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Insights

Malaysia initiatives for homegrown startups

By

Terrence Yooi

Government-linked investment companies (GLICs) will allocate MYR1.5 billion ($332.7 million) in 2023 to invest in homegrown startups

Malaysia's Prime Minister, Anwar Ibrahim, has announced several initiatives to ensure that local startups have access to later-stage financing within the country, reducing the need for them to seek listings abroad. During his keynote address at the Invest Malaysia event in Kuala Lumpur, he expressed his commitment to supporting high-value local startups from the early stages to listing on Bursa Malaysia, the local stock exchange.


To facilitate this, government-linked investment companies (GLICs) will allocate MYR1.5 billion ($332.7 million) in 2023 to invest in homegrown startups. Additionally, tax deductions will be provided for companies listing on the ACE market, LEAP market, and the Main Board of the local exchange. Furthermore, listed companies will be allowed to issue dual-class shares.


Anwar emphasized the government's objective of ensuring that successful startups have access to later-stage financing in Malaysia to prevent them from seeking listings abroad. This move aims to address the concern that Malaysia has lost some of its homegrown tech startups and talents to neighboring Singapore, which offers a more developed ecosystem for startup funding and higher valuations for public offerings.


The introduction of a capital gains tax has raised concerns about deterring investments. Anwar reassured stakeholders that the tax will only be finalized after extensive engagement, and it will not apply to listed shares. He also stated that the disposal of unlisted shares for approved Initial Public Offerings (IPOs) will not be subject to capital gains tax.


In support of Malaysia's journey towards achieving net-zero emissions, the government has committed MYR10 million ($2.21 million) as a seed fund for the carbon credits market. The Bursa Carbon Exchange, launched in December, has become a crucial catalyst in accelerating the transition to a net-zero future. It is the first exchange globally to receive a Shariah pronouncement for its Carbon Exchange.


To further promote Environmental, Social, and Governance (ESG) adoption, Malaysia aims to facilitate the transition and transformation of industries and local players, including small and medium enterprises (SMEs), towards ESG practices. The government is currently engaging with stakeholders to develop the National ESG framework for the manufacturing sector by 2024, enabling companies to calculate their carbon emissions and disclose standardized ESG data in line with global standards.


Bursa Malaysia, in collaboration with the London Stock Exchange Group (LSEG), plans to launch a Centralized Sustainability Reporting platform. This platform will facilitate the calculation of carbon emissions and the disclosure of standardized ESG data for both public listed companies and non-listed SMEs. It is seen as a vital enabler for Malaysia's transition to a green economy and sustainable development, while also generating high-skilled job opportunities.

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