Malaysia budget: Expect more goodies for tech and startups

Dan Lain-Lain (Malay for “and others”) is a weekly column by Tech in Asia journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy, and politics. Click here to read past articles.

Tis’ the season for the national budget. Malaysia will table this next Friday and, expectedly, everyone is chiming in with their own wish lists.

Photo credit: siraphol / 123RF

I originally wanted to write about the supposed reshuffle of Prime Minister Anwar Ibrahim’s cabinet. Two local news portals – The Vibes and Free Malaysia Today – published articles on the subject for a week, only for the prime minister himself to pour cold water by saying that there was no reshuffling happening at the moment.

While saucy stories remain elusive for now, the tabling of Malaysia’s 2024 budget will continue to be a sensational topic because of the signals that’ll come from the Anwar government as to where it will channel public funds – and for what purpose.

Based on news reports and ministerial soundbites, I’m betting there’ll be some good news for the tech and startup scene. Let’s get to it:

An SME-centered budget

Steven Sim Chee Keong, one of the country’s deputy finance ministers, told the press on Wednesday that the government will put SMEs front and center.

Details are scant but Sim stressed that the betterment of SMEs is a key performance indicator of the Anwar government.

While foreign direct investments remain an important component of the Malaysian economy, Sim said the government will also focus on domestic direct investments, especially from SMEs, where these firms will be encouraged to invest in building capacity.

SMEs in Malaysia make up 38.9% of the national economy and 48.4% of total employment, according to the Department of Statistics Malaysia. This is still a small pie compared to China, where these firms make up 60% of the national economy and 75% of full employment, and Japan, where SMEs make up 55% of the economy with 70% of total employment.

One important reform in this space is the role of state-owned bank SME Corp, particularly in terms of funding startups. In 2019, the bank partnered with Malaysian VC firm RHL Ventures to launch a 100 million ringgit (US$21.2 million) fund. But that seemed to be a one-off event.

The other reform is the reactivation of the Domestic Investment Strategic Fund under the Malaysian Investment Development Authority, which will focus on local tech firms.

Emerging tech and new startup hubs

Science, Technology, and Innovation Minister Chang Lih Kang said that “there are a few areas” his ministry is looking to strengthen. He revealed a few details such as a focus on “emerging technology” and STEM education.

Chang’s ministry oversees R&D grants, especially for the deeptech sector. However, this space is fragmented and grant conditions may not reflect best practices. If the budget is going to move the needle here, a better streamlined process and better grant terms will go a long way.

EVs for the poor?

Tax and (more?) taxes

More funding for startups