Kean Wei Kong’s hands snapped from the wheel as we hit the highway in the midday rain.
His sedan, a Malaysian-made Proton S70, kept cruising on its own, flowing with the traffic snaking into Kuala Lumpur.
The bespectacled 28-year-old, a former insurance salesman, was taking me for a spin of what he and two college friends were selling: a plug-and-play dashcam that uses AI to drive your family car.
Their company is Kommu, one of the 4,000 Malaysian startups the federal government hopes will form a key pillar of a new Asian tech boom. As the nation exits an era of political turmoil, founders like Kean say they’re hopeful.
“The younger generations are stepping up,” he said as he crossed his arms, letting the car do the work. “We’re no longer thinking of survival. It’s more like we’re in an innovation phase.”
Born from years of tweaking open-source code, Kean’s software controls limited steering and acceleration. It’s nothing that EV makers like Tesla aren’t already selling, but he and his buddies custom-engineered their product, made with Chinese phone parts, for Malaysia’s national auto brands.
Their pitch is that for $800, the owner of a $10,000 hatchback can plug in Kean’s dashcam via two cables and get partial self-driving.
Kean is unsure if their product is legal, though he said they haven’t seen trouble from authorities and secured prize money from a government-affiliated competition.
“It’s like a gray area. Malaysia isn’t a very regulated country yet,” he said. “That’s why there are opportunities for startups like us.”
Off to a good start
A political reckoning saw Malaysia cycle through five prime ministers in six years, until Anwar Ibrahim, the current prime minister, squeezed through the November 2022 national polls through a coalition.
As the dust settles, more than a dozen local tech insiders told Business Insider that Malaysia feels like it’s on the cusp of a new chapter. Anwar champions the idea of the next era in the nation’s economy, rallying his government for an all-out push to develop Southeast Asia’s version of Silicon Valley.
The prime minister described Malaysia’s new effort as “a clear break from the past,” saying in May that the country had missed opportunities for tech investments in previous years.
Malaysia is banking on more than just stability. It commands vast reserves of land and water, useful for facilities like data centers run by Intel, Nvidia, and ByteDance. US-China tensions and the Ukraine war brought a wave of investors looking to park funds in new havens. And Malaysia’s popular but spatially constrained neighbor, Singapore, is contending with surging living and business costs.
Anwar’s government is touting Malaysia as an appealing alternative, announcing a plan in April to extend financial support, visa access, and job benefits to foreign startups moving in. State money, including the sovereign wealth fund Khazanah Nasional Berhad, is offering $27.6 billion for all local ventures over the next five years.
“It’s different. Because this time, the government isn’t doing too much,” said Tan Eng Tong, a startup advisor who runs an education center for tech workers in Malaysia. He spent the 1990s building his career in Silicon Valley with Seagate and Hewlett-Packard.
Tan believes Malaysia’s last tech mega-project in the 1990s was the result of a government trying to force a revolution. Then-Prime Minister Mahathir Mohamad cleared land for global companies to settle down, dreaming of transforming greater Kuala Lumpur into an IT powerhouse.
But many of the prized multinationals eventually used their new Malaysian bases for low-cost labor in manufacturing and outsourcing. When a BI reporter visited Cyberjaya — a development near the capital meant to house the world’s hottest startups — in 2022, the largely residential area was filled with abandoned business hubs and quiet malls.
5,000 startups by 2025
Now, the country is trying a new approach. Its semiconductor industry, largely based in the state of Penang, already houses Intel and Texas Instruments. Officials have announced a plan to bring in $100 billion in additional investment for the sector, without specifying a deadline.
Anwar is continuing the prior administration’s goal of producing 5,000 local startups and five unicorns by 2025.
Norman Matthieu Vanhaecke, the Belgian-Malay CEO of Cradle Fund, the government’s agency supporting early-stage firms, said the country now has about 4,000 startups. The overwhelming majority are located in the capital and the state that surrounds it, Selangor.
But Vanhaecke says Malaysia’s true near-term goal is to get on the map and have Kuala Lumpur join Tokyo, Seoul, and Singapore on global lists like Startup Genome’s ecosystem ranking.
Singapore and Indonesia have enjoyed the lion’s share of venture capital activity in Southeast Asia. In 2023, they secured 651 and 165 deals, respectively, according to data from the investment database PitchBook.
Malaysia recorded 71 deals that year, and the total annual value of its deals has never reached $1 billion, per PitchBook. The total value of deals in Singapore has eclipsed $9 billion annually in the last three years.
The Malaysia Digital Economy Corporation, a government agency tasked with attracting tech investment, is trying to give foreign startups a “soft-landing zone” in Malaysia through coworking spaces.
The agency told BI that since 2016, it has partnered with 23 locations that have serviced about 600 startups. These firms are promised low business costs and potential access to government and private sector financing.
Malaysia opens its state funds to startups
Noor Amy Ismail, an analyst asked by the Malaysian government to assess the local VC scene in 2023, said she studied South Korea’s 2014 tech drive for her recommendations. There, government funds set the stage, then petered off as private investors poured in.
Amy advised Malaysian officials to do the same.
“That is what our venture capital road map is trying to address, to get more corporate investors on board to support,” she said.
