Is a Commission the panacea for Malaysia’s startup ecosystem? | Digital Asia

• Minister of Communications Gobind Singh proposes step to fast track growth
• Ecosystem leaders adopt healthy skepticism, cautious optimism, see scope as too narrow

AFTER having been in listening mode ever since he assumed the post of Malaysian minister of Communications and Multimedia in mid-May, Gobind Singh Deo (pic) has heard enough suggestions, feedback and complaints from startups and venture capitalists to start forming some of his own ideas around what can be done to take the Malaysian startup ecosystem to the next level.

And on Fri, at the largest ecosystem gathering yet in Kuala Lumpur, organized at his behest, with around 200 entrepreneurs at hand, to hear their feedback on how government can help accelerate the growth of Malaysian startups into becoming regional and global winners, Gobind offered a suggestion that he described as, “a bold step to deal with the needs and concerns of the ecosystem” and which has sparked many conversations in the startup ecosystem.

His idea is to create a Commission for the startup and venture capital ecosystem that will be empowered by an Act of Parliament thus giving it greater power and authority to be able to help accelerate growth of the startup ecosystem by promoting policies and creating legislation and offering funding that will help startups scale fast.

“I agree that time is of the essence,” he said in his closing remarks at the Friday event, after having heard from various entrepreneurs, including Patrick Grove, Kamarul Muhamed, Khailee Ng and Ganesh Bangah Kumar, about the urgency of moving forward quickly to help Malaysian startups be winners on the regional and global stage.

Gobind also invited “the industry” consisting of between 10 to 12 leaders to, “meet me in 2-weeks time for suggestions on who will form the pro-tem committee to propose the structure for such a Commission.” Gobind expressed the hope that this can be completed by year end if not by Q1 2019.

Recent history however suggests that this timeline is wildly optimistic. Considering that the most recent such Commission in Malaysia was the Malaysian Aviation Commission (Mavcom) that started operating in 2016 – six years after it first started the process of setting up a pro-tem committee and working out the terms of reference and other procedures. 

But fortunately Balbeer Singh Khaira reminds us that if you go back to 2010, the national innovation agency or Agensi Inovasi Malaysia (AIM) was set up via an act of Parliament in a space of four months.

Balbeer should know, he was employee number 2 at Unit Inovasi Khas (Unik), an interim organization set up to prepare the ground work for AIM to be tabled in Parliament. From the time the Prime Minister's Office appointed Dr Kamal Jit Singh as CEO in mid 2010 with a budget of US$724,000 (RM3 million) for UNIK to get going, it took a mere four months before AIM was established.

“So it can be done,” he reassures. “Gobind just has to appoint the right person as CEO and the CEO has to appoint a team of hard workers that can get all the preparatory work, the consultations, the submission to the Attorney-General's office and cross all the dots and tees to get the Act ready to be tabled in Parliament,” he says.

Unik was formed in Sept 2010 and AIM was formed in Dec 2010 after being tabled to Parliament, and passed, that same month.

Now that we know Gobind can get his Commission on Startups and Venture Capital to be up and running by early 2019, the crucial question is, will such a Commission help or hinder the growth of the ecosystem it aims to help.

DNA asked some ecosystem leaders their opinion on the benefit of such a Commission. Opinions are divided here. A few were cautious but with caveats, one was bullish and one downright negative on the effectiveness of such a Commission.

Dr V Sivapalan, president of the Malaysian Business Angels Network (MBAN) sees the merits of having one organization that has the power and clout to create a better environment and ecosystem for startups and VCs to flourish. 

“On the other hand, if this commission comprises of the wrong people then instead of speeding things up it can slow things down. And if it becomes a mere ‘talk shop' with limited powers then that too will be a waste of time,” he warns.

On the other hand, Victor Chua, president of the Malaysian Venture Capital Association feels the ecosystem will always benefit from initiatives that are genuine and constructive. But he has questions about how this Commission will integrate with existing structures such as Malaysian Venture Capital and Private Equity Development Council (MVCDC) chaired by the Securities Commission.

The same concerns are shared by Elaine Lockman, president of the Malaysian ECF association which goes by the Registered Digital Market Association (RDMA). “The big question to me is, how it co-exists with the existing ecosystem regulators (eg Securities Commission, Bank Negara) and developmental agencies (SME Corp, MDEC, Cradle, MaGIC).”

On the other hand she is very cautious about the hype and whether the Commission will seek to “regulate” startups. “If it does, this seems archaic and goes against the grain of how startups operate in the context of innovation, agility, fluidity and swift execution.” 

Carrying a contrarian view, Fadzli Shah Anuar (pic, right), President of the Technopreneur Association of Malaysia (TeAM) feels there is already too much overlap of objectives between agencies and ministries and that a Commission, “will only serve the louder/influential representatives to the further the agenda for the agency they represent,” he shares.

“Honestly, if the government wants to streamline the landscape and make it more efficient, the proposed Commission should consist of industry members who DO NOT represent or have commercial ties to any existing agency or ministry,” he suggests.

Compensation is key to maintaining the independence of the Commission members and with those shown to be lobbying for certain quarters for commercial gain to be thrown out immediately,” he says.

Sivapalan concurs as well. “The key will be to select members who have the interest of the entire ecosystem at heart and not just their own interests.” 

Adds Fadzli, “Gobind's ministry should then empower this Commission to figure out where new programmes should fit in the landscape, streamline programmes and incentives across agencies.”

On the other hand, Ganesh, the president of Pikom, the National ICT Organisation, thinks it's “a great idea”. Noting however that it has drawn quite a bit of negativity among the startup ecosystem, he feels that the Commission should not be about regulating, “that should not be the Commission's job, but be focused on supporting the ecosystem with sufficient power to do so and to take ownership of KPIs.”

While he says Pikom supports the formation of such a Commission, he does feel the scope is too narrow. “Instead of being the Startup and VC Commission, I feel it should be the Digital Economy Commission as that is the bigger picture and mega trend of our times and we need to ensure Malaysia gets the transition right.”

Clearly, while there are already strong views about the idea of such a Commission, it is a healthy sign that the ecosystem leaders are not just blindly supporting the idea for a Commission but are approaching it with healthy skepticism and cautious optimism, which is what is needed.

Taking a cue from the AIM experience, perhaps the ecosystem leaders who go meet Gobind next week should also offer some names as to who can be the CEO of the interim organization set up as UNIK was, to help fast track the ground work and consultations needed for the formation of the Commission. And while the CEO of UNIK went on to become the CEO of AIM, that should not necessarily be the way the eventual Commission CEO is chosen.

Or, the ecosystem leaders can even modify the idea of having a Commission. Who knows. Interesting days lie ahead for Malaysia's digital economy and as Gobind says, speed is of essence.