12 MP: Digital is the economy

The role of government in entrepreneurship is often understated or sometimes criticized. Critics believe that the government has no place in the entrepreneurial ecosystem while some believe that in Malaysia the government is too interventionist in its approach. The truth is probably somewhere in between - where the government indeed plays a key role in crafting the business leaders of tomorrow but with a sense of focus. In Mariana Muzzacato’s book, “The Entrepreneurial State”, Muzzacato shares the illustration of how the US government was often criticised for its support of a green tech company called Solyndra but how at the same time it had granted a $456m loan to another company called Tesla which is now worth ~$574 Billion. Closer to home, we often grimace at the fact that Grab is now domiciled as a Singaporean company. However, we forget the importance of how in its early days Cradle Fund gave a grant of RM150,000 through its CIP150 grant to then MyTeksi, which is now the US$40 billion behemoth Grab. This alone shows the impact the government can have in uncovering entrepreneurial talent in Malaysia. With the soon to be announced 12th Malaysia Plan, we thought we would share some thoughts on how the government can further develop and enhance our technology entrepreneurship ecosystem. Empowering Business and Entrepreneurship We need to create a bigger pool of entrepreneurs and the government can do this by encouraging more Malaysians to get involved in startups and technology entrepreneurship. This is done through early stage stimuli in schools and educational institutions as well as exposure to local entrepreneurs through the media. We also hope to see a stronger focus on training and capacity building as a part of the initiatives pursued by the various institutions and agencies. Programmes such as MaGIC’s Global Accelerator Programme, MDEC’s eUsahawan programme and Cradle’s Coach and Grow Programme should be supported and expanded to targeted sectors and be more stage focused. The government should also put in efforts to grow domestic demand by encouraging the Rakyat to “Buy Malaysian”. This spirit should also permeate to the public sector where the government should prioritise local technologies over foreign ones in awarding projects. There must also be a strong focus on exporting Malaysian products and technologies. Many of our Malaysian entrepreneurs can compete internationally and with the right support they can go far. Investing In Our Winners And Raising The Next Generation To further develop technology entrepreneurs there needs to be more focus in developing our funding ecosystem. The creation of equity crowdfunding, peer to peer funding and the LEAP markets have proven to be a success. These initiatives should be continued and more support given to these operators. At the early stages there needs to be a restoration of early stage grants. Cradle’s CIP150 helped create hundreds of early stage entrepreneurs who have gone on to build successful businesses and even a unicorn like Grab. How many more would-be unicorns are up for “grabs” if only we focus on uncovering and supporting them early on. Let the private sector develop the mid to later stage ecosystem. Incentives should be given to Malaysians to set up local Venture Capital and Private Equity funds. This includes corporate investors through the roll out of the promised corporate tax incentive. The government should focus on building the technologies of tomorrow. While there are many technologies listed in the 4th industrial revolution the government needs to make the hard decisions and focus on core industries such as drone tech, halal tech and creative content where Malaysia already has success stories. Technology Park Malaysia and the National Technology and Innovation Sandbox initiative are also championing these technologies of the future. We also hope to see initiatives to attract foreign direct investments from international investors and domicile international tech giants. As we have seen with Dana Penjana, the knowledge transfer, coupled with capital can be very impactful to the ecosystem. Empower The Rakyat Through Technology We also hope to see policies and programmes to create a more inclusive digital economy. Not only does this help the rakyat but it also allows our technology entrepreneurs to expand their market locally. There needs to be better access to technologies and connectivity - which is something that is being addressed in the recently announced MyDigital 5G plan. Government agencies such as MDEC, Cradle and MaGIC should also have a presence in all states, not just Klang Valley so that no one is left behind. Also from an infrastructure perspective there needs to be efforts to strengthen cyber security, data privacy and internet freedom. While it's encouraging to see rapid adoption it's also important to create a safe environment for the public. We also hope to see proposals to overhaul the education system to meet the needs of the digital tomorrow. Our core syllabus has not changed in decades and quick action needs to be enacted to prepare children for the jobs of tomorrow. Our top universities should also be given the flexibility to develop curriculum fast as needs are changing rapidly instead of always waiting for approval from the Malaysian Qualifications Agency. Conclusion The speed of delivery is equally important to make sure the programmes hit the recipients urgently. Also the ability to adapt to change is key as technology changes rapidly. If the conditions change the executing agencies should be empowered to change the plan to meet the KPIs that have been set out. There also needs to be transparency and accountability. Clear KPIs need to be set and the public should have access to track progress over time. A centralised focus is important as resources are not unlimited. To be successful we need to rally around the cause and execute with precision. Agencies should align with regards to roles and responsibilities so there is no unnecessary competition or duplication of roles. Finally, the government should encourage and foster more public private partnerships to help propel the digital economy forward. The knowledge, networks and experience of the private sector will help amplify the efforts of the public sector and ensure national goals are achieved for the benefit of all parties. We look forward to reading and understanding the upcoming programmes, policies and initiatives that have been developed for RMK-12. May it steer us to better develop Malaysia’s Digital Economy and the entrepreneurs who aim to build in it. This article is written by Aaron Sarma is an entrepreneur, speaker and investor. He is a Co-Founder and serves as General Partner at ScaleUp Malaysia Accelerator (www.scaleup.my) and Co-Founder of a startup studio called Remote Ventures (www.remoteventures.my). He is the founder of Touristly/Vidi which was acquired by AirAsia in 2017. Dr. Sivapalan (Ph.D in Venture Capital from University of Edinburgh, Scotland) is Co-Founder and Senior Partner of Scaleup Malaysia Accelerator (www.scaleup.my) and Proficeo Consultants (www.proficeo.com). Authored a book on business innovation - Blue Sky Innovation (available on Amazon). Visit his LinkedIn profile.