- Malaysia has announced a goal to create five domestic US$1 billion ‘unicorns’ by 2025 as part of its plan to become a global start-up hub
- The goal comes years after Malaysia did a U-turn on its tech ambition when it sidelined the Multimedia Super Corridor scheme
Kuala Lumpur is on the verge of making it onto the global start-up map, tech entrepreneurs say, but its ecosystem needs access to cash, talent and government backing to reach a breakthrough moment.
Malaysia’s government has ambitious targets to create five billion-dollar domestic ‘unicorns’ by next year as it seeks to retool its economy toward innovation rather than a reliance on natural resources and commodities.
Silicon Valley-based tech entrepreneur Damon Grow says local newcomers need “the right support and inspiration” to break it into the big league, which includes neighbouring Singapore.
Speaking to This Week in Asia ahead of the European start-up event ‘Slush’ in Kuala Lumpur’s Chinatown, Grow said Southeast Asia is the next growth centre of the world and Malaysia has a unique role in the heart of a region of hundreds of millions of people.
“What’s great about Malaysia is it has the population, everyone speaks English, it’s a melting pot of different cultures and different things and it’s just built for business,” Grow said.
“I think the ecosystem here is not yet ready but it’s almost there.”
Start-ups flourish with ready access to funding and talent as well as supportive government policy including tax breaks. For years, Malaysia has failed to focus on building its tech capabilities, according to industry analysts.
Yet there are signs the country’s reputation is changing with global tech firms looking to establish cloud infrastructure and data centres in Kuala Lumpur and other cities.
Last December, Nvidia, the world’s third most valuable company, partnered with local conglomerate YTL to deploy its artificial intelligence technology for a new data centre with Nvidia’s CEO Jensen Huang coming to Malaysia and meeting with Prime Minister Anwar Ibrahim.
“Why would [Huang] take time to come to Malaysia? Because the future is here,” Grow added.
Looking to grow beyond its dependence on oil and gas and commodities to a higher value chain level, Malaysia has been vying to compete in the tech start-up sector and grow “unicorns”, or privately held start-up companies each with a value of over US$1 billion.
Malaysia is not high on the radar for start-ups. Its local ride-sharing start-up, Grab, which now has a market capitalisation of over US$12 billion, relocated to Singapore in 2014 after being sidelined by the government’s sovereign wealth fund Khazanah Nasional, which backed rival US-based Uber instead.
Grab went on to receive funding from Singapore’s state investment firm Temasek Holdings, among other backers.
Slush’s Head of Expansion Stella Korpikuusi said that Malaysia’s tech roadmap could mirror the experience of Finland, which now has over 3,800 start-ups. This has elevated the Nordic country of 5 million to No 13 worldwide in terms of its start-up ecosystem, having incubated more than 10 unicorns, according to the Global Startup Ecosystem Index 2023.
“Why would anybody important come to Helsinki, [and to] a really small country in the middle of the winter?” said Korpikuusi, who is Finnish.
“Something has to start, starting something new can change the formulation of the local tech ecosystem.”
The Malaysia Digital Economy Corporation (MDEC) is driving the government’s five-unicorns-by-2025 target.
MDEC was launched in 1996 when Malaysia first envisioned creating its own Silicon Valley under the Multimedia Super Corridor scheme.
Launched to much fanfare under Prime Minister Mahathir Mohamad, the scheme fell by the wayside after his retirement in 2003 with the government focusing on other areas.
MDEC CEO Mahadzir Aziz, who was in Helsinki in November to attend the 2023 Slush event, said the Kuala Lumpur offshoot event could be a catalyst for Malaysia.
“Initiatives like KL Slush’D are the catalysts, provoking a radical shift, inspiring AI-native companies to emerge and stimulating the growth of a talent pool that thrives amid this disruption,” Mahadzir told tech publication Venture Beat last July.
Economy Minister Rafizi Ramli announced last May that the government plans to make Kuala Lumpur a regional hub for start-up companies as part of its plans to boost the country’s digital economic activities.
“The three strategic sectors that the Economy Ministry is focusing on are energy transition towards renewable energy, digital economy and food security,” the minister said.
Rafizi himself started several start-up businesses including his big data outfit, Invoke, before his return to politics in 2022.
Last December, Anwar appointed Gobind Singh Deo as Malaysia’s first minister of digital to oversee the country’s goal to become a regional tech hub.
Source: scmp.com
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