealing with increasing manpower costs, rental, utilities and other operating expenses.
“Second – Shortage of Skilled Manpower. Many companies struggle to recruit and retain the right talent. Third – Limited Access to Bigger Markets. Many Sabah businesses have good products and services but face challenges expanding beyond our local market.
“I believe AI can help us overcome these challenges. AI can help businesses automate repetitive work, improve customer service, increase productivity and reduce operating costs.
“But more importantly, AI can help our SMEs create new opportunities and reach bigger markets. That is why our theme today is: “Smarter Teams, Bigger Markets!”“We want Sabah SMEs not only to become more efficient, but also more competitive and more profitable.
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