The industry 4.0 era has brought Malaysia positioning itself in which new technologies such as robotics and artificial intelligence can help humans work better.
Malaysia is targeting the forefront of Southeast Asia's vibrant startup ecosystem, with the goal of becoming a regional hub for the development of high-performing startups.
The announcement that Carsome has become Malaysia's latest unicorn adds to the country's emergence as a startup hub. The Malaysian-based second-hand car sales platform raised US$200 million in funding last year, following the lead of the country's home-grown "super app," Grab, which provides services such as food delivery, transportation, and online payment systems and is now valued at around US$10 billion.
This makes Malaysia the birthplace of some big startups.
An ideal location for startups incubation
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Furthermore, Malaysia is an excellent location for startups trying to expand. According to a report published last year by Startup Genome and the Global Entrepreneurship Network, Kuala Lumpur is the ninth most valuable city in the world in terms of ecosystem value, valued at US$16.1 billion.
The same report ranked Malaysia 34th out of 134 countries in terms of readiness to transition to a digital economy and identified fintech as a leading sector in the country's pool of startups.
Malaysia's emphasis on unicorn creation is likely to improve its presence in Asia as a favourable ecosystem for startups. According to Startup Genome, the creation of each unicorn in Malaysia can enhance the ecosystem's value by US$10 billion.
According to Malaysia Digital Economy Corporation (MDEC), the government agency leading the economy's digital transformation for 25 years, additional investments in the sector might well benefit other young companies in their stages of growth as they try to expand, as well as drive the nation's position as a regional hub for tech companies.
The digital transformation opportunity in Malaysia
During Covid-19, the crisis weakened the country's economy, affecting many Malaysians and businesses. The one-two punch has proven to be a major challenge for startups, particularly in terms of capital and demand.
Despite the darkness, many Malaysians embrace the challenge. Previously physical product manufacturers and service providers have shifted to digital operations.
A survey conducted by the Malaysian Global Innovation Centre (MaGIC) in November 2020 indicated that 10% of the 168 startups in the nation's consulting, services, lifestyle, fashion, events, marketing, and advertising sectors had shut down.
Due to the pandemic, 61% of them saw a revenue reduction of more than 50%, whilst 74% benefited from various government incentives like salary subsidies and grants. The survey also revealed that the majority of companies wanted financial support.
According to Lifenewsagency, since March 2020, the Federal government has distributed these aids in three economic incentives. The three are the RM35 billion Short-Term Economic Recovery Plan (PENJANA), the RM15 billion Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI), and the RM250 billion Rakyat Economic Stimulus Package (PRIHATIN).
By creating these incentives, the government acted as a saving grace and helped them manage their cash flows. Financial support is not sufficient, though. Startups must be imaginative and inventive to cultivate cooperative relationships with other participants and larger businesses, governmental organisations, and investors.
The National Technology and Innovation Sandbox (NTIS), is created to accelerate Malaysia's objective of becoming a high-tech and high-income nation and was therefore launched by the government through MOSTI. The NTIS, which was established under the PENJANA, aids in bolstering and accelerating initiatives to expand technological sectors and urge R&D and local technology commercialisation.
NTIS offers some benefits that meet some regulatory requirements to academics, innovators, startups, and high-tech entrepreneurs. So they can test their products, services, business models, and delivery systems in a real situation.
How does a tech company or startup contribute to the nation’s wealth in Malaysia?
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Still, according to Lifenewsagency, before reaching the commercialisation phase, the ideation, product development, and pre-commercialisation phases of technology development and innovation are all involved.
Every researcher and inventor agrees that commercialising their R&D products is challenging since there are many issues that must be resolved, often at considerable expense and with the assistance of various stakeholders.
In order to speed up the commercialisation of govt research and development, MOSTI engaged in the Malaysia Commercialization Year (MCY) project of 386 products, technology, and services with a combined sales value of RM402.5 million was included in the MCY Special KPIs list from January 2016 to December 2020.
Because of its ongoing growth, this project moves on to MCY 3.0, which focuses on international R&D commercialisation. The growth of the nation's commercialisation ecosystem is now being increased to make this possible through the cooperation of the four quadruple helix parties: the government, academics, business entities, and the general public.
With the right support or initiatives identified, synergy among all stakeholders is critical to strengthening Malaysia's position as one of the leading producers of R&D products.
The government recently unveiled the National Policy on Science, Technology, and Innovation (DSTIN) 2021-2030, which aims to address the issue of inefficient innovation.
MOSTI has identified 10 main socio-economic drivers with 10 worldwide leading science and technology industries to lead and empower Malaysia's economic growth in its attempts to build Malaysia into a high-tech nation with a GERD to GDP of 3.5% by 2030.
It implies that there is a moment for Malaysia to grow its potential in technology and startups.
What are the most common startups?
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Here is a quick summary of the typical startup kinds per industry to wrap things up. Indeed, most of them are tech-related, but there are also definitely startup chances in more “non-conventional” industries.
- Software (SaaS) and technology
- Marketing and advertising
- Healthcare
- IT
- Insurance
- Education
- Real estate
- Environmental and energy
- Retail and e-commerce
- Blockchain and cryptocurrencies
In conclusion
The government policies, the synergy among all startups, and an ideal location are the factors enhancing Malaysia in leading digital transformation. Thus, digital transformation can grow opportunities for Malaysia to contribute to the nation’s wealth through the startups or technology sector by the power of the government, academics, business entities, and the general public.
Providing technology products and services, many startups are contesting to create a beneficial and supportive environment for digital transformation. A company like Virtual Spirit promises to bring the utmost technology services and products in order to boost economic growth in Malaysia.
By creating a robust and seamless project management and team communication tool, we are committed to helping every business to thrive. Because we all understand that increased productivity equals more growth and conversion. Thus, every business in Malaysia can contribute more to the nation's wealth.
