(From left) Science, Technology and Innovation Minister Chang Lih Kang, Deputy Prime Minister Datuk Seri Fadillah Yusof, Prime Minister Datuk Seri Anwar Ibrahim, Economy Minister Mohd Rafizi Ramli, and Digital Minister Gobind Singh Deo at the launch of the KL20 Action Plan in Kuala Lumpur on Monday. (Photos by Low Yen Yeing/The Edge)

KUALA LUMPUR (April 22): Economy Minister Mohd Rafizi Ramli on Monday announced a slew of incentives for venture capital (VC) firms as well as global technology companies to set up shop in Malaysia, including exemptions and subsidies for rents and employment passes, alongside concessionary tax rates for corporate profits, as part of the ministry's efforts to turn the country into one of the top 20 start-up ecosystems in the world by 2030.

Dubbed the KL20 Action Plan, Rafizi said the new initiatives set the pathway for Malaysia to be the choice destination for early-stage and growth capital, the centre for world-class entrepreneurs and skilled talent, and home to innovative start-ups looking to set up, grow, and scale.

"Malaysia is a microcosm and gateway to the East. KL20 represents our ambition to bring Malaysia to [be one of] the top 20 start-up ecosystems in the world. Within this concept is an emphasis on pragmatism and action," he said during his speech at the KL20 Summit 2024 here on Monday.

"The KL20 Action Plan outlines new initiatives that will accelerate the critical areas of a start-up ecosystem — capital, talent, and the quality of start-ups," Rafizi added.

For instance, the VC Golden Pass, which aims to attract VC firms with venture-sourcing sophistication and a global reach to make Malaysia its home, offers incentives including funding access opportunities, subsidised office spaces, expedited licence registrations, and exempted fees for employment passes.

Rafizi says the new initiatives set the pathway for Malaysia to be the choice destination for early-stage and growth capital, the centre for world-class entrepreneurs and skilled talent, and home to innovative start-ups looking to set up, grow, and scale.

"Our hope is that with more international sophisticated VCs in Malaysia, innovative start-ups within the country will have access to more funding, network, and mentorship that will help them cross the chasm and scale to other markets," Rafizi said.

Malaysia also aims to attract global unicorns via the Unicorn Golden Pass, so that high-skilled and high-value jobs are created, besides developing a pipeline of future entrepreneurs and senior leaders in the technology industry.

Under this programme, incentives offered include exempted fees for employment passes for senior management, subsidised rental, concessionary tax rates for corporate profits, relocation services, and a start-up concierge that handles the backroom registration at the start.

To enlarge the pool of high-skilled talent within the country, the Ministry of Economy is also introducing a multi-tier employment pass programme under the Innovation Pass that gives tailor-made benefits to founders, senior management, high-skilled talent, and general talent in tech.

In fact, the KL20 Summit 2024, spearheaded by the Ministry of Economy, already saw the signing of letters of intent by 12 global VC firms to set up new offices in Kuala Lumpur for the first time. They include London-based Nordstar and GP Bullhound, Singapore-based K3 Ventures, China-based HOPU Investments, and New York-based Lever VC. Each of these entities manages an average asset under management of US$1 billion (RM4.79 billion).

Besides that, the summit also saw the commitment of high-tech companies to establishing offices, research and development facilities, and regional headquarters in Kuala Lumpur, to serve the Asian and Southeast Asian markets. They include Ginkgo Biosecurity, which is looking to establish biosecurity infrastructure in Asean, Seoul-based chemical business company OCI Holdings, which is setting up its Asean-based headquarters in Kuala Lumpur, and digital asset exchange Fasset that will be establishing its office in Kuala Lumpur.

Khazanah to launch RM1b fund to invest in local start-ups

Meanwhile, Prime Minister Datuk Seri Anwar Ibrahim during his keynote address announced that Khazanah Nasional Bhd will launch a National Fund-of-Funds, with an initial RM1 billion allocation to invest in innovative high-growth Malaysian companies.

On top of that, Anwar said Khazanah, together with Retirement Fund Inc or Kumpulan Wang Persaraan (Diperbadankan) (KWAP) and BlueChip Venture Capital, a Malaysian VC fund dedicated to the semiconductor industry, will invest up to RM3 billion in the Southeast Asian and Malaysian ecosystems under the Asean Investment Initiative.

The capital commitment for start-ups is aimed at keeping start-ups alive and get to a point of profitability and growth. This is also aimed at helping build the pipeline for more start-ups to thrive, and produce a more dynamic economy to move up the value chain.

Anwar says Khazanah, together with KWAP and BlueChip Venture Capital, will invest up to RM3 billion in the Southeast Asian and Malaysian ecosystems under the Asean Investment Initiative.

Furthermore, Anwar unveiled the plan to build the largest integrated circuit (IC) design park in Southeast Asia by the Selangor Information Technology and Digital Economy Corporation (Sidec), with British semiconductor and software design company Arm licensing its technology to the IC design park.

The proposed IC design park, Anwar said, is part of Malaysia's efforts to move beyond back-end chip assembly and testing, and into high-value front-end design work.