Malaysia’s $100m startup funding in doubt as elections loom

The Malaysian government had set aside about 467 million ringgit (US$100.4 million) for tech and startup financing next year, but that amount could be revised as the country heads to the polls.

Finance Minister Tengku Zafrul Tengku Aziz tabling the 2023 federal budget / Photo credit: Malaysia’s Printing and Publications Department

The country’s finance minister, Tengku Zafrul Tengku Aziz, unveiled the allocation at last Friday’s tabling of the 2023 federal budget.

Here’s a breakdown of the allocation:

• 364 million ringgit (US$77.9 million) for “research and development” under the education and science, technology, and innovation ministries
• 50 million ringgit (US$10.7 million) for Cradle Fund, the coordinating agency of Malaysia’s startup ecosystem
• 10 million ringgit (US$2.1 million) for a venture capital fund to finance high-tech companies in the electrical and electronics industry as well as the renewable energy sector via an equity injection
• 20 million ringgit (US$4.3 million) for Mranti Technology Park, the country’s research and innovation accelerator, to focus on developing health technology and smart manufacturing
• 16 million ringgit (US$3.4 million) to state agency NanoMalaysia for the development and commercialization of nanotechnology
• 7 million ringgit (US$1.5 million) for Malaysia Techlympics 2023, a series of coding competitions for young Malaysians that tackle themes ranging from AI to sustainable innovation

Prime Minister Ismail Sabri Yaakob, however, announced the dissolution of parliament on Monday after getting consent from the king on Sunday.

Conventionally, a caretaker government can still push ahead with plans agreed upon before the dissolution. But only a new government can table the 2023 budget. This means the sum set aside for tech could either be retained or revised as the budget wasn’t passed in parliament.

Ismail Sabri’s government had set aside a total of 372.3 billion ringgit (US$79.9 billion) for next year. Financial and political analysts speaking to Tech in Asia noted that as the general elections neared, the budget was like a “carrot” dangled in front of beneficiaries ranging from large businesses and startups to poor households.

Following Malaysia’s constitution, a general election has to be called within 60 days after announcing the dissolution of parliament.

Ismail Sabri said that if his coalition party Barisan Nasional (BN) won the polls, the proposed initiatives would continue to be implemented.

But one political analyst told Tech in Asia that even if BN wins the election, this may be easier said than done.

Typically, the coalition with the largest number of parliamentary seats will decide who will lead the country in the next five years. That person is usually the president of the winning bloc or the one who commands the biggest support from his peers.

If BN doesn’t win with a supermajority or Ismail Sabri is not appointed prime minister, federal allocations for next year’s budget are subject to change or revision.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.67 ringgit