The Malaysian government has engaged consulting firm McKinsey & Company in an ambitious plan to make the country the technology start-up hub of south-east Asia, and lure US and Australian investors. McKinsey is in the process of speaking with international venture capital firms including investment firms from the United States and has invited companies from Australia to discuss potential funding and entrepreneur partnership programs, according to Tan Sri Dr Mohd Irwan Serigar Abdullah, secretary general of Malaysia’s Treasury, Ministry of Finance. The consulting firm will deliver a report to the Treasury secretary in August, which will be used to inform the Malaysian government on the best approach to support and grow technology entrepreneurship in the country.
For Malaysia to earn its name as south-east Asia’s version of Silicon Valley, it will have to leapfrog other countries with already more advanced entrepreneurship programs and funding arrangements, including the likes of Singapore and South Korea. The Singapore government’s generous co-funding grant and equity arrangements for early stage start-ups have been able to attract global investment firms including the likes of Softbank and US VC firm, Sequoia Capital, to the region.
The Malaysian Global Innovation and Creative Centre (MaGIC) has been established in Cyberjaya, the country’s technology district, under the leadership of CEO Cheryl Yeoh.
“Singapore is known to be the start-up hub right now [in the region] because the government has made it easy for VCs to set up there … Malaysia has all the ingredients, we just need to pull it all together, Ms Yeoh said. Ms Yeoh was recruited by Dr Irwan to head MaGIC after spending 12 years in the United States, where she eventually sold a technology start-up to Walmart Ventures, the digital arm of US retail giant, Walmart.
The Malaysian government will also hope to lure Australian investors away from more mature start-up markets and towards south-east Asia’s ecosystem which is feeding a technology-hungry 630-million population. Dr Irwan said he wanted to “move fast” to make Malaysia’s mark on the global tech start-up scene.
“It’s not my ambition to create Silicon Valley, but something better than Silicon Valley,” said Dr Irwan, who is also chairman of MaGIC. Within the next three-years Dr Irwan said he wanted Cyberjaya, a satellite city located about 20 kilometres from downtown Kuala Lumpur, to be hub of south-east Asia’s technology start-up activity.
US President Barack Obama officially opened MaGIC’s headquarters in April during his first ever official visit to the country. It is also where world leaders will gather in November for the Association of South East Asian Nations (ASEAN) summit, which Malaysia will chair this year.
Successful Malaysian start-ups are likely to continue to find their way onto the Australian Stock Exchange, with the likes of iProperty and iCar already flying the Malaysian flag Down Under. Many of the largest technology IPOs and exits to come out of the region are started by Malaysian founders and Malaysian-based operations, Ms Yeoh said.
JobStreet was recently bought out by SEEK, Japanese telco SoftBank backed GrabTaxi and ASX-listed iSelect backed iMoney – all were among the biggest start-up exits in the region and originated from Malaysia. “The market is available already, you don’t have to depend on the US or Chinese market, we have the population here. The problem isn’t the market, the problem is you need the globally-competitive technology and you need the programs,” Dr Irwan said. He said partnerships are an important part of the strategy to propel Malaysia’s tech start-up hub plans. “VCs are contacting me and we are looking at ways to partner … when you partner you can learn fast,” he said.
When MaGIC came into existence in April 2012 it forged a partnership with California’s Stanford University to enable student and faculty exchange programs. MaGIC, which was funded with $50 million from the Malaysian government, will be the central point to link new and existing government funds and incentive programs together, Dr Irwan said. “We’ll have to put more [money in]. How much I’m not sure yet,” he said, adding the McKinsey advice will help address where the focus on government spending will be. “Of course we are behind when you benchmark Malaysia against Australia, Singapore, China and the US. But I don’t believe in benchmarking; if you are benchmarking you are always catching up. Rather than benchmark we are looking to find ways to make a quantum leap,” he said.
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