Southeast Asia is going through what might be termed a golden age of digital transformation and technology investment. A rising middle class and digital penetration have brought about a demographic and innovation boom. Southeast Asia’s growth market for tech investments has been red hot in recent years, as E-commerce and its ancillary sectors – payment and logistics – have exploded.
Apart from that mobility/transportation, artificial Intelligence, food-tech, enterprise solutions, and IT services have seen significant investment in recent years. For several years now, Singapore has been the standout story when it comes to entrepreneurship, capitalising on its banking and industrial base to create an unrivalled tech hub for startups in SEA.
Countries like Indonesia and Vietnam are catching up as they witness the renaissance of a new middle class fuelled by strong GDP growth. A noteworthy trend in these markets is the inflow of foreign money from Japanese, Chinese, Singaporean and South Korean VC funds which has influenced startup growth. Significantly, global leaders and technology innovators from the EU and US have expanded to the Asian market and launched their operations with a high rate of success.
Malaysia: a thriving startup tech ecosystem in Southeast Asia
Currently, the Malaysian tech startup ecosystem early-stage investments are powered largely by domestic capital and conglomerates. With all the right moves the country has been making as a key player in the ASEAN, they are able to compete with other global cities in terms of success.
Rising consumer spending and increasing interest from foreign investors are coming together with targeted government support programs, to create the perfect conditions for the development of large-scale innovation and technology hubs.
Malaysia is now displaying all the right indicators to point to a high growth trajectory. Malaysia’s GDP per capita ranks 2nd within the SEA region so it certainly represents a lucrative market for foreign investors.
Especially significant in a country where business and commercial activities are still mainly offline and traditional, Malaysia has improved its regulatory environment by establishing clear laws and regulations. These provide protection to businesses in areas like intellectual property rights hiring and contracts. Malaysia ranks second in ASEAN for ease of doing business.
The country can boast of a vast and versatile pool of potential talent, a valuable factor for tech startups and companies looking to attract talent. With English widely used in the country, it is not surprising that Malaysia has become the choice for several foreign entrants to establish their regional operations here.
Moreover, the pandemic has been a boost for digitalisation in the Islamic finance sector. In a post-COVID world where many banks are facing the pressure to digitise their offerings, the country has enormous potential as an emerging global Islamic fintech hub. As financial institutions shift out of the culture of doing technology in-house, Malaysia is poised to be the big gainer in this digitisation agenda.
Islamic banks and financial institutions looking to ally with fintech startups to develop new services are sure to find Malaysia a very attractive proposition. Thanks to the legacy of Islamic banking and regulatory environment, Malaysia’s $3Bn Islamic fintech market is set to expand exponentially with 25 Islamic fintech startups already operating in Malaysia.
MyStartup Hub (MSH) Programme as a catalyst for regional expansion
The Malaysian Global Innovation & Creativity Centre (MaGIC) is the country’s apex agency tasked with the discovery and development of technology startups and leverage Malaysia’s strong positioning in the regional ecosystem to foster a vibrant startup ecosystem in the country. Through various programmes they have since 2014 helped over 100,000 entrepreneurs.
The MyStartup Hub Programme (MSH) is envisioned as a soft-landing programme for startups from around the world who want to establish a business hub in Malaysia. Collaborating with Malaysian ministries and agencies, MyStartup Hub provides help in company incorporation, local talent acquisition, and market access.
High-value late-stage startups from anywhere in the world can establish a presence in Malaysia as a gateway to access ASEAN’s marketplace. As international markets open amidst the post-pandemic recovery, MSH has doubled its reach from last year. In 2021, MSH will assist 20 high-growth global startups with innovative technology looking to expand in and through Malaysia.
Selected start-ups undergo a structured 12-month programme where the business model is validated and they receive in-depth guidance on the business incorporation process, hands-on mentoring, local talent acquisition and access to the Malaysian market by facilitating meetings with local partners, suppliers, distributors and clients. MaGIC offers financial incentives to start-ups that fulfil the commitments under the MSH programme. The programme aims to support Malaysian talent secure employment at MSH startups.
How Malaysia’s diverse market makes it a conducive gateway to Southeast Asia
Malaysia is perfectly positioned as the most favourable entry point for global startups to get to know how to do business in the region. A cosmopolitan country where most people speak 3 or 4 languages — Malay, Chinese, Tamil, and English – Malaysia’s unique cultural mix represents a potentially lucrative market of tech-savvy consumers. Business-friendly regulations and processes make it easy to launch a company and thrive with skilled low-cost talent. Malaysia ranked 2nd among ASEAN nations in the 2019 WEF Global Competitiveness report.
High skill levels combined with digital economy growth are translating into higher disposable incomes in a country where access to digital devices is already higher than in Singapore. A highly educated workforce and youthful multicultural consumer demographic make it a great place to test and refine business models for the wider region.
Companies entering Malaysia get access to a ready-made network of business partners providing high-value business support services, and access to top-notch logistics and infrastructure. Easy access to Singapore and its financial resources is another reason why Malaysia is the right launchpad to the wider Southeast Asia market.
With 650 million people spread across a vast geographical area, SEA is a challenging but highly attractive market for foreign unicorns and tech startups. Thanks to its size, digital penetration, rising income levels and stable business environment, Malaysia makes an ideal testbed to understand how they can succeed in SEA.
The Malaysian government signalled its intentions to build a digital economy and attract foreign investment with the establishment of the Malaysia Digital Economy Blueprint (MDEC) to lead the charge. Significant digitalisation goals have been set with large allocations announced in the latest budget. MDEC projects a 22.6% contribution to GDP by 2025, leading to 500,000 jobs created within the digital economy.
MyStartup Hub Programme 2020
The main objective of the programme is to empower participating startups with hands-on assistance with company establishment paperwork, hiring of talent, and local market access. This allows them to build a strong team for ASEAN operations, sales & marketing, R&D by employing strong local talents.
Priority areas for program selection are Smart Manufacturing, Smart Cities & Transportation solutions, as well as Healthtech, Education, Agritech, and Tourism innovators. The start-ups should have a clear ASEAN-focused growth plan and a track record of product development (MVP stage), performance (Above RM 1Mn annual revenue), and/or funding history.
The MyStartup Hub programme is opening its new cohort for global startups who are keen to explore the Malaysian market and expand regionally. Interested startups may visit the programme hub for more details.
This article is produced by the e27 team, sponsored by MaGIC MyStartup Hub
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