Week in Review: Property maven comes up with innovation based on digital

  • Bank Pembangunan’s CTO will have to be on his toes to handle wave of silicon and robotics
  • Still some confusion on nature of FundMyHome with chairman allaying fears

THE inaugural national budget by the new Pakatan Harapan (PH) in Malaysia was certainly interesting for the digital economy with Industry4.0 initiatives outshining internet based and funding based announcements and plans.

But I will hold my optimism until I see that the announcements made are actually executed on the ground. I am particularly intrigued, but also skeptical, of the US$718 million (RM3 billion) allocation announced for the Industry Digitalisation Transformation Fund through Bank Pembangunan Malaysia Bhd (the Malaysian Development Bank) with a subsidised interest rate of 2 per cent. This special interest rate loan is designed to accelerate the adoption of automation, robotics and artificial intelligence (AI) by Malaysian companies.

You will see interest around automation but I doubt in the coming year you will see many Malaysia companies looking to inject robotics or AI into their operations. The announcement of this allocation will however surely increase interest of companies to explore how they can practically apply robotics and AI into their operations, so that is a good thing.

Of course, I expect every tech vendor in town to slap “robotics” and “AI” to their solutions as well and that will not be a good thing. Bank Pembangunan’s CTO will have to be on his toes here.

On the funding side, entrepreneurs and industry bodies such as Pikom, the National ICT Organization are excited over the announcement of a US$479 million (RM2 billion) matching grant between GLIFs (Government-linked Investment Fund) and private sector for high growth tech companies. It is widely expected that this will have a catalytic effect on Malaysia’s tech funding ecosystem and encourage the expansion of tech companies.

Knowing how difficult it was for even the first version of this fund, when US$240 million (RM1 billion) was announced in Budget 2018, to get off the ground, I will hold my excitement until I see some of the GLIF’s come forward to allocate meaningful amounts (in the hundreds of millions) from their substantial funds, towards this. And just for the record, it was Permodelan Nasional Bhd or PNB’s then chairman, Abdul Wahid Omar who took the lead to commit US$71.8 million (RM300 million) to get the matching fund going. Of course the events post May 9 have derailed that earlier effort. But clearly the new Malaysia government sees the value of its funding institutions taking bets on promising Malaysian and regional startups. I look forward to seeing quick progress here that leads to innovative companies being funded.

And speaking of progress and innovation, hats off to EdgeProp Sdn Bhd and its chairman, Tong Kooi Ong. It seems that the world-first peer-to-peer funding concept, announced in Budget 2019 on Nov 2, to allow individuals/families to afford their own homes is actually the idea of EdgeProp. The property focused media itself is part of The Edge Media Group, a traditional media player that is trying to make the transition to adapt and benefit from digital disruption.

It was three days after that budget announcement was made that EdgeProp launched its P2P product called FundMyHome (FMH) with Malaysian Prime Minister Dr Mahathir Mohamed and Finance Minister Lim Guan Eng as guests of honour.

Actually part one of FMH was launched where buyers come up with 20% of the property price with the balance raised by FMH from institutions. The more interesting product is when the retail public can invest in the balance 80% of the buyer’s home. Naturally stringent regulatory approval is needed and EdgeProp’s Tong has made it clear that they are engaging with and will work with regulators to have this sorted by Q1 2019.

And yet, former Malaysian Prime Minister Najib Razak, with too much time on his hands, has come into the picture, insinuating, through a FB post that FMH will be funded by government.

This brought a quick rebuttal from Tong. But that has not been the end of it, for, without fully understanding how FMH works, some parties are already worried that it could end up sparking a Malaysian sub-prime crisis where non-credit worthy buyers are able to afford homes through financial chicanery.

Again, Tong came up with a quick rebuttal, explaining that FMH actually reduces the property buyer’s debt, not increases it.

The point I want to make about doing something new, something innovative that was not thought possible before is that people will first doubt it, ridicule it and try to kill it. Next comes the effort to try to understand what it really does and when it all clicks into place, comes realisation and wonderment of a solution so obvious.

That may just happen here with FMH. And it is worth noting that, before Tong was a property man, he was a successful banker who sold his bank and securities company, Phileo Allied Bank (Malaysia) Bhd, to Maybank Bhd for a cool US$311 million (RM1.3 billion) in 2000.

Here’s hoping that this bold and innovative idea from Tong, sparks other established entrepreneurs to think out of the box and come up with their own innovative, boundary pushing ideas on solving market issues.

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