TECH STARTUPS – AN INFO BYTE FOR BURGEONING MARKETS

Introduction

Malaysia and New Zealand have had more than 60 years of diplomatic relations while being full members of the Commonwealth of Nations. Both countries have maintained strong bilateral ties, particularly in education, trade, security and defence and tourism.Since both countries have signed the Malaysia-New Zealand Free Trade Agreement (“MNZFTA”) on 26 October 2009 in Kuala Lumpur, which entered into force on 1 August 2010, two-way trade has increased by 57 per cent.

Trade through the tech industry (by way of business / commercial provision and knowledge exchange) has grown tremendously in the past decade.

Tech startups in New Zealand

New Zealand based Tech startups have grown its global footprint in a large way, with success stories such as Xero, a cloud accounting platform company that has multitudinous integrations to solve many business and company problems; and  Trade Me, the country’s first online marketplace. The market continues to grow its innovative expansion with  companies such as Jucebox, a startup working to create the ultimate home automation control device whereby the system allows our phones to be turned into a remote control for all your existing devices and electronics at home and Flick Electric, New Zealand’s energy retailer that allows consumers to have more control of their electricity bills through the app driven platform providing constant updates on price of a unit of electricity which goes up and down every 30 minutes. There seems to be no limit to the possibilities of how innovation integrates with our day-to-day lives, reducing time cost and providing valuable efficiencies.

Tech startups in Malaysia

Malaysia is not far behind on its growing tech startup scene. iFlix, a Malaysian tech company founded in 2014 has made its app available in 25 countries. It has a turnover of more than RM500,000,000.00. The Malaysian government through its principal agency, the Malaysian Investment Development Authority (“MIDA”) has been driving and facilitating tech startups to rise up as homegrown brands in the international arena. An RM1 billion fund has been allocated by the government for startups under the Budget 2018 is seen as a major support for the Malaysian home-grown tech scene.

Healthtech Partnerships

Recently, there has been greater the two countries insofar as the health industry is concerned. New Zealand’s health technology companies recently took part in the International Healthcare Conference & Exhibition 2018 which was organized by the Association of Private Hospitals of Malaysia (“APHM”) in August to share on innovative ideas and methods to upgrade efficiency and reduce costs. It is evident that there are plenty of opportunities to partner and invest to support growth of smart technology solutions in the healthcare sector.

Setting up tech-startups in Malaysia: Some considerations

Foreign ownership

Since 2009, the Malaysian government had liberalized many sectors by eliminating foreign equity restrictions. In 2012, the Malaysian government allowed up to 100% foreign equity participation in various services sectors such as telecommunications, healthcare and education. In other words, a company incorporated in Malaysia may be wholly owned by foreign investors. However, the relevant government department or statutory bodies may impose certain equity conditions for the application of business licenses or approvals, and the requirements of such equity conditions would depend on the nature of the business establishment.

Employment of Expatriates

A foreigner is able to register as a Director and set-up a Company in Malaysia, provided that he/she shall ordinarily reside in Malaysia by having a principal place of residence in Malaysia. However, a foreign Director will need to obtain valid work permit to operate the Company or perform duties of Director and also to open a personal or corporate bank account here. Approval of work permits may be granted for a director or a shareholder who is a foreigner for the purposes of protecting business investment. A company with foreign paid-up capital of US$2 million and above will be allowed up to 10 expatriate posts, including five key posts that are permanently filled by foreigners.

Quality Workforce

Apart from supportive government policies and initiatives, Malaysia being a country that gives priority to education and training, allows investors access to sn educated workforce at very competitive costs. The Malaysian government helped set up the Human Resource Development Fund which allows employers who contribute to the funds to apply for grants to subsidize the training and skills upgrading costs of their employees. Malaysia’s labour laws provide a legal framework to regulate the conduct of industrial relations and protect the interests of both employers and employees.

Infrastructure and strategic location

Malaysia has the most well-developed infrastructure compared to other developing countries in Asia consisting of well-maintained network of highways, airports, seaports which are continuously expanded in tandem with the economic growth of the country. Malaysia’s strategic location at the heart of Southeast Asia makes it the ideal gateway to Asia and an attractive regional hub for many foreign corporations.

Malaysia New Zealand Chamber of Commerce (“MNZCC”) was one of the 30 bodies which pledged their support to the business development initiatives introduced at the Selangor International Business Summit (“SIBS”) 2018, which was held to increase trade and investment links with Asean countries. Growing support from the governments and stronger ties between both countries reveal plenty of opportunity to collaborate, invest and emerge as leading technology ecosystems in Asean.

Shaun Paulian
Treasurer of MNZCC