KUALA LUMPUR: The government will simplify financial cross-border approvals under the Foreign Exchange Policy, enabling funds to flow efficiently based on their mandate size to ensure Malaysia remains competitive in attracting foreign venture capital, said Finance Minister II Datuk Seri Amir Hamzah Azizan.
He said that a lively venture capital landscape in Malaysia will see more startups hiring across different skill levels, creating many job opportunities for Malaysians, particularly in high-value industries.
"This growth enables and encourages continuous talent development and upskilling, strengthening both the workforce and the economy, and lifting the rakyat further up the socioeconomic ladder," he said in his speech after officiating the Malaysia Venture Forum 2024.
The minister highlighted that a diversified funding landscape, with all ecosystem players in place, namely government-linked investment companies (GLICs), private sector investors, and start-ups, are pivotal in energising Malaysia's nascent venture capital ecosystem and accelerating its evolution. "Data from Malaysia's Securities Commission reveals a critical challenge in our national venture capital landscape, an overreliance on government-related funding," he noted.
In 2022, government agencies and sovereign wealth funds accounted for nearly two-thirds, or 63 per cent, of total venture capital funding.
"While this demonstrates the government's commitment to nurturing startups, it also highlights a gap that must be addressed to ensure the ecosystem's sustainability and dynamism. An ecosystem dependent primarily on public funding will struggle to fully mature.
"This dependency not only limits the growth trajectory of startups as they evolve but also diminishes Malaysia's attractiveness to seasoned international venture capitalists," he cautioned.
Amir also said that while the country expands and strengthens its venture capital ecosystem, it is inevitable that it will encounter challenges, including the inherent risks associated with investing in innovation-driven businesses.
"Venture capital, by its nature, is not without uncertainty, it is built on a foundation of high-risk, high-reward decision-making. We must recognise that there will, predictably, be investments that do not meet their intended outcomes.
"These are part and parcel of a dynamic venture capital ecosystem. They should not deter us from taking bold steps forward.
"Instead, we must view these as opportunities to strengthen our governance frameworks, refine our strategies, and reinforce our resolve to support innovative startups that have the potential to transform our economy," he advised.
Amir added that the government stands firmly behind the venture capital ecosystem, and encourages all stakeholders - investors, entrepreneurs, and the public to have confidence in local institutions, which remain committed to balancing calculated risk-taking with sound governance.
He reminded that under the Madani economy framework, venture capital is a key focus area that aligns with Malaysia's broader ambition to raise the economic ceiling and expand the nation's economy. "Developing the venture capital ecosystem drives a pipeline of innovative, high-growth companies into indexes, increasing the market's attractiveness to investors," he said.– BERNAMA