17-7-2023 (KUALA LUMPUR) Malaysia’s startup industry has made significant progress, but further efforts are needed to establish the country as a startup hub, according to the Securities Commission (SC) Malaysia.
Datuk Seri Awang Adek Hussin, Chairman of SC Malaysia, highlighted the importance of deepening the pool of capital and encouraging local investors to invest in the startup ecosystem as critical areas for establishing Malaysia as a startup hub.
Awang Adek emphasized the significant role played by small and medium enterprises (SMEs) and startups in driving economic activities, contributing to half of the country’s gross domestic product (GDP).
To address the financing needs of SMEs, he stated that capital market financing offers a flexible and creative solution. It enables SMEs to raise funds and supports their growth, potentially leading to listings on the stock exchange.
Awang Adek acknowledged the challenges faced by SMEs, especially startups, in accessing sustainable funding. Traditional bank loans often fall short in meeting their financing needs, while the higher risks and lower survival rates of startups make them appear riskier to financial institutions.
To foster investor confidence and attract more capital for SME growth, Awang Adek emphasized the importance of governance, transparency, disclosures, and investor interest within the capital market.
He commended the government’s commitment to developing the Malaysian startup ecosystem, as reflected in the revised Budget 2023, which allocates RM40 billion for financing and guarantees by government agencies, particularly for micro, small, and medium enterprises (MSMEs).
Despite these initiatives, Awang Adek acknowledged that funding gaps still exist, especially in later stages of financing, commonly referred to as the “Death Valley” in the venture capital (VC) industry. To address this, matching fund programs have proven effective in attracting private investors to Malaysia, striking a balance between public spending and private capital infusion.
He highlighted the Dana Penjana Nasional, administered by Penjana Kapital Sdn Bhd (PKSB), as a notable example that leverages the expertise and networks of local and global VC managers to identify and support promising startups.
Awang Adek welcomed the launch of Dana Penjana Selangor, which reflects the state government’s commitment to fostering a thriving startup ecosystem. He encouraged the replication of such models at the state level to complement existing programs and create innovation and entrepreneurship centers in Selangor and Malaysia.
He also mentioned the growing interest from states such as Selangor, Penang, and Sarawak in supporting startups and SMEs through capital market financing. The SC is committed to facilitating a comprehensive “funding escalator” that provides startups with more funding options throughout their growth lifecycle.
Additionally, the SC has taken measures to open registration for new equity crowdfunding (ECF) and peer-to-peer (P2P) market operators, including those offering Shariah-compliant solutions. The introduction of the DIGID fund aims to co-fund innovative technology projects, advancing the digital agenda in the Malaysian capital market.
