On 30 September 2018, the Communications and Multimedia Minister, Gobind Singh Deo announced that his ministry is planning to set up a new commission (“Commission”) to develop startups and venture capital industry in Malaysia.
Essentially, the Commission aims to streamline efforts in view of developing startups and venture capital in Malaysia.The proposed Commission will be empowered by an act of Parliament thus giving the Commission greater power and authority to be able to address issues facing the growth of the startup ecosystem. Some of the proposed powers include promoting policies and creating legislation and offering funding that will help startups scale fast. In the interim, a temporary group will be set up to build the structure of the Commission.
To illustrate, Agensi Inovasi Malaysia (“AIM”) was set up via an act of Parliament under the Akta Agensi Inovasi Malaysia in 2010. The AIM was created in view of promotion of an “innovation economy” and achieving the country’s aspirations of becoming a high-income nation status.
In our view, the Commission is indeed a laudable effort by the minister. However, the scope of powers of the proposed Commission should be clearly defined, or else there may be overlap with between existing agencies such as Malaysian Global Innovation & Creativity Centre, Cradlle Fund Sdn Bhd, Malaysia Venture Capital Management Berhad and ministries namely Ministry of Finance and Ministry of Science, Technology and Innovation to name a few.
Presently, venture capital firms are regulated by the Securities Commission of Malaysia under the Guidelines on the Registration of Venture Capital and Private Equity. However, startups in Malaysia is not regulated by a single regulator per se, however a startup may be regulated by different regulators depending on the nature of the startup’s business. For instance, a startup involved in logistics may fall within the purview of the Ministry of Transport.
Generally, Companies Commission of Malaysia (“CCM”) takes precedence as the statutory body governing startups as most startups are private limited companies under the Companies Act 2016. However, the CCM does not distinguish between a technology startup or a traditional brick and mortar business. In our view, CCM may be a good source for statistics for the Commission to be able to identify the number of technology startups incorporated in Malaysia.
At this articles goes to press, we have not heard of any update on the proposed Commission as to whether there’d be any draft bill prior to its proposed tabling in the next Parliament sitting. In our view, the setting up of the Commission is a positive step in the right direction, and an important move that perhaps was long overdue.
[via The Star]