This article first appeared in Digital Edge, The Edge Malaysia Weekly on January 27, 2025 - February 2, 2025

I am sure that when you read the headline of this article, you wondered why I would be bullish about Malaysia. Well, here’s the surprise — it is not actually me who is bullish, but rather our neighbours down south in Singapore. While this initially took me by surprise, perhaps it shouldn’t have, given that Singapore-based venture capitalists (VCs) have been visiting Malaysia and scouting for deals for at least the past 12 months.

In early December 2024, I led a delegation of start-up founders and CEOs from the Soonicorn Collective — a growth and leadership programme for founders — to Singapore for our annual trip. Our goal was to explore new opportunities and learn from some of the city state’s top start-up CEOs and VCs.

During our visit, we met with several VCs, including Jeffrey Seah of MSW Ventures, Carmen Yuen of Vertex Ventures (both significantly funded by Singapore’s sovereign wealth fund Temasek), and Shannon Tan and John Wisnioski of Wavemaker Partners (also partially funded by Temasek).

Do you notice a common thread here? Temasek has been a major player in the venture capital space for the past two decades, consistently funding venture capital firms and highlighting how crucial government funding can be in this industry. More importantly, all of these VCs expressed strong optimism about Malaysia’s potential and indicated a keen interest in ramping up their investments in the country over the coming years.

We also engaged with the Action Centre for Entrepreneurship (ACE), hosting a networking dinner and panel session with its members — primarily start-up founders, VCs and professionals who support both VCs and start-ups. The event was well attended by individuals keen to learn more about developments in Malaysia and explore potential collaborations with Malaysian start-ups, both on a regional scale and in the local market. While not everyone was as well versed in the Malaysian ecosystem as the VCs we met, there was clear enthusiasm for Malaysia’s growing opportunities and a desire to participate in its expansion.

One of our most interesting sessions took place at Block 71, Singapore’s renowned start-up hub, akin to Cyberjaya but compressed into a few blocks of repurposed industrial buildings. Block 71 now hosts about 250 start-ups and some 30 venture capital funds, accelerators and incubators. A key part of Block 71 is NUS Enterprise, the entrepreneurship division of the National University of Singapore.

During our discussion with NUS Enterprise, we learnt about its international internship programme, which sends NUS students to Silicon Valley, China, South Korea and Southeast Asia — including Malaysia. Here’s the interesting part: despite efforts to encourage students to intern in Malaysia for years, there had been little to no interest. For 2025, however, NUS Enterprise has 30 students eager to join Malaysian start-ups. Naturally, our Soonicorn Collective members were more than happy to welcome them.

It appears that even students are now bullish on Malaysia. Who would have predicted such enthusiasm? So, what’s generating this level of interest and bullishness about Malaysia?

VCs, in particular, are very concerned about political stability. Since 2018, when Pakatan Harapan won the general election, we have had four governments and four prime ministers — three of whom lasted less than two years.

This political uncertainty and turmoil is a negative factor for any nation. After Datuk Seri Anwar Ibrahim became prime minister in 2022, his government became the first to last more than 24 months and the VCs feel that there is finally some political stability.

Long may it last as this is a cornerstone of a successful nation — in the eyes of these VCs.

It is rather interesting that all the Singapore-based VCs are familiar with the KL20 initiative via the KL20 Summit that was held in April last year. I was a speaker at that summit and I must say the attendance at the event was among the best I had seen in years.

The VCs like many of the policies that were introduced at the summit and feel that this was a boost to the ecosystem. Of course, we had announcements at the summit on more funds for the VC industry, visas for VCs who set up their funds in Malaysia (VC Golden Pass), visas for founders who want to set up a business in Malaysia (Unicorn Pass and Innovation Pass) and specialised focus on niche areas like Islamic finance, energy and cleantech and agritech.

Singapore start-up founders only had a basic knowledge about these initiatives, so more education and sharing is needed if we want to attract more founders to Malaysia.

The last three years have seen many start-up failures in the region, especially among those that have raised significant sums of money — many at least in the tens of millions of US dollars.

These are mostly in Indonesia, Vietnam and Singapore. This has cost VCs dearly. However, this did not happen in Malaysia because most Malaysian start-ups never raised such sums of money. This is a lucky break for Malaysia as it made our start-ups highly capital-efficient, doing a lot more with a lot less money.

In the present circumstances, this is highly desirable and that is one reason more VCs are eyeing Malaysia. Capital efficiency is now the flavour of the year.

The sudden explosion of data centres setting up in Malaysia, especially by the biggest technology companies in the world, including Amazon, Microsoft, Meta and of course Nvidia, the current darling among tech companies, has made the world take notice of Malaysia.

This has been good for our image and of course our economy. Even the Singapore VCs are positive about this. The spillover effect on VCs and start-ups will not be significant as these data centres are about infrastructure plays, but the impact on the “Malaysia Story” is highly positive.

Everyone knows that Malaysia has a low-cost operating environment but they have stayed away because of the political instability and lack of strong start-up policies.

However, the recent move to create the Johor-Singapore Special Economic Zone (JS-SEZ) in Johor with special incentives and lower taxes has reignited interest among VCs and start-ups interested in setting up in the JS-SEZ to take advantage of not just the incentives and taxes but also because of the lower cost of operations in Malaysia.

While everyone knows about our lower cost structure, a lack of transparent policies has hindered the setting up of operations here. With the new KL20 and JS-SEZ initiatives, and hopefully a more transparent policy, we will attract more start-ups to set up in Malaysia.

Is there a catch to this feel-good factor? Yes, execution and storytelling.

We have always had many good initiatives and policies but we have failed on execution. This is a common lament of local start-ups and also foreign VCs and start-up founders.

Over the 25 years I have been involved, I have witnessed countless policies introduced and later abandoned. I have seen “dead” policies being resurrected, only to wither away again, and seen promising policies being discarded when a new government comes into power. Throughout the years, I can say with confidence that we have failed too many times when it comes to the execution of policies and initiatives.

My fervent wish — my “quarter-century wish” — is that this government will finally take these policies seriously, empowering the right people to execute them effectively and breaking the cycle of good intentions undone by poor implementation.

I have always said that Malaysia is the world’s best kept secret because we have so much to offer but no one knows about us. KL20 has started the ball rolling but we shouldn’t stop now. We need to keep telling the world our story so that everyone knows what Malaysia can offer and hopefully, this will attract more funds and talent to the country.

These two things are critical — execute better and tell our story to the world. Only then will our country do well in the technology sphere. Let’s not fail again on this.

Dr Sivapalan Vivekarajah is co-founder and senior partner at Scaleup Malaysia Accelerator (scaleup.my) and adjunct professor at Sunway University’s School of Science and Technology. He is also the author of Supercharge Your Startup Valuation.

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