Discuss: Alibaba’s digital push in Malaysia is a double-edged sword

Jack Ma and Prime Minister Najib Razak (second and third from left) / Photo credit: Alibaba

Discuss features short but strong and insightful opinions on interesting startup, entrepreneurship, and tech topics. Got a topic or question to suggest? Drop us an email or leave a comment.

It has been a good year so far for the Malaysian business ecosystem with developments like the City Brain and a positive growth outlook. But startups there still face pertinent issues (e.g. lack of tech talent and startup-corporate collaborations), and recently, there were worries on the potential harm that Alibaba’s initiatives could bring to Malaysia’s small businesses.

See also: Jack Ma opens Malaysia’s ‘digital free trade zone’ with an eye to Southeast Asia’s ecommerce boom

We asked founders and investors about the state of Malaysia’s startup scene. Here are their insights.

Editor’s note: Answers have been edited for clarity.

Mohd Ridzwan Nordin, venture partner at Monk’s Hill Ventures

There are two initiatives that I think will bode well for local and foreign startups. One is the RM 1 billion (or US$256 million) fund-of-fund (FoF) aimed at attracting more VC funds to encourage local institutions and corporates to become active investors in VC funds. There are tax incentives to sweeten the initiative.

Second was the Regulatory Sandbox. The goal is to encourage various regulators in the country to think differently and formulate new policies in anticipation of disruptive technologies.

Challenges

First up is talent. Hiring high-quality talent is a big challenge, and this may take time to solve. The government is taking the right step forward by introducing computational thinking and computer science in primary and secondary schools.

Another common issue revolves around capital availability. In Malaysia, there are plenty of avenues to raise pre-seed and seed funds—angels, equity crowdfunding platforms, and grants. But once they are ready to scale, they may find it difficult to locate series A investors in the country. The FoF initiative described above will go a long way in addressing this funding gap.

Let’s discuss