Malaysia is fast becoming a favorite business destination of many companies, especially those from the United States. One of the reasons is the locals’ facility in the English language. Another reason is the cost of living, which is lower and better than other Asian locations such as South Korea, Japan, Hong Kong and Singapore.
Regional hubs are starting to enter Malaysia because they can likewise communicate in Tamil, Cantonese, Mandarin and Hindi.
The Malaysian government introduced the New Economic Policy (NEP) in the 1970s. Its objective was to give citizens a bigger role in the country’s economy via education quotas, equity and employment. Many of the policies are still being enforced although the 30% equity from the companies to be used by Malay investors was already repealed.
Malaysia’s economy has a steady growth since the colonization ended and with the privatization acts implemented, the investment of the government in technological infrastructure has increased.
In 1996, the government launched the Multimedia Super Corridor (MSC), an area designated by the Malaysian government as a technology hub, which was built close to the international airport. It has the high speed Internet, and firms establishing in the areas are given tax breaks. This is part of the Vision 2020 of Malaysia, the objective of which is for the country to be economically self-sufficient by 2020.
The government likewise created the Malaysian Exchange of Securities Dealing and Automated Quotation (MESDAQ) market for tech-based firms in 1997. It aims to boost the financial sector. It is now under Bursa Malaysia but still acts as a sub-entity separate from the main exchange holding company.
The active participation and support of the Malaysian government led to the rapid growth of the startup ecosystem in the country, especially the technology sector.
At the turn of the century, another government-owned incentive was established, the Malaysia Venture Capital Management Bureau (MAVCAP). It is a venture capitalist organization that provides investment mainly in small and emerging ICT companies. It is now Malaysia’s largest venture capitalist company.
The government created another agency in 2003 called the Cradle Fund, which provides early stage funding for technology startups. It supported several tech companies like Xeus, a mobile network optimization tool that is now used by a number of mobile operations in Malaysia, Hong Kong, Oman and Libya.
Malaysia has established itself as a global entrepreneur hub by hosting the 2013 Global Entrepreneurship Summit and Global Youth Startup. It was attended by entrepreneurs from 50 countries.
The collaboration between Malaysia and the United States was announced during the summit. The two governments jointly created the Malaysian Global Innovation Creativity Center (MaGIC). It is planned as a one-stop shop for people interested in starting a business. The center helps people get financing from venture capitalists, incubators or banks. The center likewise provides entrepreneurs with mentoring, coaching and training and helps them in intellectual property registration.
Did you know that the high-end shoe designer Jimmy Choo is one of the most globally known Malaysian entrepreneurs? He was born in Penang, Malaysia and his father was a shoemaker who made shoes by hand. Jimmy Choo was taught by his father and he created his first handcrafted shoes when he was 11 years old. His real last name is Chow but it was misspelled as Choo on his birth certificate.
Established ecosystem for entrepreneurs
Because the ecosystem for entrepreneurs has already been established, it is not surprising that entrepreneurs entering the tech scene is popular. It’s almost a given, since there are several tech startups in Singapore and China. Moreover, social media use and Internet connectivity in Malaysia are also already firmly established. Malaysia is likewise attractive to business travelers as it is a global transportation hub. It is home to Air Asia, the best budget airline in the world. It is therefore enticing for companies who want to penetrate the Southeast Asian market or Asian market as a whole.
One of the things that entrepreneurs willing to establish a company in Malaysia should keep in mind is the strong conservativeness of the population. Thus, it is important to consider your products’ cultural impact.
Startup scene in Malaysia
Although it can be considered that the Malaysian startup scene has slow exponential growth, it is still growing steadily and investments continue to increase. The growth can be clearly seen by the number of private equity and venture capital firms in the country. In 2006, there were only 91 registered financing firms. In 2016, the number has increased to 109. In 2018, about 150 firms provide funds for startups.
The support of the Malaysian government to beckon foreign companies to have their base of operations in the country helps grow the startup scene. Entrepreneurs themselves praise the government’s efforts to establish organizations that are dedicated to help and endorse startups, such as PlaTCOM Ventures Malaysia, Malaysia Digital Economy Corporation Sdn Bhd (MDEC), Malaysian Business Angel Network (MBAN), Cradle and MaGIC.
What hinders the growth of tech startups in Malaysia is the lack of talents. This is one reason why the government is launching more initiatives and facilities for training, coaching and mentoring. Entrepreneurs are also looking for government support in the global expansion of local startups.
Despite some drawbacks, the Malaysian startup scene is seen by many as booming. For example, Storage Bloc, a family storage business was founded by twins Jessica and David Buri. Their research showed them that there would be a need for storage space as house prices in Kuala Lumpur keep rising.
They custom-designed their website and developed their online tools, including booking, management of inventory and tracking system. They cater to product-based startups, providing them with fulfilment service and valet storage. Storage Bloc offers end-to-end service that includes pickup, packing, itemizing, storage and delivery. Monitoring of stock levels, orders and deliveries can be done by clients real-time.
Many entrepreneurs are finding that startups are flexible and can respond quickly to new technological and economic developments. Because the companies are smaller, they are able to adjust their services to clients with smaller budgets. For example, Ideastogo, a company founded by Shane Loh, provides marketing, design and event management services. They compete with in-house and bigger firms that provide the same services at a higher price. They pride themselves in working closely with clients to help them build their brands.
The founder of Yoke & Theam, a firm that designs handmade shoes, thanks technology for their business success. They have an automated e-commerce site that links orders they receive to order fulfilment through their interconnected warehouse. With technology, they are able to operate 24/7.
Many of the startups use technology to find customer demographics, allowing them to tailor their products according to the needs of their clients, as well as offer them new products.
Startups to watch
Malaysia is part of ASEAN, which is the seventh largest economy in the world. It is the fastest growing Internet market, so it’s no wonder that tech companies are plentiful in the region. Malaysia wants to become one of the top countries in the list and it is already nurturing several companies that receive support from accelerators, venture capitalists and the government. Here are some that are worth watching.
- It is a car-selling platform that was launched in 2015. The company inspects and assesses the value of the car for free. The pricing is transparent, with customers allowed to create an account to view the results of live bidding. It handles all the paperwork for the sale, which they complete in five working days. Carsome has already expanded to Singapore, Thailand and Indonesia.
- The startup provides video-on-demand services in Africa and Asia, serving 25 countries. The IFlix app is available in 14 languages. Founded in 2014, the company now has partnerships with 230 studios.
- This is an online service for designer flowers and other gifts. The flowers are delivered on demand if the order comes in before their cut-off time of 1:00 p.m. Monday to Saturday. It is expanding its service to Indonesia and Singapore.
- The company is focused on providing information and instruction for living healthy lifestyles to women. It offers videos, recipes and articles in Chinese and English, adding more content on subscription basis. The company has expanded to Singapore, Hong Kong and Malaysia and plans to explore markets in Australia and Dubai.
- It is a combination of human and software involvement by preforming tasks in content moderation, data management and machine learning. It offers tools for auto routing, work automation and project management. Supahands is like a BPO and freelancer marketplace combined. It is planning to expand its services to either China or India. It would be increasing its workforce, enabling them to serve more companies in the region with different languages and cultures.
Recently, the startup scene in Malaysia received an international boost. French Tech, a global network in France is going to offer collaborative chances between French and Malaysian startups. This means that Malaysia startups will have the opportunity to work with French startups located around the world.
So, if you are interested in starting a business in the ASEAN region, which is a huge market, check if Malaysia will fit your needs and your envisioned products.
Resources: Fintech and Localization go together when expanding to international markets. Visit our free guide on Going Global in the Fintech Industry.
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