A perfect 10 – this was Malaysia’s score in terms of performance and market reach in the Global Startup Ecosystem Report 2020 (GSER 2020). Kuala Lumpur was ranked 11th in the Top 100 Emerging Ecosystem category, and scored 9 for talent and 8 for funding.
Furthermore, the Global Innovation Index 2020 ranked Malaysia second after China for most innovative country in the upper middle-income group category.
These are not a ‘flash in the pan’ achievements but a testament to the boom the nation is experiencing in the tech industry in recent years. The startup culture and entrepreneurship have gained greater relevance, with players catching up with their global counterparts.
Even more, the growth of tech startups has impacted the Malaysian economy positively, creating many new jobs and contributing to the nation’s Gross Domestic Product (GDP).
But as you know, nothing comes easy. The concept of being an ideal startup hub has been a race, especially among emerging countries and Malaysia is a rising contender.
The government is fully aware that facilities go a long way towards attracting startups and so we offered speedy processing, improved infrastructure and increased accessibility. It is noteworthy to say that our success so far has been due to multi-ministerial efforts and no one entity can be singled out.
It is also worth noting that Malaysia’s fast-growing Equity Crowdfunding (ECF) and Peer-to-Peer (P2P) Lending spaces, as well as the number of angel investors are a testimony of growing interest in this vibrant ecosystem.
Malaysia, as at June 30, 2020, launched a total of 106 ECF campaigns, raising some RM110.26 million. During the same period, as many as 10,824 P2P campaigns were launched, worth over RM798.32 million raised.
Our home-grown startups are making a name for themselves. Players like Aerodyne, Carsome, EasyParcel, Fave, Grab, iFlix, Kaodim and Pop Meals (previously dahmakan) are some examples of companies riding on the bandwagon and causing disruptions. Recognising the role of startups, the Ministry of Science, Technology and Innovation (MOSTI) is on a mission to groom the country’s startups to propel them to the global arena.
Game change in the new norm
As in most unexpected turn of events, COVID-19 did not spare Malaysia. The crisis has brought the country’s economy to its knees, impacting many Malaysians and businesses. The one-two punch has proven a major struggle for startups, especially in terms of capital and demand.
Despite this gloom, many Malaysians rose to the occasion. Product manufacturers and service providers that were previously operating physically, shifted their operations to digital.
According to an online report in November 2020, a survey by Malaysian Global Innovation Centre (MaGIC) revealed that about 10% of the 168 startups in the country ceased operation, namely in consulting, services, lifestyle, fashion, events, marketing and advertising industries.
Sixty-one per cent of them suffered more than 50% decline in revenue due to the pandemic while 74% have benefitted from various government incentives like wage subsidies and grants. The survey also noted that most of the startups desired financial aid.
These aids were disbursed in three economic packages by the federal government since the first in March last year. They are the RM250-billion Rakyat Economic Stimulus Package (PRIHATIN), RM35-billion Short-Term Economic Recovery Plan (PENJANA) and RM15-billion Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI). These packages acted as “the kiss of life” for Malaysians in various sectors and categories.
The government came in as a white knight introducing these incentives to assist them to manage their cash flows. However, financial assistance alone is not enough. Startups need to be creative and innovative, foster collaborative partnerships with other players, as well as larger corporations, government agencies and investors.
This drove the government, through MOSTI, to launch the National Technology and Innovation Sandbox (NTIS) designed to accelerate Malaysia’s goal to become a high-tech and high-income nation. Initiated under PENJANA, the NTIS helps support and intensify efforts to develop technological fields and accelerate R&D and commercialisation of local technologies.
The advantage is NTIS allows researchers, innovators, startups and high-tech entrepreneurs to test their products, services, business models and delivery mechanisms in a live environment with some relaxation from all or selected regulatory requirements.
Contributing to the nation’s wealth
Technology development and innovation involves several phases beginning with the ideation phase to product development and pre-commercialisation, before finally reaching the commercialisation phase. The difficult part for every researcher and innovator is to commercialise their R&D products as various challenges need to be addressed, which may involve high costs as well as support from various parties.
Thus, this is where MOSTI plays a role through the Malaysia Commercialisation Year (MCY) initiative, to accelerate the commercialisation of research and development funded by the Malaysian government. From January 2016 to December 2020, a total of 386 products/technologies/services were listed under MCY Special KPIs with a sales value of RM402.5 million.
