Speaker: Dato’ Seri Dr. Awang Adek Hussin, Chairman SC Malaysia Location: Kuala Lumpur Convention Centre Delivered: 22 April 2024
Key Highlights:
VC’s can capitalise on Malaysia’s growing affluence. Private markets have seen steady growth, with over 130 registered corps and RM17.6 billion in AUM in the VC and PE space as of 2023. The fund management industry's AUM has grown to almost RM1 trillion.
To enhance efficiency & increase the breadth and depth of the Malaysian wealth management ecosystem, the SC has: ✅ Widened qualifications for sophisticated investors. ✅ Speed up IPO approvals within 3-months ✅ Accelerated listing transfers from ACE to Main Market ✅ Capacity building initiatives to encourage CVC ✅ MyCIF co-investment programme in ECF & P2P campaigns 📋 5-year MSME and MTC roadmap to enhance access to capital market financing.
The SC is introducing a VC Golden Pass to help experienced international VCs register in Malaysia. This green lane process will reduce registration time from 6 weeks to 2 weeks, subject to SC's Focused Scope Assessment framework.
The SC is enhancing the vetting process for faster Employement Pass issuances, facilitating non-Malaysian personnel relocation, and collaborating with other agencies to connect VC firms with local communities.
The SC is setting up a VC Academy to develop capital market talent. Courses and public resources will be offered to seasoned and aspiring VC professionals, investors, and service providers.
Full Text
Bismillahirrahmanirrahim
Salutations
YB Tuan Rafizi Ramli, Menteri Ekonomi
YB Tuan Gobind Singh Deo, Menteri Digital
Distinguished guests, ladies and gentlemen, Assalamualaikum warahmatullahi wabarakatuh and good afternoon
Firstly, I would like to thank YB Rafizi and the organisers for KL20 for giving me the opportunity to speak today. I would also like to bid “selamat datang” or welcome to our international guests.
Ladies and gentlemen,
Private markets growth, opportunities ahead
In Malaysia, the private markets have seen steady growth, with many positive developments over recent years.
There are over 130 registered corporations and RM17.6bil in AUM in the VC and PE space as of 2023.
Combined with licensed fund managers, AUM of the Malaysian fund management industry has grown to almost RM1 trillion as of end 2023.
Growth in alternative investments, with RM3.8 billion (2023) invested across VC, PE, ECF and P2P. Programmes such as Dana Impak, Dana Perintis and national fund-of-fund programmes which aim to attract experienced VC firms and crowd-in private investors in the VC asset class have also contributed to this.
These are positive signs that suggest VCs can capitalise on Malaysia’s growing affluence and demand for more vibrant and diverse asset classes in wealth management.
Malaysia’s economic fundamentals remain resilient with a projected GDP of 4.6% for 20241 .
The semiconductor industry stands out with Malaysia carving a niche as a competitive destination in the global semiconductor supply chain.
Local players (including startups) are moving up the value chain into integrated circuit (IC) design attracting over RM80 billion in domestic and foreign investment in the E&E industry 2023 alone.
In 2023, Bursa Malaysia’s strong pipeline of listings (32 listings and RM3.6 billion raised) have seen several semiconductor companies doubling their valuations or more since going public.
SC’s recent and ongoing efforts
In the past few years, the SC has introduced several new reforms and development initiatives to enhance the vibrancy of the Malaysian capital market. The goal is to enhance efficiency and increase the breadth and depth of the Malaysian wealth management ecosystem and position Malaysia as a competitive and attractive destination for both local and foreign investors.
In February 2024, the SC widened qualifications for sophisticated investors to deepen the investor base for restricted products, including VC funds. In addition to wealth and income tests, a new category for knowledge and experience was introduced to assess if investors qualify as sophisticated investors. “We believe that knowledge and experience are just as valuable as wealth and income.”
We have also jointly committed with Bursa Malaysia to speed-up IPO approvals to within 3-months (previously it can take 6-months or more) to ensure quick time to market for listings on Bursa Malaysia
Companies can also benefit from an accelerated listing transfers from ACE to Main Market, following amendments to the SC’s Equity Guidelines effective 1 Jan 2024. The transfer is now almost automatic.
