Bold Initiatives in the Malaysia 2017 Budget : Page 2 of 2

The rise of fintech

The rise of technology startups and increased interest in Financial Technology (fintech) incubation by banks and investors alike are expected to leverage heavily on these affirmative policies for capital raising as they elevate the risk and credit profiles of these new businesses.

This is a broad-stroke step at universally enhancing the ability to seek funding, but will eventually require synergies from key ecosystem players before the sector can truly flourish – for example, banks need to revise longstanding loan policies to compete with more in vogue crowdfunds and venture capitals; platforms to facilitate more transparent valuations and assessments must similarly be conceived moving forward.

An attempt at a longer-term solution to create a sustainable knowledge ecosystem is evident through the injection of funds into the National Innovation Agency Malaysia (AIM). The longstanding transformative mandates carried out have been directed at overhauling cross-industry and public sector collaboration.

Considering the burgeoning startup ecosystem, AIM’s immediate concern is expected to be the enhancement of local IP monetization platforms under its charter, integrating with principals like MyIPO and KPDNKK.

SME development

The government has also recognised the importance of further enabling SMEs in increasing macroeconomic indicators. Small and medium-sized enterprises (SMEs) contribution to the overall GDP for Malaysia was estimated to be 36.3% in 2015, whereas it tends to be about 50% and above in high-income nations.

The US$17.7 million allocated to promote SMEs development, as well as the funding for MDEC programmes such as the e-commerce ecosystem and Digital Maker Movement, is a very positive step in this direction.

"The e-commerce ecosystem will continue to evolve in the future with the maturity of services, and the consumption patterns of the citizens. Two key areas worthy of future attention are figuring out how to retain more revenues from e-commerce sector within Malaysia, as well as encouraging global e-commerce platforms to increase investment in the country," cays IDC Malaysia country manager Vijay Sundararaman (pic, right).

There is a growing discussion on the creation of e-hubs that can accelerate SMEs output, as well as interconnectivity of these hubs globally to create a worldwide “Mega Trading Platform”, he adds.

The Digital Free Zone or DFZ concept in the Malaysia 2017 budget neatly ties into this initiative. The concept seeks to enable Malaysia-based small to mid-sized businesses to sell their products additionally through an e-platform.

Such an initiative can increase SME sector contribution to the overall GDP, while also placing Malaysia in a leadership position in the development of e-hubs globally.

However, there may be some challenges ahead. For instance, 73% of SMEs in Malaysia are lagging in adopting ICT in their business operations, which implies lack of awareness to the benefits of digital platforms in enhancing their business and elevating them from competitors.

“Given the potential this initiative alone has in helping Malaysia leapfrog into the league of high-income nations, this is possibly the most noteworthy announcement of the 2017 budget,” Nath concluded.
 
 

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