Malaysia offers ‘test-bed’ for startups seeking to scale: MDEC

The Malaysia Digital Economy Corporation (MDEC), the government backed agency trying to create a digital ecosystem in the country is unfazed by China emerging as the next technical power, with a senior executive from the firm stressing on the opportunity to collaborate between companies from both countries.

“China, being the new technology power with companies such as Huawei, Tencent, Alibaba is also exploring this region and already has a presence. We need to be able to optimize the strength of collaboration and one of the ways we have done this is through the Digital Free Trade Zone (DFTZ),” MDEC VP, Growth Ecosystem Development Norhizam Kadir told in an interview.

Chinese e-commerce giant Alibaba is setting up a trade and logistics hub in Malaysia. Oracle had recently opened its first digital hub in Southeast Asia and this facility will help small and medium enterprises (SMEs) in Malaysia, and 21 other countries in Asia Pacific, to receive access and support to the cloud solutions and resources they need to power digital transformation.

Kadir said the developments such as Alibaba setting up a logistics hub were opportunities for the agency to support Malaysian SMEs aiming to penetrate the China market. The organisation, as a pilot, is onboarding 1,500 Malaysian SMEs onto the Alibaba platform to help them expand their market reach into the vast opportunity that is China.

MDEC has been working on digital areas like encouraging talent and entrepreneurship in big data, gaming and e-commerce. Recently, it started a Data Star Programme accelerating the growth of data professionals in Malaysia. Also, it has partnered with the National ICT Association of Malaysia (Pikom) for the five-day #MYCYBERSALE this year, targeting a gross merchandise value of MYR300 million. The aim is to boost Malaysia’s e-commerce industry by generating online shopping demand and encourage businesses to adopt e-commerce.

Kadir also streesed the fact that Malaysia offered a great ‘test-bed for companies which are seeking to scale further into bigger markets’.

“Malaysia’s cost of doing business is one the lowest in the ASEAN region, and with the government’s business-friendly policies and various developmental initiatives from MDEC, Magic, Cradle and many others, it is extremely conducive for entrepreneurs to set-up, grow and scale from Malaysia,” he said.

Edited Excerpts:

How is MDEC playing a role in developing the tech ecosystem in the country. Is there an amount that has been allocated by MDEC for an annual spend in this regard? How much is it?

MDEC is guiding Malaysia’s digital economy forward based of four key pillars. We continue to grow Malaysia’s ecosystem by attracting foreign and domestic investment from tech companies establishing presence and creating values in Malaysia. The growth of local companies is also important, as they serve as the rockbed of the Malaysian economy, in particular, the SMEs.

MDEC also focuses on catalyzing digital innovation ecosystem in ensuring that digital adoption, entrepreneurship and talent development continue to be cultivated in Malaysia. The focus on propagating digital inclusivity is also a priority to ensure all Malaysians are riding on the digital economy wave and further narrowing the digital divide.

Do you believe that Malaysia is poised to become the next regional digital hub despite the presence of Singapore that has a more matured ecosystem. What would be a play point for Malaysia to attract digital entrepreneurs rather than them going to any other country in the region?

Malaysia is strategically located in ASEAN, the highest growth region in the world. Comprising 10 countries with $2.4 trillion GDP, opportunities are plentiful.Central to the region, Malaysia has the right accessibility for entrepreneurs.

MDEC made it easier by introducing Malaysia Tech Entrepreneurs Program (MTEP), a visa program that enables global entrepreneurs to establish their presence in Malaysia and later use it as a springboard to other ASEAN countries.

The country is a great representation of Asia, with a multi-racial and talented population. It is a great test-bed for companies which are seeking to scale further into bigger markets.

Malaysia’s cost of doing business is one the lowest in the ASEAN region, and with the government’s business-friendly policies and various developmental initiatives from MDEC, Magic, Cradle and many others, it is extremely conducive for entrepreneurs to set-up, grow and scale from Malaysia.

In your view what would you consider the main challenge in your journey to transform Malaysia into a digital hub. Also, how are you trying to address that challenge?

We need to be more globally inclusive in harnessing diversity to breed creativity. Being truly inclusive will not only output social good, but widen the tent to bring in more talent, ideas, and capital.

Setting a systemic level to have a funnel of talented kids – of all backgrounds to see entrepreneurship as a viable career path. They need to have hands on experience, learning through failure and success.

