March 30, 2015 7:00 pm JST
Malaysia's startup scene

Government stokes entrepreneurial fires

KATE MAYBERRY, Contributing writer

KUALA LUMPUR -- Two days after giving up a well-paid job and five-year career as a management consultant, Daniel Lim is getting to grips with a Web app framework at a developer boot camp. This, he hopes, will be the first step toward success in the rapidly evolving world of digital startups.

     "I wanted to get out of my comfort zone," the Malaysian finance graduate said during a short break from his first stab at the development tool known as Ruby on Rails. "I will be turning 27 at the end of the year, so if I want to take a risk, [now] is the best time. I want to see if I can create something on my own."

     Josh Teng, the course leader who owns a startup offering customer support services, said the application process is very "selective." "We don't disqualify students based on academic achievements," he said, "but we only admit people who are truly passionate, motivated and committed to learning a new skill."

     The course is organized by the government-backed Malaysian Global Innovation and Creativity Centre. Usually referred to as MaGIC, the agency was launched in April 2014 and is located in Cyberjaya, a city created out of a palm oil plantation in 1996 about 30km south of Kuala Lumpur. The place was envisioned as Malaysia's Silicon Valley. It provides training, mentoring and other assistance, such as space to work and connections to investors.

     Nearly two decades ago, then-Prime Minister Mahathir Mohamad set up a special economic zone called the Multimedia Super Corridor -- which includes Cyberjaya -- and convinced CEOs of some of the world's leading technology companies to become advisers. The government has since created a plethora of largely state-backed funds to support early stage startups.

     There have been a few success stories, such as Jobstreet and MyTeksi (or GrabTaxi as it is known elsewhere in Asia). But Malaysia is still far from being a tech hub.

     According to the annual Digital Evolution Index published by Tufts University, Malaysia was the second-fastest improving startup ecosystem from 2008 to 2013. By some measures, it even rivaled Singapore, which ranked first overall. Yet in terms of broader factors, such as infrastructure, consumer behavior, innovation and institutions, Malaysia ranked 23rd out of the 50 countries surveyed.

     Industry players say that a small and rather traditional local market is one of the main problems, as is a bureaucracy that can be difficult for outsiders to navigate. They also blame an old-fashioned education system and lack of business savvy among young entrepreneurs. In general, the few private venture capitalists that have started to operate from Malaysia remain fairly cautious in their evaluation of the country's startup businesses, they say.

"Not hungry enough"

"We need to double down on education," said 31-year-old Heislyc Loh, who worked with MaGIC until January and runs a monthly gathering to help tech entrepreneurs learn and succeed. Loh, who is also the Malaysian representative for the Founder Institute -- a global startup training program -- thinks local entrepreneurs need to hone their business skills and get a better understanding of how difficult it can be to get a company off the ground.

    "We have a lot of people inspired, but they are not doing enough to become real entrepreneurs," he said. "It takes a lot of hard work and they are not hungry enough."

     Ravi Shankar Chaturvedi, a research fellow on innovation and change at Tufts' Fletcher School and co-author of the Digital Evolution Index, thinks that MaGIC is on the right track.

     "Institutions are vital to the creation and efficient functioning of marketplaces and ecosystems," he wrote in an email. "Particularly in emerging sectors, it is governments that create a market where none could exist before. Initiatives like MaGIC are critical to jump-starting entrepreneurship and innovation. The Malaysian government deserves kudos for its far-sighted policies in this regard."

     

Prathib Sooria Demudu knows how difficult it can be to set up a successful business, but that has not dampened his determination to create a multimillion-dollar company. The 26-year-old has been dabbling in business since he was a small boy helping his parents in their sundry shop in Ipoh, in the northern state of Perak. His first startup -- an app to sell express bus tickets -- failed. He has high hopes for his latest creation, Golfbogey.

     "We allow golfers to make reservations and clubs to improve efficiency," Prathib explained in the co-working space at MaGIC, where he is based. "It's a kind of matchmaking." About 100 golfers now use the site each month to make bookings at 12 Malaysian courses.

     Golfbogey, which went live last November, recently applied for a grant from the government-backed Cradle Fund and is looking for funding to expand further. There has been "some interest" from investors, Prathib said.

     The entrepreneur admits he failed to adequately research the market on his first startup attempt. He also struggled to find tech support. This time, Prathib is targeting Malaysia's golf tourism market, which in 2013 was valued at 290 million ringgit (about $88 million at the time). He has sought advice from successful Malaysian entrepreneurs, sometimes with the help of MaGIC.

Boot camp pressure 

Golfbogey is one of 89 companies currently operating from the co-working space in Cyberjaya, which is open 24 hours a day and furnished in Silicon Valley style with a ping pong table, bean bags and a well-equipped pantry. The whole area is in the midst of renovation -- the sound of drills and steel cutters rumbles through the building -- but it is designed to give businesses a greater chance of success by lowering their costs and giving them access to mentors and other advisers.

     Prathib's mentors include Puvanesan Subenthiran, chief executive of IT outsourcing company Privasia Technology, and Khailee Ng, a serial entrepreneur whose successes include SAYS.com.

     Over at the boot camp, the group is divided up into pairs and given as many as nine coding challenges each day. Halfway through the course, they will be tested. If they do not make the cut they will be asked to leave. At the end, they will be asked to pitch an idea they have been working on to a panel of expert judges.

     "Every one of you has made sacrifices," Teng said in a pep talk before assigning the first coding task. "Some of you quit your jobs, others are driving an hour or so here and back every day, but we are here for the same goal. We are a team -- mentor each other, encourage each other." He paused and smiled before adding: "And make sure you get enough sleep."

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