State and national funds, which have long dominated investing in Malaysia, have been opening their coffers to startups.
One founder, Jimmy How, said state executives were far more risk-averse 10 years ago when he started his affiliate marketing company.
“Back then, guys like Khazanah wouldn’t even look at startups like us,” How said. Khazanah, Malaysia’s main sovereign wealth fund, earmarked $1.3 billion in 2023 for startups and venture capital over the next five years.
How’s company received an investment from Penjana Kapital, a national venture program, during a Series C funding round last year.
Gokula Krishnan, the founder of Vircle, a financial literacy app for kids, said his firm received a seed investment from Khazanah in 2023. It helped convince him to stay in Malaysia instead of leaving for Singapore.
“Talent is relatively cheap. Available office space is cheap. Cost of living is supercheap, even compared to Vietnam or Indonesia,” he said about Malaysia. “I don’t see any other country in Southeast Asia that has this mix.”
No more ‘shit-hole state of mind’
Khailee Ng, an energetic Malaysian with a mane of black hair flowing down to his shoulders, is perhaps the biggest name in Kuala Lumpur’s venture capital scene. He’s a managing partner with the US venture firm 500 Global, which has seeded at least six unicorns in Southeast Asia since 2014.
Malaysia, burdened by a history of infighting and policy reversals, has for too long wallowed in a self-defeating attitude — a “shit-hole state of mind,” he said.
But Ng said he’s seen far less of that among entrepreneurs in the last two years. “They’re getting funding, they’re kinda seeing that things are working. I think a lot of tech startups are starting to be open to the idea that something good will happen,” he said.
His team analyzed 198 local startups from January 2023 to June 2024 and found that 33 were profitable, with at least 20% annual growth and $5 million in revenue.
Of that group, 11 had over 60% growth and $10 million in annual revenue.
“I was shocked,” Ng said, adding that 500 Global has since invested in five of those 11 firms.
Stronger currency boosts purchasing power
In Puchong, a town about 10 miles south of Kuala Lumpur, entrepreneurs Amirul Merican and Chor Chee Hoe were preparing just after dawn to meet their startup’s new landlord. They’re looking to move into a factory to expand production at their firm, Qarbotech, by 50 times.
In a garage space on the outskirts of the capital, their workers hauled tubs of grounded carbon to be heated into a patented liquid via a dozen or so kitchen microwaves.
That liquid is their product, a spray that Amirul and Chor say boosts crop yields for rice paddies and vegetables through improved photosynthesis.
Amirul said the last two years of political stability were a boon for their expansion plans.
Malaysia’s stronger currency has made purchasing American equipment cheaper — like a giant industrial-level microwave they bought to replace their kitchen appliances.
The ringgit has strengthened by over 3% against the dollar over the past year, peaking with a 13% gain against the dollar in September.
“That’s crazy,” Amirul said of the gains in September, when they bought the microwave. “We have a stronger currency, more international companies looking at Malaysia.”
Quelling the brain drain
One of Malaysia’s long-term challenges is quelling a brain drain to Singapore, Australia, and the West.
More than 1.1 million Malaysians lived in Singapore in 2022, about three-quarters of whom were skilled or semi-skilled workers.
Jayant Menon, a senior fellow who studies Asian trade and investment at the ISEAS-Yusof Ishak Institute in Singapore, said if Malaysia does not fix issues like its talent exodus, the tech push could become a collection of short-term investments spilling over from the US-China trade war.
Amy, the analyst asked to assess Malaysia’s tech scene, said the government should work on bringing middle-class female talent back into the workforce.
About 53% of Malaysian STEM graduates in 2021 were women, far higher than the global average of 29%.
“But the moment they enter the workforce, that number drops to about 43 to 44%,” Amy said of how many working STEM professionals are women. Middle-income Malaysians are often under pressure to care for both their children and retiring parents, and many women choose to take on that role since they earn 33% less than men in the country, she added.
“Naturally, the women will stay at home,” she said. “But we have all those women who we put on scholarships stuck at home.”
Malaysia could also struggle with educational gaps for its future workforce.
Nearly a quarter of Malaysia’s 17-year-old students failed math in the 2023 national exams, while another 28.9% scored a D or E grade, according to the Education Ministry.
The country has been grappling with inconsistent education policies, debating whether to offer science and math classes in English, Malay, or other mother tongues for the past two decades. Singapore’s education and government are primarily in English, a decision that helped make the city-state a business hub.
On the global front, Malaysia must also overcome a hit to its reputation from a major 2015 corruption scandal, in which officials funneled $4.5 billion from its sovereign wealth fund 1MDB into their own pockets.
Kean, the founder who’s building self-driving software, is aware of those potential pitfalls. But he said that for entrepreneurs like him, the only option for now is to keep going.
Since April 2022, Kommu says it has sold 400 dashcams, mostly to car enthusiasts. The company’s next phase of development is creating software that can navigate to destinations and know when to exit highways.
His team is unsure where Kommu can take its dashcam or where their exits lie. But he hopes that a way up could come from local automakers noticing their work and reaching out.
“I think any entrepreneur will tell you that the best time to start is now,” he said.
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