Since its establishment 25 years ago, the Malaysia Digital Economy Corporation (MDEC) has led the growth of the country’s tech industry and digital economy, driving it towards becoming a digital capital for the region.
Having championed digital transformations for years, the arrival of the pandemic in late-2019 proved that MDEC’s role in leading the way is much more important than ever.
In a conversation with BusinessToday, MDEC’s Chief Executive Officer, Surina Shukri shares what the restructuring within the Corporation means for its direction and how MDEC is reinventing itself to fit in with the new norm.
“As we face the huge impact of escalating digital transformation and the Fourth Industrial Revolution (4IR), we recognise the enormity of the mandate we have been given to lead our country’s digital leap and achieve the Shared Prosperity Vision 2030.
We need to be agile, streamlined and collaborative as we build a digital economy that benefits the many. As such, we too, must undergo change or we will unwittingly risk being behind the times,” Shukri says.
Given their need to deliver impact at greater speeds and after careful consideration, MDEC decided to streamline their operations into four focus areas with five divisions, each mapped to its strategic thrusts.
These focus areas are led by a new MDEC Operating Council, which will encourage cross-division collaboration and agile, seamless solutions. Additionally, they also introduced IOOI (Input, Output, Outcome, Impact) Valuation Metrics to guide future resources allocation and measure our socio-economic contribution to society.
“We are confident that this reinvention will enable us to execute more with speed, expand mass outreach, create measurable socio-economic impact and address significant lapses in our governance within a digital-first future,” Shukri tells BusinessToday.
She further highlights that the decision to restructure also comes at a time where MDEC is looking to attract more digital investment into the country and develop the deep tech sectors. She also says MDEC is now fully focused on their role as a specialist Investment Promotion Agency (IPA).
“Working closely with other IPAs, we have taken on a targeted approach in attracting digital tech and services companies in the areas of AI, data analytics, cybersecurity, fintech, digital content, cloud computing and data centres, as well as emerging technologies in the areas of EduTech, Health Tech, Agtech, GreenTech and Dronetech,” she shares.
Simultaneously, MDEC is also focusing on the Global Business Services (GBS), under which they are working to attract MNCs to establish their regional technology hubs and advanced digital service centers in Malaysia.
At the same time, Shukri and her team is encouraging the existing GBS industry in the country to move up the value chain by embracing disruptive 4IR technologies.
“We recognise that fostering a welcoming startup ecosystem is critical for the development of global tech ventures who have bases in Malaysia,” she opines.
Shukri further highlighted that it is crucial MDEC’s performance delivers measurable socio-economic impact for the country. “The implementation of the IOOI methodology and the appointments of industry trailblazers into MDEC’s Board of Directors is a testament to our commitment.”
“These changes are not small and will take some time to integrate. Nonetheless, we need to be bold and decisive. As the leader of Malaysia’s digital economy transformation, we need to set an example in embracing change,” she says.
Supporting the startup ecosystem
According to Startup Genome’s 2020 report, Kuala Lumpur is the 11th emerging startup ecosystem in the world and is on track to becoming a top-tier startup ecosystem, due to low costs, high quality of living, progressive talent, fast-tracked visas and robust government support.
In 2019, Malaysian startups raised a total of US$226 million, with approximately US$99 million of that going into early-stage funding. MDEC aims to build further on this achievement by positioning the country as a digital hub for tech companies to set up and build global businesses.
In support of the country’s growing startup ecosystem, MDEC has stepped up to help 98 local tech companies last year to raise funds through alternative routes such as ECF and P2P platforms. Companies that have benefited from the initiatives include PolicyStreet, an InsurTech startup which successfully raised RM7.8 million, making them the largest ECF issuer in the country with the largest ECF investment raised.
“We conducted six funding initiatives to connect local startups with potential investors last year, which attracted 375 startups with funding need totaling US$243 million. As of September 2020, we have successfully raised close to 25% of this request,” Shukri tells BusinessToday.
MDEC has helped tech companies obtain funding from corporate VCs in the countries such as Petronas, Axiata Digital and AirAsia who have VC arms as part of their organisations. Shukri hopes that more corporates will follow in their footsteps to establish VC arms as she believes this will contribute to the growth of the country’s startup ecosystem and foster the holistic development of our digital economy.
The CEO also says that VC interest and investments are also beginning to return. “This was evident by the Finance Ministry’s recent appointment of eight foreign VC fund managers to invest in Malaysian startups under the Dana Penjana Nasional Initiative.”
The VCs have pledged to contribute a combined total of RM1.57 billion, surpassing its initial RM1.2 billion target. These funds will be spread across different funding stages (from early to growth stages) and in 4IR focus sectors such as Agtech, EduTech, Mobility and Artificial Intelligence.
MDEC’s ongoing GAIN programme will also continue to help catalyse Malaysian technology firms into global players. Thus far, the programme has helped grow close to 200 local digital companies into global players including Aerodyne, Softspace and Carsome.
“Not only will these initiatives help our tech startups across multiple sectors survive, but they also present opportunities for our homegrown talents to expand their operations and establish a regional and global footprint.
We aim to help our promising startup ecosystem grow from strength to strength and we are confidence that Kuala Lumpur can be listed in Startup Genome’s Top 30 startup ecosystems by 2025,” Shukri expresses optimistically.
Commenting on what VCs out there are looking for, Shukri says VCs are showing more interest in startups that can address real-world vulnerabilities in the economy and society through technology. Of particular interest, she says, are the fields of healthech, edutech, greentech, e-commerce, agitech and deep tech due to the sheer potential for improvement and advancement in these fields.
MDEC is also expecting to see investment continue to flow into the startup ecosystem in Southeast Asia, including Malaysia, as the region continues to attract attention from VCs and global tech companies alike for expansion and grow.
