YBhg Dato’ Zarinah Anwar
Chairman, Malaysian Venture Capital Development Council
Venture Capital Roundtable 2007
Friday, 4 May 2007
Securities Commission, Kuala Lumpur
Ladies and Gentlemen
- It gives me great pleasure to welcome you to the MVCDC’s inaugural Venture Capital Roundtable. This Roundtable brings together VC professionals from venture capital and venture capital management companies that are registered with the Securities Commission. Given our shared vision of a robust venture capital industry in Malaysia, your insights and comments today will be valuable input into discussions on how we can create positive traction for the Malaysian venture capital industry.
- The outlook for the Asian venture capital industry has never been brighter. According to The Economist, as private equity funds plan to increase their commitments to emerging markets over the next five years , Asia (excluding Japan, Australia and New Zealand) will be the prime beneficiary since the region attracts 70% of emerging private equity investments.
- However, a quick look at industry statistics indicates that Malaysia lags behind most of our Asian peers. For example, from 2004 to 1st quarter 2007, our VC industry, in terms of both deal flow and investment amount, only represent 1% of the Asian venture capital industry . Against this backdrop, there is an urgent need for policy makers together with VC professionals and VC investors to work together to implement necessary measures to ensure that venture capital continues to fund vital sectors of growth in our economy, and to increasingly internationalise our market to increase our standing vis-à-vis our regional peers.
MVCDC’s role in coordinating Government’s efforts in developing venture capital
- In recognition of the crucial role of venture capital in driving economic and capital market growth, the government has committed resources to developing the sector through establishing key institutional infrastructure, rolling out funding programmes and introducing incentives. These have been embodied in the recommendations of the Capital Market Masterplan, the Financial Sector Masterplan, annual budget announcements and the 9th Malaysian Plan.
- One quantitative indicator of the government’s commitment to venture capital, is the 9th Malaysia Plan’s allocation of RM1.6 billion to the industry. This is more than double the 8th Malaysia Plan’s allocation of RM690 million. The government has also played a key role through joint investment programs with private sector venture capital companies in disbursing government funds and undertaking joint venture investments, as well as through the introduction of various tax incentive packages.
- Despite these inititatives, a key challenge still remains ie the coordination of efforts for an industry that brings together financiers and entrepreneurs from a wide diversity of sectors. The MVCDC was therefore formed in January 2005 under the chairmanship of the Securities Commission, as a one-stop agency to synchronize implementation of the relevant strategies and initiatives for the venture capital industry.
- The Council, whose members comprise policymakers and venture capital professionals, is entrusted to provide the strategic vision and direction for development of the venture capital industry in Malaysia. Its strength lies in its public-private sector composition which connects policymakers and industry professionals, towards creating an optimal business environment for venture capital activities.
- As the one stop agency for the industry,the MVCDC has been busy in the past year. We hosted our inaugural Investors’ Forum last year to gain first-hand understanding of the challenges in getting greater involvement of Malaysian institutional investors in funding venture capital. We will be sharing with you some of the feedback from that forum today. We hope that the Investors Forum and today’s Venture Capital Roundtable will become annual events on the VC calendar.
- The MVCDC also worked towards addressing one of the key challenges faced by the industry – lack of information. Last year we launched a VC web portal to facilitate effective information flow and provision of interactive services.
- Following compilation of the latest industry statistics for 2006, MVCDC has also conducted a study of the industry, and the Council is in the midst of formulating new action plans and strategies to further stimulate the industry. These initiatives include recommendations for new measures to enhance the effectiveness of incentive programs and financial grants, as well as to promote greater involvement of the private sector in the industry.
- A comprehensive study of the Malaysian VC industry which would allow the Government to formulate strategies to grow the venture capital industry and accelerate the development of the k-economy will also be undertaken.
Purpose and Objective of today’s Roundtable – How Best to Position the Industry Forward with Positive Traction and Operate at Higher Platform
- We have selected three topics for today’s breakout sessions:-
What measures are needed to further develop our entrepreneurial system;
How to enhance the effectiveness of MESDAQ as a preferred exit mechanism for venture capitalists; and
How to leverage our leadership position in Islamic Capital Market to add vibrancy to the industry.
- According to a recent study of venture capital in OECD economies, one of the key factors for a successful venture capital industry is a robust national innovation system, particularly the entrepreneurial development system. We want to hear from you how MVCDC and the government can play a role in nurturing this in Malaysia.
- The same study also identified “efficient exit mechanisms” as a crucial common factor for successful and developed venture capital markets. We are therefore interested in getting your views and ideas on how to enhance the effectiveness of MESDAQ as a preferred exit mechanism for venture-backed companies and their VCs.
- Finally, to better position our venture capital industry, I believe a viable regional or even international strategy is essential. This needs to build on our domestic strengths and comparative advantage, and certainly we believe we can leverage on our leadership position in Islamic finance to enable us to achieve this.
Ladies and Gentlemen
- I look forward to your active participation in this morning’s sessions and to the results of your deliberations.