October 16, 2023
KUALA LUMPUR – The government aims to rank in the top 20 in the Global Startup Ecosystem (GSE) by 2030, in addition to transforming Kuala Lumpur into a digital industry and startup hub for the South-East Asian region.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim said the emergence of more local startup companies are essential to accelerate the restructuring of the country’s economy.
The government has allocated RM28mil for the development of the MYStartup platform which will act as a single platform to bring startup companies together, all while simplifying business activities.
This effort is said to be in line with the National Digital Economy and the National Fourth Industrial Revolution (4IR) policy introduced to encourage digitalisation throughout the nation’s economy.
“This initiative will optimise funds amounting to RM200mil under various agency fundings and venture capital under one platform,” he said during the tabling of Budget 2024.
Hence, as an effort to internationalise local startups and increase competitiveness to penetrate the regional market, government-linked companies (GLCs) and government-linked investment companies (GLICs) will be providing funds of up to RM1.5bil.
This is to encourage startups including bumiputra small and medium enterprises (SME) entrepreneurs to venture into the high-growth high-value (HGHV) fields such as digital economy, space technology as well as electronics and electrical (E&E).
CIMB Group chief executive officer Datuk Abdul Rahman Ahmad shared his belief that in order to accelerate economic growth, micro, small, and medium enterprises (MSMEs) as well as the startup ecosystem should be supported.
Local digital wealth management startup company, Versa, also believes that this initiative is positive for the startup industry.
“It is definitely a step in the right direction and a potential game changer as it will harness more home-grown innovation and will position Malaysia as an innovative and collaborative economy to differentiate itself from neighbouring countries,” Versa chief executive officer Teoh Wei-Xiang told StarBizWeek.
He believes the amount of RM1.5bil is a good start and said once the momentum picks up and the amount of successful startups increase in Malaysia, the amount should then be increased progressively in the future.
“We hope this initiative will be successful and Malaysia can one day rival neighbouring countries in the South-East Asian region, such as Singapore and Indonesia,” he said.
As to support capital funding for startup companies, the government will be implementing three initiatives namely providing an allocation of RM100mil to Malaysia Co-investment Funds (MyCIF) as well as providing tax incentives for individual investors and angel investors.
The government’s allocation to MyCIF for a period of three years will complement the cooperation with food security initiatives, environment, the community as well as the State Islamic Religious Council (MAIN).
The collaboration with MAIN is said to open up opportunities to develop waqf assets for health, education and agro-based enterprises.
Abdul Rahman said by placing focus on environmental sustainability and food security with specific allocation for MSMEs that operate within these two crucial areas, it will help support their growth and resilience, and subsequently futureproof the socioeconomic wellbeing of all Malaysians.
On the other hand, Teoh stated that the government’s allocation into MyCIF will continue to benefit the MSMEs, especially after having funded 3635 companies in 2023.
Tax incentives for individual investors who invest in startups through equity crowdfunding (ECF) platforms will be extended via a limited liability partnership (LLP) nominee companies until Dec 31, 2026.
Angel investors will also be extended tax incentives up until the same date, as to encourage capital funding in technology startups.
“As an angel investor myself, I am glad that the tax incentives have been extended and this will motivate investors to continue investing in local startups in Malaysia,” Teoh added.