With the new focus on energy transition, technology and digitalisation, Rafizi believes the multi-application of startups will add to the complexity of the Malaysian economy. — Bernama
PETALING JAYA: The growth acceleration of technology startups and the increased conduciveness for tech companies in the country will go a long way in raising the income earning ability of Malaysians, says Economy Minister Rafizi Ramli.
He said the biggest challenge in actually overcoming the middle income trap for the last two decades or so has been the lack of complexity of the local economy.
“By and large, our economy is still very much low-skilled and based on manufacturing, and we have been having the conversation of leapfrogging the complexity of our economy for many years,” he commented.
He was speaking at the launch of the Dana Perintis by the Kumpulan Wang Persaraan (Diperbadankan) (KWAP) here yesterday, a fund aimed at injecting up to RM500mil worth of investments into Malaysia’s venture and startup ecosystem over the next 18 to 24 months.
With the new focus on energy transition, technology and digitalisation, which requires higher technology content, Rafizi believes the multi-application of startups will add to the complexity of the Malaysian economy.
He noted: “As is common knowledge, technological talents command a higher pay scale than those of other industries, hence the speeding up of startup growth means more skilled workers will be employed, and over a longer term, improving the income level of Malaysians.
“This is especially true if a startup can be scaled up quickly.”
Elaborating on the Dana Perintis, the minister said the significant allocation of RM500mil by KWAP is an important recognition that good ideas need to be supported, and more good ideas need a chance to be developed.
With KWAP putting a significant sum into early-stage startups and incubators, Rafizi opined that it is a sign that Malaysians have come to recognise that the country is the best test bed to the largest economic blocs in Asia.
“The Dana Perintis will draw international investors and venture capitalists (VCs) to set up offices in Kuala Lumpur and explore the region, bringing experienced founders and funders network that would create a chain reaction of innovative ventures.
“This is part of the building blocks as we prepare for the launch of our tech conference in early 2024, which shall congregate the world’s most renowned sovereign investors, VCs, incubators and founders.
“In that conference, the government will also announce a series of policy changes to make Kuala Lumpur the best place to build a startup, with the full commitment of the government,” he added.
Meanwhile, KWAP chief investment officer Hazman Hilmi Sallahuddin said the public services pension entity acknowledged the potential for innovation and growth within Malaysia’s venture ecosystem.He said the Dana Perintis is an initiative that serves as a testament to KWAP’s commitment in enhancing the growth of the country’s startup industry, emphasising that on top of capital, the pension group is also investing its expertise and resources to ensure Malaysian startups can succeed on the global stage.
Hazman revealed that a substantial portion of up to RM250mil from the allocation will be directed towards investing in VC funds with exposure focusing on Malaysia, who also serve as catalysts to nurture innovative startups by providing essential capital and guidance.
“Investments will span the spectrum of the startup journey, from accelerators to growth managers. In parallel to the fund investments, another RM250mil will be committed towards direct investments into promising early-stage companies,” he explained.
While the Dana Perintis has a few priority sectors to invest in, such as the silver economy, food security, education, energy transition, financial inclusion and the digital economy, Hazwan said it will not be exclusively limited to these industries.
In line with Rafizi’s call on improving income generation, he said with the launch of the Dana Perintis, KWAP is dedicated to empowering startups and small-medium enterprises while nurturing innovation.
“In fact, we have identified several potential startups to invest in, which currently employ more than 1,000 Malaysians from different backgrounds,” he said.
On a separate note, Rafizi dispelled the notion that most venture capitalists are more interested to invest in Singaporean startups compared with those Malaysian ones, pointing out that various VC groups that he is in touch with are motivated to come to Malaysia.
He observed that most of the time, VC investors are “agnostic”, and that they pursue value and scalability more than anything else.
The most essential issue is to focus on ideas and talents, as well as to build an environment that facilitates them, Rafizi said, although he recognised there were also pain points that needed to be ironed out.
“For example, one of them is for the government to streamline agencies so that it becomes a lot easier for startups to come here,” he said.
