The Malaysian government has set aside MYR1.5 billion (US$332.7 million) to invest in local startups as well as offering tax breaks and incentives for stock market listings. It’s hoped the plan will encourage those firms to list on Bursa Malaysia instead of seeking an IPO overseas.
“I had the opportunity of meeting various successful homegrown startups such as Carsome, Oppstar and Farm Fresh. My administration is committed to support high value-add local startups from early stage right up to listing onto Bursa Malaysia,” Prime Minister Anwar Ibrahim was quoted by TechNode as saying. “We certainly want to ensure that successful startups will have access to later-stage financing here in Malaysia, so that they do not need to seek listing abroad.”
That has proven to be an issue in the past. Grab was founded in Malaysia but eventually moved to Singapore before listing on NASDAQ in 2021. Carsome, the country’s first tech unicorn, was rumored to be considering a dual listing on NASDAQ and the Singapore Stock Exchange but has since iced those plans due to a poor economic climate.
There is optimism that the Malaysian government’s plan to invest in local startups will see them stay in the country. Singapore has poached Grab and many other companies due to its more robust startup ecosystem that can attract international financiers and bring higher valuations for public offerings.
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Interesting Analysis
While the Malaysian government has announced plans to invest in local startups, the impact of this decision may not move the needle. Simply put, listing on Bursa Malaysia isn’t sexy. Many founders dream of floating on NASDAQ, the Singapore Exchange or even the Australian Securities Exchange because it is seen as offering credibility in addition to the financial benefits.
Even if Malaysia was able to provide a competitive environment for IPOs through funding, some businesses might still prefer the overseas option. Children who play soccer dream of suiting up for Liverpool, Manchester United, Barcelona and Real Madrid. This isn’t any disrespect to Johor Darul Ta’zim, but that’s just the way it is.
The same can be said of founders in the country who usually envision ringing the NYSE bell when taking their company public.
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