Malaysia investment gateway to Asean
25 Jul 2024
Country leads from the perspective of infrastructure and stability
Malaysia is increasingly seen as the epicentre and gateway to the broader Asean region by investors, underpinned by its relatively advanced infrastructure and stable business environment.
Penjana Kapital Sdn Bhd chairman Tunku Alizakri Raja Muhammad Alias said while the country’s yield flow may not be as high as some other countries, the nation is quite advanced from an infrastructure perspective for investments compared to many of its Asean counterparts.
“There are a lot of opportunities in Southeast Asia and Malaysia. I think the country is much more advanced in terms of stability and ability for companies to conduct their business.
“We might not be as advanced as Singapore but Malaysia is definitely cheaper. This is what is generating a lot of interest among investors,” he said at a panel discussion on “Malaysia’s government-backed funds and their investment strategies” at the Tech in Asia conference yesterday.
Penjana Kapital is a sovereign venture capital fund.
Alizakri said the key question now is whether Malaysia and Asean as a whole will be able to “get its act together” to unlock the true value of Asean.
“I think this question is still being answered and this is where the Malaysian government attempts to give that perspective, with an ambition to position Malaysia as a hub for venture capital and startups, specifically for Asean. This is also taking into account that the country is going to be the chairman of Asean next year,” he said.
Alizakri said when it comes to investment, it is important to have a whole-ofasean approach and not just on individual countries.
He noted that instead of competing over ownership of companies, like Grab, countries should embrace the idea that Asean owns these individual companies
“In the early days, which was about five to 10 years ago, we used to look at what is happening in the West, and try to replicate it in Malaysia, not really taking into account that we do not have the same fundamentals.
“What worked in the United States and Europe does not necessarily work for Malaysia. Some of our companies had gone into a ‘cash-and-burn’ model.
“We should look at Asean as a whole. So if you want to go on a cash-and-burn model, start in a country which actually has its core fundamentals in place, like Malaysia. Use Malaysia as a testbed for prototypes into targeted businesses.
“Once a company reaches a certain saturation point, it can then seamlessly transition to a larger market like Indonesia where you actually scale up.
“So in that case, you will be able to unlock the true potential of Asean itself rather than any individual country in its own right,” he said.
In response to what success would look like, Alizakri said it would be when the true promise of Asean is realised, using Malaysia as a partner, given that the country is an unexplored launchpad into Asean for global funds at this point in time.
“Some people assume that when they establish their headquarters in Singapore, they automatically know the whole of Asean. This is a mistake because each country is very diversified with very different cultures, religions and practices.
“Malaysia has the potential to be a solid hub, especially for impact investmenting, because I believe this is going to be the next generator of not only financial returns but also social returns.
“I also hope, in terms of success, that at long last, we will see solid global partners who will look at Malaysia as their home.”
In a separate panel discussion on “Digital banking in emerging markets: What’s next?”, GXS Bank Pte Ltd group chief executive officer Muthukrishnan Ramaswami said while what digital banks offer is not significantly different in terms of digital capacity, their products and services have been significantly reinvented, as they have started afresh.
“Digital banks can make a big difference in the sense that users have the flexibility of putting money into a digital bank and earning interest that is much more competitive than what the big banks pay.
“What the regulators have done is to provide the central-bank guarantee or the insurance guarantee for deposits held in digital banks and therefore hold us to the same high standards as any big bank.
“So I don’t think we get any regulatory slight. The ratios are the same, we are pretty much governed like a big bank but we are able to extend services that are much more far-reaching for the underserved customers,” he said.
Muthukrishnan said the key thing for digital banks is the simplicity of products and services in bringing banking to underserved segments.
“The products are geared to cater for what I would call non-complex needs. Because most people do not have very complex needs early in their financial journey.
“The quid pro quo for that is the service costs are very low, acquisition costs are very low and we do not have a branch network, therefore our cost to service is low.
“Hence, if we can keep our costs small and if we can keep our products simple, then I believe it’s a win-win,” he said.
Boost group chief executive officer Sheyanta Abeykoon said if one were to look at digital banks that are successful around the world, having a robust ecosystem – whether captive or through a partner – is a major contributing factor.
“Ecosystems play two important roles. The first is bringing an existing customer base where digital banks can seamlessly integrate an onboarding journey or products in an already familiar environment to customers.
“Secondly, it offers data, especially of the underserved segment, that is not publicly available. This unique customer data gives digital banks a competitive advantage in our customer-centric strategies as well as in product design.
“Boost Bank is doing the same by tapping into our own and partner ecosystems to bring banking directly to our customers by seamlessly embedding our digital banking products and services within these ecosystems,” he said.
Source: The Star
