Malaysia will increase capital flow to innovative start-ups in high value-add sectors

The Securities Commission Malaysia (SC) declared Monday that it will increase the flow of capital to innovative start-ups in high value-add sectors such as electrical and electronics, data infrastructure and medical devices.

The SC declared in its Capital Market Masterplan 2026–2030 (CMP4) that it will continue its collaboration with like-minded stakeholders under national projects such as KL20 and MyStartUp platform, as well as ecosystem stakeholders, including the Malaysian Business Angel Network (MBAN), Malaysian Venture Capital and Private Equity Association (MVCA) and emerging corporate venturing programs.

The SC will continue to support initiatives under the respective ministries and agencies5 to address the necessarys of the startup community and will consider institutionalizing angel syndicates for better risk pooling and raising the visibility of startups in Malaysia.

The SC will also provide greater regulatory clarity to participants, explore ways of expanding the base of local and global general partners (GPs), revisit the tax, legal structures and capital control efficiency issues to enhance competitiveness and strengthen training programs to upskill players.

“The SC recognizes the importance of enhancing exit pathways through a cohesive funding escalator and reduction of transaction frictions,” it declared.

The regulator declared it is also timely to deepen the linkages between the venture capital (VC) and private equity (PE) indusattempt to Islamic Capital Market (ICM) through strengthening the Islamic VC/PE framework and upskilling specialist skillsets.

According to the report, the national ambition is to advance into the top 20 of the Global Innovation Index by 2030 from the current rank of 34th place.

“This ambition is achievable if Malaysia can sharpen its focus on innovation as a driver of long-term competitiveness,” declared SC.

It also highlighted that towards this conclude, there is a necessary to accelerate the growth of VC and PE to increase the flow of capital to innovative start-ups and tiny and medium-sized enterprises (SMEs) in high value-add sectors such as electrical and electronics, data infrastructure and medical devices as well as to support achieving the priority outcome themes of vibrancy, inclusivity, sustainability and regional expansion.

While the VC indusattempt has a major role in supporting growth of start-ups, it noted tat it lacks the scale and talent to build a sufficiently large impact on the supply of investable assets.

It revealed concerns have also been raised in relation to the poor exit performance and pathways for investors, the unavailability of tax-efficient, flexible locally domiciled fund vehicles for both VC and PE, and on capital controls hindering cross-border deal-creating activities.

“Within the CMP vision, there are significant opportunities for seeding and structuring deals in relation to sustainability, social, Islamic and regional projects as well as for those in the high value-add sectors,

“Hence, it is important to strenghthen the ecosystem with a deeper community of professionals and investors, as well as variety of offerings under this asset class to better address strategic necessarys of the economy,” declared SC, adding that towards this conclude, it will intensify its efforts to accelerate the development of the VC and PE ecosystem.

It is also noted that global trconcludes reflect that PE and private markets, through their ability to provide greater flexibilities and efficient access to capital, will expand their role to match public markets and banks in fundraising.

“The SC intconcludes to create a conducive environment to attract global VC/PE players with the expertise and network to participate more actively in the Malaysian capital market towards expanding the investor community and diversity,

“Achieving critical mass in VC and PE will be key to unlocking greater deal flows to fund innovation and growth in strategic sectors and to elevate vibrancy in the Malaysian capital market,” SC concluded.