Kuala Lumpur, 6 May 2007

Malaysian venture capital industry strengthens foothold among institutional investors

The Malaysian Venture Capital Development Council (MVCDC) held the inaugural Venture Capital Roundtable on Friday, 4 May 2007 to tap industry views on ways to boost the country’s venture capital industry.

The closed-door forum themed “Creating Positive Traction in the Malaysian VC Industry” was attended by key venture capital industry professionals who shared their views and feedback on the further development of the Malaysian venture capital industry.

Organised as a follow-up to MVCDC’s inaugural Venture Capital Investor Forum 2006 held in August last year, the Roundtable participants had focused discussions on strategies to develop an entrepreneurial culture in Malaysia, and how to enhance the attractiveness of the MESDAQ Market as an exit mechanism for venture capital and leverage on Malaysia’s domestic strengths, particularly its leadership role in Islamic finance and Islamic capital market towards internationalisation of the market.

The deliberations also covered a review of the effectiveness of the current tax incentives as well as other government initiatives to develop venture capital. In addition, the participants also encouraged adoption of regional and international strategies in order to enhance the domestic venture capital environment.

Findings and feedback from the Investor Forum on challenges in garnering greater involvement of Malaysian institutional investors in funding venture capital were also discussed at the Roundtable.

“We hope that today’s deliberation will provide fresh insights for MVCDC to design new venture capital strategies and initiatives,” said MVCDC Chairman Dato’ Zarinah Anwar.

Currently, MVCDC’s latest action plans and strategies to further stimulate the industry include the recommendation of new measures to enhance the effectiveness of incentive programmes and financial grants, as well as to promote greater private sector involvement in the industry. The views and comments received from the Roundtable will serve as input to further refine and enhance MVCDC’s existing strategies.

New funds raised in Malaysia’s venture capital industry in 2006 had increased significantly to RM715 million from RM323 million in 2005. Government agencies and local corporations continue to contribute to the majority of these funds at 40.73 percent and 37.59 percent respectively, with vast untapped potential in insurance and pension funds as the source of venture capital funds.

The Malaysian government, having long recognised the strategic importance of the venture capital industry as a source of funding for growth, has been promoting the industry through the provision of funds and incentives. These measures include the RM1.6 billion allocated for venture capital under the Ninth Malaysia Plan to bridge the crucial financing gap in the early stages of enterprise development, and tax exemption for 10 years granted to venture capital companies investing at least 50 per cent of funds in seed capital, as announced under the 2007 Budget.

The MVCDC was established in January 2005 as a one-stop agency to ensure a coordinated implementation of strategies and initiatives for the development of the venture capital industry.

The MVCDC comprises the Chairman of the Securities Commission Dato’ Zarinah, who is also the Chairman of MVCDC, and representatives from the public and private sector who are appointed by the Minister of Finance on the SC’s recommendation.

Further information on MVCDC is available from its website at www.mvcdc.com.my.