Malaysian start-ups must be empowered to go global - investor

Photo: Malaysian Global Innovation & Creativity Center by FongCL (Own work) [CC BY-SA 4.0, via Wikimedia Commons

KUALA LUMPUR - Start-ups in Malaysia shy away from global expansion and are too dependent on the Southeast Asian market, says New Zealand-based AIPC Limited managing director Sudhir Shreedharan.

AIPC recently acquired a stake in Malaysia-based digital media start-up Loonaq Sdn Bhd that runs Islamic content marketplace IslamicTunes.net. Shreedharan was previously Asia Pacific managing director of Germany headquartered Music2Deal.com, a marketplace for the music industry.

AIPC's interest in Loonaq is to expand the company into Indonesia, Thailand, Vietnam and Philippines and provide strategy and marketing advise to develop IslamicTunes. 

Shreedharan said Malaysian start-ups lack the drive to innovate and the ability to scale their operations as most of them seem contented to be serving familiar markets that are closer to home.

“Traditionally, Malaysian start-ups have been dominating the developing markets in Southeast Asia. (This) could be the reason for their comfort levels both in terms of business culture as well as understanding of the market segments. But with the right push, Malaysian start-ups have [an] extremely strong position within the global halal start-up ecosystem,” he said.  

“This initiative needs to be nurtured along with international or strategic partners. Otherwise, Malaysia could lose its edge to other global start-ups. I hope that the relevant government agencies will take this seriously and build on the strong and extremely friendly geo-political as well as socio-political position Malaysia has built over the years within the international business community,” he added.  

NATIONAL DRIVE

To reinforce the Malaysian government’s commitment in pushing for innovation and technology, 1.5 billion Malaysian ringgit ($370 million) was allocated to the Ministry of Science, Technology and Innovation under the national budget 2016 to make Malaysia a competitive regional technology hub.

The country has declared 2016 to be a “Malaysian Commercialisation Year” to boost commercialisation of research and development products and services in all sectors.

“I hope start-up incubators and other relevant government agencies [are] more proactive in hand-holding start-ups. There is definitely [a] need to [have] a certain level of relaxation in bureaucratic practices and policies when it comes to nurturing any start-up ecosystem,” said Shreedharan.

He observes that Malaysian start-ups need more than just funding to go global.

“I personally don’t think financial capability is the biggest stumbling block or a deal breaker. [But] I do agree that the start-ups and the grants that support [them] are lacking the capability to combat challenges of certification and policy requirements in developed economies. They also lack the relevant understanding and expertise to overcome those challenges,” Shreedharan said.

PUSH FACTOR

In order to help Malaysian start-ups address requirements in developed economies, last year Malaysian start-up and entrepreneurship program MaGiC (Malaysian Global Innovation & Creativity Center) formed a partnership program with U.S.-based VC firm 500 Startups to help Malaysian start-ups work on specific growth goals. The program hopes to launch 100 graduates in three years.

“I think Malaysia has a very promising start-up ecosystem. Put that together with an innovative halal community and you have a very vibrant and potentially disruptive halal ecosystem. We also envision Malaysia playing a key role in defining the halal start-up ecosystem. However, a lot more needs to be done to make this ecosystem sustainable,” said Shreedharan.

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