KUALA LUMPUR: About 40% of technology startups and social enterprises may fold from June this year if assistance is not rendered to the local startup community, according to an industry think tank.
Future Digital, an arm of the National Tech Association of Malaysia (Pikom), said the government’s RM250 billion Prihatin Rakyat economic stimulus package provides little or no help to technology startups.
It recommended that RM200 million be set aside from the RM4.5 billion allocation for small and medium-size enterprises.
The money could be used to fund technology companies and startups, via agencies such as Malaysia Venture Capital Management Bhd and Malaysia Debt Ventures.
Future Digital chairman Ganesh Kumar Bangah said technology startups do not qualify for most loans as most of them are less than one-year old, have no track record and do not meet the minimum staffing count required.
“Should the movement control order be extended for another few weeks, it would be difficult for many of these companies to survive as they may have insufficient cash flow,” said Ganesh, who is also immediate past chairman of Pikom.
A 2020 survey last month by the Malaysian Global and Innovation Centre had indicated that fewer than 3% of startups would survive if the Covid-19 crisis continues for the next 12 months.
Ganesh said the government should also continue to encourage private sector investments into technology companies and startups by providing matching investments and/or partial guarantees to Malaysian investors investing into Malaysian startups.