Singapore may be a regional financial centre and expat haven but it is not the only choice. I believe Kuala Lumpur has many advantages that make it the best place in Asia to grow a technology company.
At Juwai IQI, we believe in Kuala Lumpur so much that we chose to build our 1,000-person technology and data team there instead of in the nearby Merlion City. We have already begun hiring and are fitting out the new space we will grow into. We plan to move in during the first quarter of 2022.
Nor have we regretted our decision for a moment. While Singapore is well known for a range of startups, I believe Malaysia has more long-term potential and does more to encourage tech companies that can help it fulfil its ambitious plans to make its workforce one of the most highly skilled and gainfully employed in Asia.
For example, our technology team has received a warm welcome from the Malaysia Digital Economy Corporation. Our investment falls under the government’s MyDIGITAL initiative, which aims to attract investments worth MYR70 billion in digitalisation by 2025.
Government support is helpful, but no technology business would base their decision on where to operate on this factor alone. The truth is that Malaysia is already on its way to becoming one of the most important technology hubs in Asia.
With more than 32 million people, Malaysia also has an incomparably larger population of digital consumers. Most technology companies need a market like Malaysia because they depend on scale to achieve profitability. Singapore just can’t offer comparable benefits. Nearby Indonesia is larger, true, but Indonesia is also a more difficult environment, due to poor logistics and its highly unbanked population.
Malaysia has an advantage over competing locations from further afield. Simply put, if you want to operate or sell in ASEAN, you need to be based in Malaysia or another ASEAN member. This is especially important since the signing of the world’s largest free-trade agreement, the Regional Comprehensive Economic Partnership (RCEP) in November of 2020. When RCEP comes into force, it will encompass about one-third of the world’s population and nearly that much of its GDP.
Just look at some of the numbers.
Mobile penetration has ramifications for any technology company due to its impact on growth in social media, contactless transactions, online retail, digital currency, smart devices, on-demand services, 5G usage and the adoption of super-apps like WeChat, Gojek and Grab. Southeast Asia is home to 400 million mobile users. (By comparison, the US has just 276 million.)
In terms of internet users, Southeast Asia overtook all developed countries as long ago as 2017, the year in which the region passed the US. Germany, the UK and France (combined) fell behind in 2014, and Japan did so more than a decade ago, in 2010.
What’s more, new research reveals that the COVID-19 pandemic spurred rapid growth in digital adoption. In Malaysia, a survey conducted in August and September of 2020 found that 36 per cent of digital consumers are new. (Similar results are reported across Southeast Asia.)
It is no surprise that Malaysia has given birth to successful technology companies such as car-sales portals operator iCar Asia, Netflix competitor iflix and ride-sharing giant Grab. Their successes are one reason that private tech funding is soaring.
This leads to announcements such as the recent news from Malaysian private equity firm Creador, which sees excellent demand for its latest US$680 million fund, which will be invested in Malaysia and other Southeast Asian nations.
Realities like this make Malaysia an ideal environment for technology companies. Nor am I the only person who thinks so.
Microsoft recently announced plans to establish its first datacentre region in Malaysia, which will enable it to locally deliver cloud services. Microsoft’s move will create some 19,000 jobs in Malaysia. The company has also announced plans to train one million Malaysians in digital skills over the next two and a half years.
Technology employers, take note. Malaysia offers the kind of high-quality, high-skill and rapidly growing workforce that any technology company needs. If I had to name one other city in Asia where it makes sense to establish a technology team, it would be Shanghai. The Chinese powerhouse also has a highly skilled workforce, although good English skills are less common than in Malaysia.
That is why besides our Kuala Lumpur global research and development headquarters, Juwai IQI has made Shanghai our base for Chinatech R&D.
A presence in both markets gives you roots in two of the deepest beds of technology talent in the world.
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