Introduction

Assalamualaikum Warahmatullahi Wabarakatuh, dan selamat pagi and Good Morning.

Welcome to the Securities Commission Malaysia and thank you for participating in today’s roundtable session on Catalysing Malaysian High Growth Opportunities. This is an important agenda for us at the SC. We know there are a lot of Malaysian companies out there with huge potential to contribute to economic growth and change people’s lives for the better – but for some reason, have difficulty in realising that potential. Today, we are going to discuss how we can enhance the local ecosystem’s attractiveness for promising start-ups and similar high growth enterprises. So we look forward to hearing and sharing views and feedback on this important agenda!

From a national perspective, it is crucial that start-ups, particularly innovative and technology-inclined firms, have access to funding to be able to contribute to the nation’s growth and development. The government expects the digital economy to contribute 23% of GDP by 2025¹, underscoring the significance of technology and innovation to the country. However, to achieve these targets, market stakeholders must come together and align our efforts.

The SC has been organising these engagements to bring together the community, allowing everyone to connect and collaborate. This session follows on from the IPO Roundtable held in April this year. That session touched on key ideas to create IPO-ready entrepreneurs and inventors, particularly in the tech and digital industry.

For today’s session, we would like to deep dive and better understand private market investing. This includes investment priorities, deal assessment and valuations. Additionally, we look forward to ideas on growing our investment community to support start-ups, as well as deal flow in Malaysia.

Through conversations today, we hope to better understand challenges that require attention, and what can be done to improve our ecosystem. Therefore, it is imperative to develop deeper insights and understanding of market needs, better appreciation of pricing risks, and greater process efficiencies.

IMPORTANCE OF PRIVATE MARKETS AS GROWTH ENABLER

Ladies and gentlemen,

From a funding perspective, markets must offer tailored options suited to each company’s specific growth needs. Given the headwinds facing our economy today, such needs have never been greater. Sufficient capital is required to create jobs and generate business opportunities to prosper.

Private markets play an important role in this respect, complementing our public markets. With the steady growth in Malaysia’s affluence over the years, more solutions to channel these savings into capital formation is necessary to keep engines of growth running. Hence, expanding the private markets will be crucial in order to support high growth local companies.

Corporates are also strategically important to the start-up community. I am delighted that some of our corporates have adopted corporate venturing as part of their innovation toolkit. We hope more corporates can step up and engage with local start-ups. The opportunities abound; from providing validation for their offerings to strategic investments to propel their growth.

DEVELOPING ACCESSIBLE AND INCLUSIVE MARKETS

Ladies and gentlemen,

The SC recognises that development of alternative fundraising is crucial. Many efforts have been undertaken in recent years. Policies on ECF and P2P financing, as well as advocacy efforts in the VC and PE space are some examples. These have contributed to steady growth in this space. Moving forward, the Capital Market Master Plan 3 envisages more inclusive and accessible private markets for both entrepreneurs and investors.

Aside from regulatory facilitation, targeted public support is needed to catalyse investments. The launch of public-private co-investment structures such as the Malaysia Co-Investment Fund or MyCIF, is a good example. From 2019 to 2021, MyCIF successfully co-invested over RM357 million, benefitting over 2,200 MSMEs. This shows that co-investment funds are effective in drawing greater investor participation, retail as well as institutional, for early to growth-stage companies.

Similarly, having anchor institutional funds to attract venture capital and private equity funding is essential. For example, Penjana Kapital was recently set up to catalyse RM 1.2 billion in investments through its VC partners. Such programmes offer opportunities for local VC firms, bring foreign investors into the local ecosystem, as well as encourage local tech investments at various growth stages.

Another funding option for high growth companies and start-ups is SPAC, or Special Purpose Acquisition Company listings. The SPAC framework was recently amended in December 2021 to enhance its attractiveness. SPACs can now be steered by experienced VCs and PEs, raise additional financing through private placements, and businesses within SPACs can now merge via issuance of securities.

These are all signs of progress, and the SC remains committed to enable this market segment to develop to its fullest potential. A thriving funding ecosystem for start-ups and entrepreneurs will provide a solid platform for the domestic economy to grow in an increasingly challenging global environment.

CLOSING

Ladies and gentlemen,

Ultimately, the capital market and its supporting ecosystem must serve the needs of the domestic economy and businesses. Sessions like this are essential for us to hear from our industry stakeholders on their needs and challenges.

We are keen to hear your ideas and suggestions on how we can support you better. The SC cannot work alone. We need to strive hand in hand with all of you, towards a more supportive environment for high growth firms.

As we all know, a vibrant and competitive Malaysian capital market requires multi-stakeholder cooperation and participation. Only then can we capitalise on the opportunities ahead towards developing more home-grown global champions.

Thank you once again for taking the time to participate, and I look forward to your thoughts, and feedback. I want to give you my personal assurance that all these will be important input to our work at the SC, in charting a sustainable growth path for a relevant, efficient, and diversified capital market in Malaysia going forward.