Malaysian economic development
In the 1970s, the Malaysian government controversially implemented the New Economic Policy (NEP) that aimed to give Malays a larger place in the economy through employment, equity and education quotas. Though large sections of the policy is still in effect, fortunately,the mandate that companies had to set aside 30% of its equity for Malay investors has recently been repealed.
Unlike many other emerging markets, Malaysia has experienced a steady economic growth since the end of colonization, averaging 6.5% per year from 1957 to 2005. A steady stream of privatization acts have lead to increased government investment in technological infrastructure.
Government commitment to the advancement in technological infrastructure culminated in the launch of the Multimedia Super Corridor (MSC) in 1996 [pictured above]. The MSC is a government-designated area meant to create and entice tech firms to help build a technology hub through the provision of infrastructures such as high-speed Internet, tax breaks and its proximity to the nearby international airport. It was considered revolutionary for its time. Until 2002, it was more convenient to get high-speed Internet access from Kuala Lumpur than in London. The MSC was developed as a result of the Government’s aim to achieve Vision 2020, a government plan to achieve self-sufficiency in its economy by 2020.
In 1997, the financial sector was given a boost with the creation of the Malaysian Exchange of Securities Dealing and Automated Quotation (MESDAQ) market, a securities market for tech-based companies. It has since been absorbed by a larger exchange holding company, Bursa Malaysia, but still functions as a separate sub-entity re-named the ACE market.
Malaysian business startup ecosystem
Since the formation of Vision 2020, the Malaysian startup ecosystem, particularly tech-based companies have grown rapidly. The government has played a very strong role in the formation of the tech industry.
In 2001, the Malaysia Venture Capital Management Bureau (MAVCAP) was formed. MAVCAP is a government-owned venture capitalist firm that invests in principally small and emerging ICT firms. MAVCAP has since become the largest VC firm in Malaysia.
Since 2003, tech entrepreneurs can also tap into the Cradle Fund, a gov-owned agency that provides early stage funding in all manners of tech startups. Cradle Fund is a nest of RM $150m (USD $50m), has seen numerous successes such as Xeus, a tool for mobile network optimization that has been used by operators from as far as Hong Kong and Libya.
The entrepreneur scene also feature many community events and programmes such as BarCamps, Startup Malaysia and 500Durians.
Malaysia has slowly started to establish itself as a global entrepreneur force, hosting the Global Entrepreneurship Summit and Global Youth Startup in Kuala Lumpur in 2013. This summit saw entrepreneurs from 50 different countries coming together to discuss the future trends of entrepreneurship.
It was this also at this summit that the Malaysian government announced its collaboration with the US government to create the Malaysian Global Innovation Creativity Centre or MaGIC. This centre has been envisioned as “a one-stop shop for entrepreneurs – with everything from getting financing from banks or venture capital to incubators for developing start-ups; from intellectual property registration to facilities for training, coaching and mentoring.
Malaysia is no stranger to entrepreneurship, with numerous figures featuring prominently regionally and globally. Jimmy Choo is perhaps the Malaysian entrepreneur that most Western audiences are most familiar with. Jimmy Choo is globally renown for his line of high-end designer shoes that have been worn by numerous celebrities and even UK royalty. US Secretary of State John Kerry confessed Jimmy Choo to be his favorite Malaysian entrepreneur.
With such an established ecosystem for entrepreneurs to thrive, it is perhaps of no surprise that the tech scene can be seen to be relatively crowded. We can consider this especially so, given the influence and presence of startups from nearby tech powerhouses like China and Singapore.
The proliferation of tech startups has been helped much in part of the fact that Malaysia has been quite established in Asia in terms of Internet connectivity & social media use with a 61% internet penetration.
Curiously enough for a developed and modern nation, Malaysia still remains strongly conservative. With the government largely controlled by the conservative party UMNO, there is a strong traditional culture that runs through Malaysian society, particularly among the Malay population. Companies entering the Malaysian market should be wary of any possible cultural impacts of their products.
Malaysia is also a considerable transportation hub, comparable to Singapore with its competitive pricing. In fact, an increasing number of people, including Singaporeans, have turned to Malaysia for the regional and global travelling needs. Malaysia currently hosts the world’s best budget airline company, AirAsia. AirAsia, founded in 1993 boasts a fleet of 135 aircrafts with plans to deliver 352 more. With cheap transportation amid an established global position, Malaysia has presented itself as a strong global transportation hub.
With strong government support for budding tech startups, its modernized economy and an established reputation as a regional and growing global hub, Malaysia is easily an attractive option for companies attempting to penetrate the Asian and/or South East Asian market.
You can find back our BRICS startups series here, with amazing stories from Brazil, Russia, India, China and South Africa