Opening Remarks at Catalyst Series: “Transforming the Global Digital Economy with Generative AI”
Speaker: Dato’ Mohammad Faiz Azmi, Chairman of Securities Commission Malaysia
Location: Kuala Lumpur 
Delivered: 30 July 2024
Key Highlights:
In the 2nd installment of the SC’s Catalyst Series, themed “Transforming the Global Digital Economy with Generative AI”, SC Chairman Dato’ Mohammad Faiz Azmi stated that adopting new technologies is crucial for competitiveness and sustainable growth, as is collaborations with venture capital (VC) companies.

Here are highlights from his speech:
  1. VCs facilitate corporate access to innovative startups, supported by tax incentives and the Capital Market Masterplan 3 to enhance Malaysia’s VC landscape.
  2. The SC’s Guidelines on Technology Risk Management ensures ethical AI use, emphasising accountability, transparency and unbiased outcomes.
  3. The Digital Innovation Fund (DIGID) supports AI adoption in the capital market, co-funding innovative projects to foster digital transformation and inclusion.
Full Speech:

Yang Berhormat Datuk Wilson Ugak Anak Kumbong
Deputy Minister of Digital of Malaysia

YM Dato’ Syed Haizam Hishamuddin Putra Jamalullail
Managing Partner, The Hive Southeast Asia

Yang Berusaha Encik Ng Sai Kit
Chairman, MVCA

Distinguished guests, ladies and gentlemen.

Assalamualaikum and a very good morning.

  1. Welcome to the second installment of the SC’s Catalyst Series, themed “Transforming the Global Digital Economy with Generative AI.”
  2. Today, we delve into the exciting realm of generative AI, building on our commitment to drive corporate innovation in Malaysia.

Corporate innovation and VCs

  1. Embracing new technologies and disruptive business models is crucial for companies to stay competitive and contribute to sustainable economic growth.
  2. One effective way for corporates to innovate is through collaboration with VC firms.
  3. VCs play a pivotal role in bridging the gap between corporates and startups, facilitating partnerships and helping corporates diversify their AI investment portfolios.
  4. By collaborating with VCs, corporates can access cutting-edge developments, integrate innovative solutions and stay competitive in dynamic markets.
  5. To support Malaysia’s journey in corporate innovation, the SC offers specific tax incentives to encourage investment in Malaysian startups and the broader VC industry.
  6. Corporates can enjoy a tax deduction of up to RM20 million annually on investments in qualified venture companies or VC funds.
  7. As outlined in the Capital Market Masterplan 3 (CMP3), the SC has been working closely with relevant agencies and investment entities to enhance the corporate venture landscape in Malaysia.
  8. We have taken a multi-pronged approach to promote the growth of the VC and PE industries.
  9. The SC has enhanced the registration framework for VC and PE firms, resulting in significant growth in the AUM of registered VC and PE firms, from RM3.3 billion in 2006 to RM17.6 billion in 2023.
  10. Our commitment continues with the KL20 Action Plan, aiming to position KL as a top 20 global startup hub.
  11. We seek to attract global VCs to invest in Malaysia, complementing our goal of developing a comprehensive market-based financing spectrum for startups and SMEs.
  12. You may be aware that the SC announced the 5-year roadmap for MSME and MTC Access to the Capital Market. I don’t believe we can do this without thinking of the technological aspects of being able to help SMEs bridge their funding gap.

Adoption of AI and Ethical Considerations

  1. Generative AI represents a paradigm shift in how we approach problem-solving and innovation.
  2. The national AI Roadmap, 2021-2025, aims to create a thriving AI ecosystem, making Malaysia a high-tech, high-income nation through AI adoption. The SC fully supports this agenda.
  3. In the financial and capital markets, AI adoption is increasing, bringing efficiencies and benefits. However, it also poses risks and threats if not properly managed, which include harm to investors and negative impacts on the efficiency of markets.
  4. The SC’s Guidelines on Technology Risk Management broadly set out four (4) guiding principles proportionately implemented when considering the ethical design, development, and deployment of AI and Machine Learning within a capital market entity.
  5. Firstly, there is a need for accountability in the development and use of AI. Establishing a governance framework with clear AI objectives, well defined roles, responsibilities and lines of authority ensures that AI development is fit for purpose.
  6. Company leaders and senior management play a key role in guiding the responsible use of AI. This involves enabling innovation with risk management measures in place.
  7. Secondly, transparency of the AI model, is pertinent to reduce risk of opaque AI models. This means documenting decisions by the AI with clear explanations on both its method or process and outcome.
  8. Thirdly, AI models must operate without prejudice, and offer consistent and unbiased outcomes to all individuals, regardless of their background. Regular reviews of both data and AI model are necessary to minimise unintentional bias, and to ensure alignment with the firm’s ethical values.
  9. Lastly, investors expect capital market entities to offer reliable AI-driven products and services. This means having reliable AI models and accurate data. To achieve this, capital market entities must have in place appropriate controls for rigorous testing and data quality, as well as necessary security measures for data protection.

DIGID

Ladies and gentlemen,

  1. The SC also supports AI adoption among capital market players through the Digital Innovation Fund (DIGID).
  2. This RM30 million fund is intended to co-fund innovative projects that use technology to create competitive offerings in the Malaysian capital market.
  3. DIGID aims to support capital market players in their digital transformation by fostering innovation, enhancing efficiency in capital raising and promoting inclusion for underserved segments.
  4. We welcome applications for projects that use advanced tech, including generative AI. DIGID can co-fund up to 70% of approved expenses, with the possibility of exceeding the RM500,000 cap, subject to assessment.
  5. So far, DIGID have funded projects using AI to enhance credit scoring, investment advisory and ESG investment, as well as support SME players in capital market to build data capabilities towards future adoption of AI.
  6. We encourage all intermediaries and market participants with innovative ideas to consider applying, as we believe this fund can help drive meaningful progress.
  7. There is a lot of misconception and fears about AI. That is why we must recognise early on that these fears are genuine; therefore we should incorporate it into your planning and how we manage these products.

Conclusion

  1. In closing, we hope the Catalyst series can help foster dialogue and collaboration that can cultivate an ecosystem that inspires innovation.
  2. Thank you to our event co-organiser, The Hive, and our partners, Penjana Kapital, MVCA and MDEC, for their contributions.
  3. Please engage actively in today’s sessions because unless you understand what we are trying to do, it may be difficult for your to take advantage of this opportunity.
  4. Thank you very much and hope you have a pleasant session.
SC AFFILIATES
RELATED SITES
about the SC
The Securities Commission Malaysia (SC) was established on 1 March 1993 under the Securities Commission Act 1993 (SCA). We are a self-funded statutory body entrusted with the responsibility to regulate and develop the Malaysian capital market.

General Line: +603-6204 8000
General Email: [email protected]
© Copyright Securities Commission Malaysia.  Contact Us   |    Disclaimer   |   The site is best viewed using Microsoft Edge and Google Chrome with minimum resolution of 1280x1024
Ooops!
Generic Popup