Malaysian fund unveils investment scheme to support start-ups
A new initiative to support Malaysian start-up companies through venture capital and corporate venture programmes has been launched by Khazanah Nasional.
The sovereign wealth fund said its Future Malaysia Programme will benefit from RM6bn (£1.1bn) of investment over five years, funded through its Dana Impak Portfolio, which invests in increasing Malaysia’s economic competitiveness and national resilience.
Dana Impak facilitates investment in companies that tackle the challenges facing Malaysia, including digital society and technology, quality health and education for all, decent work and social mobility, food and energy security, building climate resilience, and competing in global markets.
Khazanah managing director Amirul Feisal Wan Zahir said the start-up ecosystem is an essential source of entrepreneurship, employment, innovation, and investment for the nation.
“Many potential solutions to the challenges we have identified under Dana Impak themes are found in early-stage companies, which requires injection of risk capital at different stages of the venture, and to scale innovation and business,” he said.
The Future Malaysia Programme is aimed at deploying an initial amount of about RM180m (£33m) by working with established local and international venture capital companies, as well as domestic corporate venture programmes.
Amirul said: “In line with this effort, Khazanah is pleased to announce its partnership with venture capital funds, Gobi Partners, a pan-Asian venture capital manager, and 500 Global, an international venture capital manager. Both are among the most active venture capital managers with an extensive investing track record and expertise for value creation in Malaysia.”
In addition, Khazanah is also establishing a partnership with Plug and Play, a global innovation platform that connects start-ups, corporations, venture capital firms, universities and government agencies.
Manufacturing facing challenging in economic investment
Manufacturers continue to face challenging business conditions, particularly the pressure on inputs costs, increased costs of energy and currency fluctuations, according to the Federation of Malaysian Manufacturers (FMM).
The organiation’s president, Tan Sri Soh Thian Lai, said that apart from challenging business conditions domestically, the manufacturing sector is also growing slower than other sectors, reflecting the slowing global economy.
“For the whole of 2022, overall sales have remained generally steady, although local sales had grown at a faster pace than export sales,” he said at the FMM Business Condition Survey 2H2022 briefing.
Data from the survey showed that for first half of 2023 local sales are expected to be ahead of export sales. It also found that both indexes for local and export sales had remained below the optimism threshold for the second survey in a row, implying that a slowdown in sales is expected on both the local and external fronts.
“Some 22% of the respondents who are domestic-oriented projected higher sales in the coming months, while 32% responded negatively. For those who are export-oriented, 22% were positive in their near-term sales outlook, down from 26% previously,” Soh said.
The survey, which drew 745 respondents nationwide, tracked business confidence via the FMM Business Conditions Index (FMM BCI), covering the actual performance in the second half of 2022 and the outlook for the first half of 2023.
Soh said that weak external demand, especially from key trading partners, further escalation of geo-political tensions and the impact of China’s zero-Covid-19 policy, among others, had all impacted on the Malaysian manufacturing sector.
“The survey revealed that 55% are impacted by an increase in their cost of production. Cash flow and business operations of 44% of the respondents were affected, and 26% had to streamline their operations and strategies to maximise profits,” he said.
Soh said the government’s removal of the energy subsidy should be gradual to reduce the impacts on the business community. “The government should remove it in stages which will be less burdening for manufacturers, and they can adjust to the changes,” he said.
Commenting on the impact of multilateral agreements on businesses, Soh said 66% of the respondents were aware of the implementation of both the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade agreements (FTAs).
The FMM president said only 11% are utilising both FTAs, while the RCEP and CPTPP are utilised by 9% and 3% of respondents respectively. And 77% of respondents have not started utilising these FTAs, with 41% of respondents saying they did not know where to start.
“Another 33% attributed their non-utilisation of the RCEP and CPTPP to their current utilisation of other FTAs and their lower duty rates,” he added.
