Malaysia’s 2024 tech budget: back to square one

Dan Lain-Lain (Malay for “and others”) is a weekly column by TIA 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.

Prime Minister Anwar Ibrahim tabled the 2024 budget last Friday. Most news coverage talked about targeted subsidies, the introduction of new taxes, and the sales tax rising from 6% to 8%.

We’re a tech publication so this article will cover relevant bits to the sector. But it’ll be chunkier than usual.

I’ll break this up into two sections: a list of all the perks and goodies for startups and tech next year, followed by commentary and context.

Same, same but different?

Let’s start with some funding numbers based on Anwar’s parliamentary speech:

• 1.5 billion ringgit (US$316.8 million) from government-owned institutional investors to support “innovative and high-growth” local startups, including SMEs run by bumiputera entrepreneurs. (Important point here so do follow.)
• 200 million ringgit (US$42.2 million) to develop startups, spread across different agencies and programs.
• 100 million ringgit (US$21.1 million) for the Malaysian Co-Investment Fund (MyCIF) for three years to fund Islamic finance initiatives. These will be done in collaboration with each state’s Islamic council. (MyCIF is a fund where the government co-invests alongside private investors in MSMEs and social enterprises through equity crowdfunding and peer-to-peer financing.)
• 28 million ringgit (US$5.9 million) to develop the MYStartup platform as the “single window” for all funding programs and venture capital.
• 10 million ringgit (US$2.1 million) for research and development under three agencies: electrical and electronics under Malaysia’s Applied Research and Development Centre; space under the Malaysian Space Agency; and drone tech under the Malaysian Research Accelerator for Technology & Innovation (Mranti).

It’s worth noting that the 1.5 billion ringgit from state-owned/controlled entities is an old item tabled in the 2023 budget, just that this time round it has a bumiputera emphasis. Adding an old item into a new one is a common phenomenon in Malaysia. Main reasons are policy emphasis and to signal that said goal has yet to be fulfilled.

From Anwar’s speech, we see some structural changes as well. Two of the country’s largest state-owned VC firms – Penjana Kapital and Mavcap – have been “centralized” under sovereign wealth fund Khazanah Nasional. This means Khazanah now has oversight over the two firms.

Incentives for angel investors have been retained. Ditto incentives for individuals and nominee companies investing on equity crowdfunding platforms.

Last but not least, Malaysia will impose a 10% capital gains tax on the sale of equity in unlisted companies.

Merely cosmetic (for now)

Let’s start with the centralization of Penjana and Mavcap because this was one of the things that made rounds on social media.

We don’t have any details as to what this “centralization” will look like at the time of writing. Does it mean Mavcap and Penjana will each have a small office in the Khazanah HQ? Will Khazanah dictate how the two firms operate?

Malaysia’s twin nightmares return

Scooping gains?

Going nowhere fast