27 Nov 2023, 12:00 am
Budget 2024 was in many ways a good budget for the tech ecosystem, from the RM1.5 billion in funding from government-linked corporations (GLCs) and government-linked investment corporations (GLICs) to the extension of the angel tax incentive and exemption from capital gains tax for venture capitalists (VCs). There were also many other good policy initiatives for the ecosystem.
Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim also stated that the government’s aspiration is for Malaysia to be among the top 20 global start-up ecosystems by 2030. This is a big goal to achieve in just seven years. Is this possible or is it just a pipe dream?
The report that most countries use to assess their start-up ecosystem position is the Global Startup Ecosystem Report produced by US-based Startup Genome. In the latest 2023 report, it ranks in the top 30, with Silicon Valley, New York and London as the top three ecosystems in the world, while Denver-Boulder, Atlanta and Vancouver occupy the No 28 to No 30 spots respectively.
The only Southeast Asian nation in the top 30 is Singapore at No 8. A few Asian cities made it into the top 30, including Beijing, Shanghai, Seoul, Tokyo, Bengaluru and Delhi. There are another 10 cities in the runners-up position. The report also ranks “emerging ecosystems”, defined as start-up communities at earlier stages of growth, with Jakarta at No 15 and Kuala Lumpur at joint No 21 to No 30.
Based on the listing of ecosystems, we are currently in the No 61 to No 70 position overall. Hence, achieving a top 20 ranking looks like a major challenge indeed. If we seriously want to achieve this target, then we need to understand the evaluation process for these rankings and then set policies and action in place to get Kuala Lumpur higher up the rankings over the next few years.
The ranking is based on a weighted average of the following six factors: performance (30%), funding (25%), market reach (15%), connectedness (5%), talent and experience (20%) and knowledge (5%). Just performance and funding alone make up 55% of the weightage for the ranking and a deeper understanding of this clearly shows that Kuala Lumpur is at a significant disadvantage to most of the top 30 cities. This doesn’t mean we can’t improve, but we do have a lot of work ahead.