KUALA LUMPUR: The electrical and electronics (E&E) sector's contribution to the overall Bursa Malaysia's index weightage is "very low" despite the sector being an economic powerhouse.

Economy Minister Rafizi Ramli said E&E counters under the technology index merely account for 4.0 to 5.0 per cent of the local bourse's overall weightage.

"If we compare our local stock exchange with some others, I think our technology weightage is very low. I think (about) four to five per cent.

"What a pity because this is a country that is recognised globally as one of the most important semiconductor players in the world," he said during a forum on "Malaysia to the World: Open for Tech Business" at KL20 Summit 2024 here today.

During the Covid-19 pandemic, Malaysia's tech supply chain was disrupted, impacting global industries reliant on locally-produced chips.

Rafizi said the country had missed out on the tech sector's bull run in the past few months and stressed that there is a need for a greater talent pipeline in local technology and startups for listing.

"If all of this happens, it would facilitate a sustainable pivot towards a high-value economy, where the government focuses more on regulation and ecosystem development, reducing its focus on funding and direct intervention, as these are important prerequisites," he added.

Meanwhile, Retirement Fund Incorporated (KWAP) chief executive officer Datuk Nik Amlizan Mohamed, who was a panelist in the same forum, said startups do not allocate enough funds for research and development (R&D).

"Malaysian corporations do not spend enough on R&D. And if they do spend, it is mainly on the exploitation of the current processes to improve what they are currently doing rather than exploring new avenues through R&D.

"Perhaps these companies should consider setting aside additional funds for R&D. For example, listed and tech companies usually allocate around 10 per cent of their budget for R&D.

"While this is a sizable amount, it often goes towards business improvements rather than venturing into something out of the ordinary," she said.

She encourages Malaysian companies to explore the areas that can propel them to the next level.

She said KWAP is creating an innovation laboratory internally to experiment with ideas and undertake pilot projects to explore new avenues.

Nik Amlizan also said that KWAP is focusing on investing in local startup companies to support their growth.

She said while it had previously focused on the public market, the shift towards investing in startup companies is based on six fundamental pillars.

"We are going to focus on six pillars and among them are financial technology, education, technology, civil and digital economy.

"Startups do not have the legacy issues faced by existing companies. Legacy issues involve transition and this requires a lot of spending," she added.

https://www.nst.com.my/news/nation/2024/04/1041173/rafizi-ee-sectors-contribution-bursa-malaysia-index-weightage-very-low