In addressing the challenges, we work with the private sector and work towards the establishment of digital hubs (www.mydigitalhub.my) where apart from providing incentives, we assist in enriching ecosystem by bringing anchor technology companies, market access opportunities, VCs and talent providers to attract more foreign entrepreneurs.

The MTEP also helps to make it conducive for more foreign entrepreneurs to make Malaysia home. In preparing the future entrepreneurs, we are working with the Ministry of Education and Higher Education via digital maker. This is with the aim of including computational thinking and programming as part of the curriculum. At the university level, we are working with various established universities in Malaysia to create an entrepreneurial spirit for a strong funneling of talent towards future tech startups.

Is talent scarce when it comes to digital economy. What is it that you are doing to attract talent?

As mentioned earlier, one of the key initiatives in this would be our establishment of the Malaysia Tech Entrepreneur Programme (MTEP). This initiative was designed to attract tech talents and aspiring entrepreneurs from around the globe to Malaysia to setup their startup and expand their business to the ASEAN region. Aside from that we are also working domestically in developing the talent pipeline for the future workforce.

Are there grants, funding or monetary incentives that MDEC provides. Can you give more details on that? Further, any particular success stories that you have?

There are various support from MDEC and other relevant entrepreneurial and developmental bodies in Malaysia in the form of grants, equity capital and debt ventures. We however feel that startups need more than just funding in kick starting their businesses. The developmental aspect, ranging from, capability building – equipping them with the right contemporary skills; leveraging on technology companies’ entrepreneur programmes (we are currently working with Alibaba, Microsoft, Autodesk Axiata, to name a few) to engagement with more scale-up VCs and many others are the crucial elements that we help support further.

Which particular sectors in the digital economy — fintech, ecommerce or others– is MDEC most bullish on and why? In fact, which one would you say is that anchor of digital economy in the country?

Consumer experiences have been transformed by digital convenience. The digital world has changed the way people consume content. We must accept the fact that today’s technology alters and, to a certain extent, dictates our behavior and lifestyles.

E-commerce adoption among small and medium enterprises (SMEs) is expected to grow to 50% by 2020 from 32% in 2016, driven by the sector’s increasing interest in online business. The government has launched programs to cater to this need. New initiatives which include the Digital Free Trade Zone (DTFZ), an initiative that teaches micro-entrepreneurs the strength of technology to help them scale their businesses will see more commerce activities done online and the births of more digital entrepreneurs.

The usage of big data can also help spur the growth of businesses in Malaysia. Malaysia is one of the few countries with a structured Big Data Framework to untap the value of big data. At the turning point of digital revolution, the powers of big data can be used to describe a problem, assess a situation, forecast results, and prepare solutions. Business owners, government, and citizens all stand to gain from Malaysia’s vision as ASEAN’s leading BDA solution hub.

The set up of Asean Data Analytics Exchange (ADAX) http://adax.asia/, a hub for knowledge, information, resources and collaboration for the ASEAN region. The main goal of ADAX is to develop the ecosystem, build a critical mass of talent pool in the big Data Analytics and to foster collaboration amongst businesses, start-ups, academia and professionals so that Data Analytics becomes an integral part of business innovation and decision making.

We are also working with various partners in driving digitization in critical vertical sectors such as fintech, agri-tech, health tech and smart manufacturing that would see huge leaps of transformation in Malaysia as we are working with the private sector, policy makers and regulators.

Do you see any threat from China digital players who are trying to expand in Southeast Asia. How do you feel, it will impact your journey for creating a robust digital economy in Malaysia.

China is already a strong trade partner of Malaysia and many other countries. We have always been welcoming and friendly to foreign players who are setting up presence in Malaysia and finding market opportunities in Malaysia. Big tech companies such as IBM, Dell and Intel have been in Malaysia for a long time.

China, being the new technology power with companies such as Huawei, Tencent, Alibaba are also exploring this region and already have presence. We need to be able to optimize the strength of collaboration and one of the ways we have done this is through the Digital Free Trade Zone (DFTZ). That is an opportunity to support Malaysian SMEs aiming to penetrate the China market. As a pilot, we are onboarding 1,500 Malaysian SMEs onto the Alibaba platform to help them expand their market reach into the vast opportunity that is China.

Source: Deal Street Asia