Enhancing the venture capital ecosystem

Prime Minister Datuk Seri Anwar Ibrahim holding of a plaque during launching the KL20 Summit 2024 at Kuala Lumpur Convention Centre. with him DPM Dato Sri Fadillah Yusof (2nd left) Minister of Mosti Chang Li Kang (1st left) , Minister of Economy Rafizi Ramli ( 2nd from right) and Minister of Digital Gobind Singh Deo (Right) (22/4/202). —AZHAR MAHFOF/The Star

KUALA LUMPUR: The government has launched a wave of passes, geared towards supercharging the venture capital (VC) ecosystem and fostering a conducive environment.

These initiatives are not only aimed to attract VCs to the country, but also bolster both international and local startups.

Economy Minister Rafizi Ramli acknowledged that the first wave of VC capital in South-East Asia has come and gone, leaving valuable lessons on business models, profitability pathways, and valuations.

“In the impending second wave of capital, Malaysia must be well-positioned to capture it,” he told the 3,000-strong audience during his keynote address at the KL20 Summit 2024 yesterday.

He described the uniqueness of the summit, whereby, KL20 goes beyond plans and blueprints, instead, it is steeped in action that went live yesterday.

These actions include the introduction of the VC Golden Pass, Innovation Pass, Unicorn Golden Pass, Graphics Processing Unit (GPU) Scheme, Innovation Belt, and Startup Single Window.

Under the VC Golden Pass introduced by the Securities Commission (SC), Rafizi said the country aims to attract world-leading VCs to Malaysia by offering incentives such as limited partner funding access, subsidised office spaces, expedited licence registrations, and exempted fees for employment passes.

“Our hope is that with more international sophisticated VCs in Malaysia, innovative startups within the country will have access to more funding, network, and mentorship that will help them cross the chasm and scale to other markets,” he said.

On the VC Golden Pass, SC chairman Datuk Seri Awang Adek Hussin said that it was designed to streamline the registration process for eligible international VCs establishing in Malaysia.

“Under this purview, the SC is introducing a green lane process to expedite VC registration from the current six weeks to two weeks, subject upon the fulfilment of stipulated requirements under the SC’s Focused Scope Assessment framework,” he said.

Moreover, he noted that the commission will enhance the vetting process to expedite the issuance of Employment Passes, facilitating the relocation of non-Malaysian personnel.

Awang Adek highlighted that as of 2023, there are over 130 registered corporations with RM17.6bil in assets under management (AUM) in the VC and private equity space.

“Combined with licensed fund managers, the AUM of the Malaysian fund management industry has grown to almost RM1 trillion as of end 2023,” he added.

As part of its commitment to nurturing talent within the capital markets, the SC will be introducing a comprehensive skills development programme tailored to professionals in the VC industry and the broader Malaysian private markets.

Meanwhile, through the Innovation Pass under the stewardship of the Malaysia Digital Economy Corp (MDEC), Rafizi said the government is seeking to expand the pool of high-skilled talent by introducing a multi-tier employment pass programme tailored for founders, senior management and tech talent.

He said this will enable the cross-pollination of ideas between Malaysians and international talent that will have a net positive effect on the ecosystem.

MDEC head of business services Razif Abdul Aziz, meanwhile, highlighted that the Innovation Pass builds upon the Malaysia Tech Entrepreneur Programme (MTEP).

“We have enhanced it (MTEP), with the aim of making it even more relevant. So, in a sense, I draw your attention to the ability to bring in your co-founders as well. So, you, as a principal, can come in with this pass and additionally, they (co-founders) as well,” he explained.

Furthermore, highly skilled talent and general talent will also have the opportunity to enter through other categories with the Innovation Pass, according to him.Aiming to establish the country as a South-East Asian hub for global tech giants, Rafizi also revealed the Unicorn Golden Pass, which will also be overseen by MDEC.

This initiative offers a package of incentives, including exempted fees for employment passes for senior management, subsidised rental, concessionary tax rates on corporate profits, relocation services and a startup concierge that handles backroom registration at the start.

“We want to attract global unicorns to Malaysia, so that high-skilled and high-value jobs are created, besides developing a pipeline of future entrepreneurs and senior leaders in tech,” he said.

Rafiz also emphasised a significant feature of the programme, noting that a dedicated account manager will be provided.

“So, what does that mean? You can call on the account manager, which will become the gateway to all MDEC’s services. This is to ensure that you are not in the dark in terms of what is the status of something,” he said.

Recognising the importance of robust artifical intelligence (AI) infrastructure, Rafizi emphasised its pivotal role in attracting top talent to Malaysia.

Therefore, he highlighted the focus on enhancing this infrastructure, such as securing greater capacity of high-compute chips and making GPUs more affordable through the GPU Scheme.

“We want our startups and tech firms to work on breakthrough solutions at the forefront of AI technology, and giving the necessary infrastructure to do so is key,” he added.

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