Fact of the matter is, we need to start becoming a nation of technology producers and not just consumers
THERE is a saying in the Malay culture, “Kera di hutan disusukan, anak di buaian mati kelaparan”, a cautionary proverb of neglecting one’s own child while helping a stranger. But it also exemplifies a phenomenon amongst corporations and agencies in Malaysia with tendencies to select foreign companies over local ones for investment or procurement in technology-based products or services.
Much has been said and written about Malaysia missing the boat on Grab Holdings Ltd. While that is unfortunate, our country has no shortage when it comes to candidates for the next unicorn.
Across various technology sectors, Malaysian start-ups are thriving in the face of challenges. Start-ups such as BillPlz, TheNoor, Evenesis, OfficeCentral, Katsana, Terato and many others are robustly scaling not just locally, but also regionally across Asean. And while some of these start-ups do receive local funding, to scale further requires a concerted effort by local investors to match what regional venture capital companies can offer, or we risk again facing the Grab situation.
Credit where credit is due, Petronas (Petroliam National Bhd) has been at the forefront of nurturing local start-ups both financially and by providing access to pilot test sites through its Petronas Ventures arm.
This is a brilliant step as it allows the oil and gas (O&G) GLC (government-linked company) to evaluate the products and services provided by start-ups, while sandboxing risks associated with early adoption. Once the product or service is ready for wide deployment, the O&G company would have access to a vendor that understands its requirements and standards.
In the investment space, progress has also been made by both Petronas and KWAP (Retirement Fund Inc) with their joint investment in Aerodyne Group, a local drone services start-up. A US$30 million (RM133.69 million) investment is major step forward and a vote of confidence for this homegrown talent in particular, and the local start-up scene in general.
But we need to go beyond just sporadic action in the technology space. For a start, GLCs must stop setting up subsidiaries that compete directly with local start-ups and start embracing collaborations with them.
GLCs with deep domain knowledge of their business sectors are perfect candidates to offer mentorship, acceleration and investment. Early traction is an important element in the start-up development process as this allows them to deploy, learn and refine their products, and having a pilot site is invaluable in this product maturation cycle. Having a GLC on their client list also works wonders when the start-up makes a sales pitch to other customers.
Fact of the matter is, we need to start becoming a nation of technology producers and not
just consumers. The era of thriving on cheap labour has ended and we can’t grow beyond being a middle-income country without leaning heavily into building talent, workforce, products and services that use locally-developed technology as productivity leverage.
For better or worse, GLCs form a large pillar in the local economic landscape and it would be smart to utilise these corporations to boost future generations of companies that would drive our nation’s economic growth.
The global economy, climate and political situation is changing rapidly, and Malaysia cannot afford to be excessively dependent on others for critical technology. They way things are going, with shortages hitting everything from food to fuel, and a slide in the ringgit, the time to prioritise our locally grown technology start-ups grows more crucial in building competitive advantages in disruptive areas.
The last thing we want happening, is for that old proverb to be proven true.
Rashdan Ramlee is the former president of New Entrepreneur’s Forum, an association dedicated to assisting IT talents and Bumiputera start-ups, and CEO of Aegis Associates, a fintech advisory and blockchain solutions development firm.
- This article first appeared in The Malaysian Reserve weekly print edition