Moving forward with its success, this initiative enters the MCY Goes Global stage or MCY 3.0, focusing on global commercialisation of R&D. To enable this to happen, the development of the country’s commercialisation ecosystem is being enhanced with the collaboration of the quadruple helix parties: the government, academia, industry players and the public at large.
Synergy among all stakeholders is important to strengthen Malaysia’s position as one of the main producers of R&D products with the appropriate aid or interventions identified.
As we know, the STI sector is evolving rapidly and we simply cannot rest on our laurels. Like the age-old saying goes, change is the only constant. So, the coming decade will bring about a new phase for the development of STI.
The government recently launched the National Policy on Science, Technology and Innovation (DSTIN) 2021-2030 aiming to address the issue of innovation inefficiency.
In efforts to make Malaysia a high-tech nation with a Gross Domestic Expenditure on Research and Development (GERD) to GDP of 3.5% by 2030, MOSTI has identified 10 key socio-economic drivers with 10 global leading science and technology sectors to lead and empower Malaysia’s economic growth.
Dubbed the 10-10 Malaysian Science, Technology, Innovation and Economic (MySTIE) Framework, it emphasises strategic collaboration between government, industry, academia, and society, especially in local technology development through research, development, commercialisation and innovation (R&D&C&I) to ensure STI benefits everyone.
Furthermore, towards increasing the GERD to 3.5% from the current 1.08%, the R,D,C&I ecosystem is further strengthened with the launch of the Malaysia Grand Challenge (MGC) early this year. The MGC is supported by five R&D funding schemes amounting to RM220 million.
The schemes are the Strategic Research Fund (SRF), Technology Development Fund 1 (TeD1), Technology Development Fund 2 (TeD2), Bridging Fund (BGF), and the Applied Innovation Fund (AIF), with 114 products expected to be commercialised this year.
Expo 2020 Dubai as a pathway to global markets
To ensure Malaysia rises to the challenge of having top startups globally, we will provide the opportunity for our startups and innovators, together with other industry players, to leverage Expo 2020 Dubai and connect with global players and markets.
The world expo, themed ‘Connecting Minds, Creating the Future’, will take place from 1 Oct 2021 to 31 March 2022 in Dubai, UAE, with 192 participating nations and organisations. Throughout, the Malaysia Pavilion will host specially-curated 26 weekly thematic business and trade programmes.
MOSTI and its agencies, Technology Park Malaysia and Cradle Fund, will debut the programmes with the ‘Commercialisation - From Lab to International’ Week and ‘Creating Tomorrow's Sustainable Start-ups’ Week respectively. The programmes’ participating companies include those in the ICT, Advanced Engineering, Advanced Material, Biotechnology, Agriculture, Healthcare, Cosmetics and Medical Technologies sectors.
This goes hand-in-hand with MCY 3.0’s intention to bring our industries to global markets and put Malaysian innovators, researchers and startups on the global map. And MOSTI is not the only ministry taking the lead in bringing our startups and SME to the forefront at Expo 2020.
The Ministry of Entrepreneurial Development and Cooperatives (MEDAC) will spearhead 19 startups and SMEs during its ‘Start up Local, End up Global’ Week at Expo 2020. The programme’s objective is in line with Strategic Thrust 4 of the country’s National Entrepreneurship Programme (NEP 2030) to accelerate economic growth through innovation-driven enterprises. MEDAC’s week will focus on Artificial Intelligence (AI), Technology & Innovation, Medical and Health, and drone-related services.
Themed “Energising Sustainability”, Malaysia Pavilion will promote over 10 sustainable industries during its trade and business programmes at Expo 2020 Dubai. They comprise the sectors of Education; Youth & Technopreneurship; Trade, Industry 4.0 & Smart Manufacturing; Science, Technology, Innovation & Environment; Sustainable Agriculture & Agricommodity; Tourism & Culture; E-Commerce and Communication Technology, Halal Industry and Islamic Banking.
Over 200 companies, startups, SMEs, innovators, technoprenuers, social entrepreneurs and GLCs will participate as business delegates. Malaysia’s overall participation at Expo 2020 is led by MOSTI with the Malaysian Green Technology and Climate Change Centre as implementing agency.
Datuk Ir Dr Siti Hamisah Tapsir, Secretary-General of the Ministry of Science, Technology and Innovation, is the Commissioner-General for Malaysia at Expo 2020 Dubai.