Malaysia is in it to win
By Aaron Sarma October 21, 2019
- Build on track record of growing successful startups with regional footprint
- Nation poised be home to many great companies in years to come in Digital Economy
Last week, an article “When the story is greener in Australia for local tech-startups” was published by The Malaysian Reserve and subsequently was copied by some local news outlets as well. As the headline would suggest, the piece spoke to how successful Malaysian startups such as iflix are looking to Australia’s ASX to raise capital and how the regional unicorn, Grab Technologies Pte Ltd, once the pride of Malaysia, starting out in late 2011 is now known as a Singapore-headquartered startup.
This set my social media aflame with comments from various founders and industry leaders chiming in - or rather - lamenting some of the challenges we face in attracting investments, a gap in tax benefits and in the limitations of doing business in Malaysia.
Granted, some of these issues are real and as a nation, we indeed have to take steps to address them. However, from all the doom and gloom it was in the “Unicroach $250m - original,” a WhatsApp group that was set up some years ago to gather the top founders in Malaysia, that an opposing view surfaced. While it’s perhaps easy to focus on startups who have left - like prodigal sons we hope will return – it’s also easy to forget that there are in fact regional champions who have made the choice to stay in Malaysia.
These companies include Fave, EasyParcel, iStoreiSend, Applecrumby, TheLorry, Carsome, Imagine Group, Exabytes, SEAGM and Aerodyne - and these were just the names that came up in the chat group! There are hundreds of great companies in Malaysia with offices around the world, who employ thousands of people, generate billions in revenue and have attracted many more millions in investments.
When I asked why these companies have opted to stay in Malaysia, most concurred with the idea that Malaysia is a great place to start a regional if not a global business. Firstly, our multiracial, multicultural and multilingual population forces our founders to deal with finding ways to communicate and reach key communities. An issue founders in more homogeneous countries probably won’t have to think about until the day they decide to start operations in a new country.
Demographic incentives such as a strong middle class and high internet penetration (just released data from the Department of Statistics Malaysia shows that 87% of households in 2018 have access to the internet while 97.9% of Malaysians aged 15 and above have a handphone) make it easy to launch a digital business too. Some also cited that it’s relatively easy to do business and run an office in Malaysia due to relatively low labour cost but with a highly skilled talent pool. Its also quite easy to bring in foreign talent. One person also highlighted how the lifestyle is much better in Malaysia compared to other countries in the region.
And of course, in the WhatsApp group conversation, there was one guy, as there always is, who opined that the food in Malaysia is better – may be irrelevant, but I don’t disagree.
And lets not forget that Patrick Grove of Catcha Group has long been a strong advocate for Malaysia and especially on how the Malaysian middle class, which is ready to try new ideas or products quickly, helps startups to monetise quickly and receive invaluable market validation that allows them to fail quickly and change models without spending too much time going down the wrong road. Incidentally, Patrick is also one of the founders of iflix and I am sure iflix's listing outside of Malaysia will not have diminished his bullish opinion about Malaysia.
In short, many founders view Malaysia as a great place for startups to thrive. In many ways, we see Malaysia as the ASEAN sandbox. Where founders can build great businesses, expand to ASEAN and beyond.
It seems that the government is on the same page too. Look no further than Budget 2020, which doubles down on key initiatives to boost digital entrepreneurship and the ecosystem as a whole. Couple that with existing initiatives like the MSC, Equity Crowd Funding, Financial Technology Regulatory Sandbox, Angel Tax Incentives, the newly announced Global Testbed initiative - the conclusion becomes clear - the government is in it to win it. The private sector is also stepping up to the plate with Corporate Venture Capital firms being formed and accelerator programs being launched by corporations and entrepreneurs. Together, we are poised to make great things happen!
This is not the time to bemoan those who have left, and by the way, to be clear, no startup has “left” Malaysia. Some have just chosen a different market to list in for their capital needs. But their businesses are still running strong in Malaysia.
And, lest it be forgotten, the Malaysian Reserve article also mentioned that Singapore-based PropertyGuru is also going to list on the ASX. So, it is not an exclusive Malaysian problem that local startups are going to foreign markets to list.
As Malaysians, we need to build up those who are still with us. We should support our startups by using their products and services, giving feedback so they can improve and promoting them to our friends, families and foreign investors. Government can accelerate its efforts to attract investors and provide a fertile ground to grow companies. And as founders, we should certainly take full advantage of all the infrastructure and incentives provided to us. We in turn need to build great products that people love and solve real problems.
As we enter the fast-evolving digital age, Malaysia is poised to be home to many great companies in the years to come. The collective hunger of the government, corporations and founders to make that a reality is palpable.
Together, we will not only launch great companies, we will attract them and they will stay.
Aaron Sarma is a successful entrepreneur who recently exited his startup. He is one of the founders of the recently launched ScaleUp Malaysia and is currently working on several projects to help build the Malaysian digital ecosystem.