Malaysia has introduced several initiatives to ensure its homegrown startups will have access to later stage financing in the country so they do not need to seek listing abroad, said Prime Minister Anwar Ibrahim.

“I had the opportunity of meeting various successful homegrown startups such as [used car platform]Carsome, [integrated circuit design service firm] Oppstar and [dairy producer] Farm Fresh,” he said in his keynote address at the Invest Malaysia event in Kuala Lumpur. “My administration is committed to support high value-add local startups from early stage right up to listing onto Bursa Malaysia (local stock exchange).”

Towards this, he said government-linked investment companies (GLICs) will set aside MYR1.5 billion ($332.7 million) in 2023 to invest in such homegrown startups; a tax deduction will be provided on listing costs for companies listing on ACE market, LEAP market as well as technology stocks onto the Main Board of the local exchange; and listed companies will be allowed issuance of dual class shares.

“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,” Anwar, who is also the Finance Minister, added.

The venture capital and tech startups fraternity has always pointed out the access to funding, especially later stage funding, as one of the reasons Malaysia is losing some of its homegrown tech startups and talents to neighboring Singapore, which has a better-developed ecosystem for start-up funding that helps attract international financiers and bring higher valuations for their public offerings.

Malaysia-born tech unicorn Grab, which moved its headquarters to Singapore in 2014, has since evolved from a ride-hailing major to a super app offering a slew of other services including food delivery and payments. The tech firm was listed on NASDAQ in December 2021 in a SPAC deal that valued Grab at approximately $39.6 billion.

Malaysia-headquartered Carsome, which is also the country’s first tech unicorn, was said to be seeking to go public through a dual listing on NASDAQ and the Singapore Stock Exchange that would value the company at around $2 billion. Bloomberg later reported that Carsome will be delaying its dual listing plans on concerns that deteriorating macroeconomic conditions could dent its valuation.

Meanwhile, Malaysian stock exchange’s move to allow listed companies to issue dual-class shares also came after neighboring Indonesia introduce a similar initiative in 2021 in a bid to boost tech IPOs on Indonesia Stock Exchange (IDX).

Under a dual-class shares framework, certain shares have more voting rights than others, allowing holders, usually the company’s founders, to retain directional control of their company. It is also a common practice among tech startups in the US, according to earlier reports.

More details on capital gains tax

Allaying concerns that the government’s move to impose capital gains tax will deter investments, Anwar said the tax will only be finalized upon extensive engagement with stakeholders.

“I would like to give you the government’s commitment that: – First, the tax will only be finalized upon extensive engagement with stakeholders; – Second, the tax will not be introduced on listed shares; and – Third, the disposal of unlisted shares for an approved Initial Public Offering will also not be subject to capital gains tax,” he said.
Earlier in the Revised Budget 2023, it was reported that the government may introduce a capital gains tax on the sale of shares in private companies in 2024.

Government commits $2.2M as seed fund for carbon credits market

Meanwhile, launched in December last year, the Bursa Carbon Exchange is a vital catalyst in the acceleration towards a net-zero future. It is also the first exchange in the world to receive a Shariah pronouncement for its Carbon Exchange.

To support the national journey to achieve Net Zero as early as 2050, the prime minister also announced that the government is committing to a seed fund amounting to MYR10 million ($2.21 million) to act as an assured demand of Malaysian-generated carbon credits to kickstart the market.

ESG matters

On Environmental, Social, and Governance (ESG)-related policies, Malaysia also seeks to accelerate the transition and transformation of industries and local players towards ESG adoption, even for small and medium enterprises (SMEs).

For example, through Ministry of International Trade and Industry, Anwar said consultation and engagement with local and international stakeholders is ongoing to develop the National ESG framework for the manufacturing sector by 2024.
This will enable companies, both public listed companies as well as non-listed SMEs, to calculate their carbon emissions impact. It will also help them to disclose standardized common ESG data in a way that conforms to established global standards.

Bursa Malaysia works with London Stock Exchange to roll out Centralized Sustainability Reporting platform

Bursa Malaysia, working with the London Stock Exchange Group (LSEG), will be rolling out a Centralized Sustainability Reporting platform next month, according to Anwar.

This will enable companies, both public listed companies as well as non-listed SMEs, to calculate their carbon emissions impact. It will also help them to disclose standardized common ESG data in a way that conforms to established global standards.

“This platform has the potential to be a key enabler to Malaysia’s pivot to green, and to support our sustainable development, while creating high skill jobs for our progress towards a high income nation,” he added.

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