Growing Global Start-ups in Malaysia

The global start-up economy is immense, amounting to USD3 trillion in terms of value, a figure equivalent to the GDP of a G7 economy. According to Startup Genome[1], seven out of the top 10 largest companies in the world are in technology. There is no doubt that the inexorable pace of the economy is heavily reliant on digital and technological advancement, and this has been further accelerated by the pandemic. Hence, for a sustainable, resilient recovery to take place, the development of a tech enabled start-up ecosystem is vital.

Malaysia has the advantage to be a hub for global start-ups. In fact, Startup Genome has acknowledged the country’s potential by citing Kuala Lumpur (KL) as an attractive destination for start-ups in its Global Startup Ecosystem Report 2020.

The city was ranked 11th among over 250 other emerging ecosystems, due to its relatively low costs and robust government support. Recently, Southeast Asian used car marketplace Carsome Group has become Malaysia’s first technology unicorn as part of a share-swap deal that will see the startup take a stake in iCar Asia Ltd.

Among the nation’s digitalisation efforts, including the development of a start-up ecosystem, is the recently launched Malaysian Digital Economy Blueprint (2021-2030). The target is to attract 5,000 start-ups by 2030, and to pave the way, MIDA and MDEC have collaborated to establish the Digital Investment Office (DIO) to facilitate digital investments as well as attract start-ups and potential unicorns.

Learning from the Silicon Valley– which was just orchards and military bases in the early days to becoming today’s gold standard tech hub, Malaysia is continuously undertaking aggressive efforts to elevate the start-up ecosystem in the country. The focus is on nurturing a robust ecosystem which include a deep human resources pool, top-notch research universities, vibrant business infrastructure and a strong culture of accepting failures as positive experiences. In achieving this feat, academia and industry players are urged to jointly contribute in enhancing other enablers such as talent and innovation, market environment and availability of funding and facilitation.

Malaysia has long realised the importance to generate more home-grown talent to fuel growth in the tech sector and provide platforms to attract global tech talent to grow together. While an emphasis on Science, Technology, Engineering and Mathematics (STEM) has been embedded in the Malaysia Education Blueprint (2013-2025), the triple helix model of innovation could be further strengthened. This includes greater collaboration in areas such as closer alignment between workforce development programmes and tech sector needs, as well as providing greater access to coding and computing education in schools and higher learning institutions. Our public universities such as UTM and USM are already leading the initiatives that include spinning off tech start-ups and driving local tech consumption instead of dependence on imported technologies.

[1] Startup Genome is a research and policy advisory organisation, based in the US that focuses on start-up ecosystems.

As Malaysia is very much a part of the global supply chain, the country is well-positioned to serve as a testbed and provide access to various marketplaces. Industry players are encouraged to leverage on this by considering potential collaborations with start-ups from a new business collaboration model perspective, instead of focussing on dollars-and-cents alone. Large local manufacturers in the Electronic Manufacturing Services (EMS) and Electrical & Electronics (E&E) sectors are setting a good precedent. There is a growing trend of these companies grooming start-ups towards a win-win situation. For example, our local companies such as KOne Technology Berhad and Aemulus Corporation Sdn. Bhd. have developed programmes known as KiasuLab and Leap-OPad respectively to nurture local start-ups in the country. Given that larger companies have more resources, start-ups could tap into the available facilities to save cost and be more focused on turning their concepts, innovation or ideas into viable products.

Moving forward, the democratisation of tech ecosystems have seen the rise of Asia-Pacific as the home to some of the world’s leading tech hubs. Startup Genome stated that the region now plays host to 30% of the world’s top ecosystems, compared with 20% in 2012. As one of the leading emerging start-up ecosystems, Malaysia is capitalising on this trend where all stakeholders – the government, academia and industry players work hand in hand to build upon the current strengths and bring it up to the next level. The region’s start-up scene is heating up and burgeoning opportunities are becoming evident. There is no time like the present to explore Malaysia as an ideal location for global start-ups to grow and find success in the region.

Source: MIDA e-Newsletter July 2021