The Malaysian Government is planning to set up a National Stimulation Fund worth about 1.2 billion ringgit ($281.3 million) to support digitalisation of local businesses.
The government will allocate 600 million ringgit while the other 600 million ringgit will be matched by domestic and international investors, he said in a televised announcement.
The move forms part of the so-called Short-Term Economic Recovery Plan announced by the Prime Minister Muhyiddin Yassin on Friday.
“The fund will be used to promote innovation and expand domestic venture capital. International investors that have expressed interest include SK Group, Hanwha Asset Management, KB Investment Co. Ltd, Provident Growth, 500 Startups and The Hive,” he said.
The investment fund will match institutional private capital investment with selected venture capital and early-stage tech fund managers for the following funds: seed-stage/co-creation funds, Series A/B Funds, growth-stage tech funds, venture debt funds, opportunistic funds (e.g., e-sports, healthcare), according to a booklet of the Short-Term Economic Recovery Plan.
The objective of the fund is to support digitalisation of Malaysian businesses by channelling funding from international investors into the local venture capital space. The beneficiaries of the fund, which will start in July, include start-ups and local venture capital funds in the private sector, according to the booklet.
The government will also allocate RM100 million to set up the National Technology and Innovation Sandbox, led by Science, Technology and Innovation Ministry, to test new technology, such as the use of drones in goods delivery and self-driven vehicles, Muhyiddin said.
The Short-Term Economic Recovery Plan is an additional economic stimulus package worth RM35 billion ($8.2 billion) aimed to stimulate the economy and lend support to industries badly-affected by the COVID-19 outbreak. The plan involves 40 initiatives worth RM35 billion, of which RM10 billion is a direct fiscal injection by the government.
Other measures include tax incentives for the purchase of passenger cars, financial relief for home buyers, real property gain tax exemption, tax exemptions for various sectors including tourism, export duty exemption for palm oil, childcare incentives, financial aids, an extension of the wage subsidy programme, tax holidays for companies relocating into Malaysia, among others. These measures also come on top of incentives worth RM260 billion ringgit announced earlier in late-March and April.
Business activities in Malaysia are resuming as the country gradually eased coronavirus lockdown measures. Almost all businesses are allowed to reopen, albeit subject to strict conditions, in the conditional movement control order (CMCO).
The World Bank in April cut Malaysia’s 2020 GDP growth forecast to a negative 0.1 per cent. Last week, Malaysia’s Statistics Department said the country is heading into a recession in the next four to six months as stay-at-home orders to contain the pandemic froze economic activity for almost two months. Similar measures across the globe, which have slowed trade, have further compounded the challenges for Malaysia’s export-oriented economy.