Opportunities in Malaysian’s startup ecosystem
The Malaysian government set a goal in 2021 to have 5,000 businesses by 2025, five of which would be unicorns. There are more than 3,000 startups at the moment. Between 2022 and 2023, there was a 42.7% increase in the number of firms registered on the MYStartup portal, which serves as a one-stop platform for startups. Despite the presence of local resources, there are still resource gaps that can be filled by cross-border resources.
5 Main Challenges of Malaysian’s startup ecosystem identified by the government
- Lack of Funding
- Lack of Required talent
- Lack of Commercialisation or Innovation
- Lack of Robust Policy
- Lack of Cross-border Resources and Opportunities
- The primary areas of concentration for public sector-led initiatives are financing, talent, innovation, and policymaking
- As a result, there is still a lack of policies to encourage entrepreneurs or increase cross-border resources
- These resources are currently offered by two primary government programs: KL20 and the Global Accelerator Programme (GAP), a part of the Malaysian Research Accelerator for Technology & Innovation (MRANTI)
- While KL20 seeks to draw international talent, venture capital (VC) firms, and other creative startups to Malaysia, MRANTI’S GAP assists startups in scaling overseas
- Enabling a globally connected startup system is crucial as businesses begin to grow because it influences the acquisition of other resources, such as talent and cross-border capital.
- Second, in addition to the Malaysian government, this offers international players a chance to access Malaysia’s market and expansion opportunities
Foreign Stakeholders
- The region with the largest FDI in Malaysia is Asia, with Singapore taking the lead followed by Hong Kong and Japan
- In line with Malaysia’s focus area for startups, a key sector for FDIs is manufacturing (especially for Japanese FDI)
- As such, Singapore, Hong Kong and Japanese players are gradually emerging in the startup space and tend to offer cross-border resources like funding and innovation resources
Innovation Gaps
- Currently, Malaysian startup innovation is mainly driven by local stakeholders like conglomerates, incubators and accelerators or government-led innovation initiatives
- As such, a major innovation gap is stakeholders that can link Malaysian startups with global partners in global markets. For example, Khazanah works with Plug and Play, a Silicon Valley innovation platform who has partners including startups, investors and other corporations
- However, the programme is mainly meant for Malaysian corporate innovation needs. For Malaysian startups that want to scale abroad, they are mainly reliant on MRANTI’s GAP as one of the few options available
Conclusion
Foreign players with vested interest in the Malaysian economy have been entering the startup scene since 2023. With the small number of domestic capital players and over-reliance on Malaysian government, global VCs can help to plug the funding gap. Additionally, Japanese and Hong Kong players are offering routes for Malaysian startups to scale abroad.
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