The SC has implemented capacity building programmes to encourage corporate venturing as well as incentives to encourage corporate investment in startups. SC is also exploring further efforts on corporate innovation, so do watch this space.
The SC, with the support of the Ministry of Finance, had also implemented a successful co-investment scheme under the MyCIF programme.
As of December 2023, MyCIF has co-invested RM930 million in ECF and P2P campaigns, benefiting 6,328 MSMEs.
MyCIF has invested 3.7 times the total grant amount of RM250 million by reinvesting returns from repayments and dividends into additional ECF and P2P campaigns by MSMEs.
The crowding-in effect of MyCIF led to a 3.5-fold increase in private investment in ECF and P2P from 2020 to 2023.
New measures were also introduced to incentivise investments in agriculture and bio-economy, to drive innovation and sustainability in these sectors.
We are also looking at adding another RM100 million in the co-investment space, to be managed by the SC
We are in the final stages of launching a 5-Year Roadmap designed to enhance access to capital market financing for Micro, Small and Medium Enterprises (MSMEs) and Mid-Tier Companies (MTCs).
We are addressing the pressing issue of a significant financing gap faced by these companies. The Capital Market Master Plan 3 (CMP3) estimated a RM90 billion financing gap for MSMEs alone in 2017.
The importance of this initiative cannot be overstated, considering the important role that MSMEs and MTCs play in the Malaysian economy.
MSMEs account for 38% of the national GDP and 48% of employment, while MTCs account for 36% of the GDP and 16% of employment.
The Roadmap contains over 30 initiatives, encompassing 3 key pillars: (i) regulatory and product innovation; (ii) market infrastructure; and (iii) capacity building.
The Roadmap takes a “whole-of-nation approach” – emphasising the necessity of collaborative efforts among diverse stakeholders to unlock the full potential of MSMEs and MTCs, while fostering sustainable growth and development.
VC Golden Pass
As part of our comprehensive developmental plan, we are looking to welcome experienced international VCs looking to establish a strong presence in Malaysia to cater to both domestic and regional needs. In this regard, we will introduce a VC Golden Pass, designed to streamline the process of VC registration with the SC for eligible international VCs setting up in Malaysia.
Under this purview, the SC is introducing a green lane process to expedite VC registration from the current 6 weeks to 2 weeks, subject upon the fulfilment of stipulated requirements under SC’s Focused Scope Assessment framework.
We are also pleased to announce the enhancement of the vetting process towards speedier issuances of Employement Pass to facilitate relocation of non-Malaysian personnel.
Together with the other agencies, we are also happy to connect VC firms with the local community, and potentially identify partners in their foray to tap into Malaysian and regional opportunities.
I would also encourage interested VCs and founders to explore other marquee initiatives under KL20, which offer incentives for locating near KL’s vibrant startup community.
VC Academy
As part of SC’s commitment to nurturing talent within the capital markets, SC will be introducing a comprehensive skills development programme tailored to professionals in the VC industry and the broader Malaysian private markets.
SIDC, the SC’s talent development arm, will introduce an array of capacity building programmes.
This will encompass a diverse range of offerings, including tailored courses and easily accessible public resources designed to cater to the needs of both seasoned veterans and aspiring entrants within the VC industry.
We will also extend our reach to include investors and service providers, ensuring a holistic and inclusive skill enhancement across the board.
Ladies and gentleman,
We are all excited to witness the convergence of numerous stakeholders rallying under the banner of KL20, united in vision of transforming Malaysia into an attractive and thriving hub for startups and VCs.
Rest assured, the SC stands steadfast in our commitment to do whatever it is necessary to promote this effort.
I believe private markets hold immense potential as a catalyst for propelling Malaysia’s economy to new heights. It is an opportune moment for investors to bank on Malaysia’s growing tech and industrial base and be part of the next success story.
I look forward to welcoming you to your presence in Malaysia.
Thank you very much.
IMF World Economic Outlook, January 2024 Update https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024
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.
