Malaysia to build region’s largest chip design park in bid for top startup-hub status
South-east Asia’s fifth-largest economy will also offer tax breaks, subsidies and visa exemption fees to draw global tech companies
[KUALA LUMPUR] With a 13 per cent market share in the global chip industry, Malaysia is set to up the ante by constructing the region’s largest integrated circuit (IC) design park. This initiative is part of the country’s strategy to advance from back-end semiconductor manufacturing to high-value front-end design work.
Additionally, Malaysia’s sovereign wealth fund, Khazanah Nasional, together with local pension fund Kumpulan Wang Persaraan (KWAP) and Blue Chip Venture Capital will invest up to RM3 billion (S$855 million) in the domestic and South-east Asian tech ecosystems.
These are part of a string of initiatives announced by Prime Minister Anwar Ibrahim on Monday (Apr 22) aimed at courting quality investment and propelling Malaysia into the ranks of the top 20 global startup hubs by 2030.
The 76-year-old premier, who is also the finance minister, was speaking at the launch of the KL20 Summit 2024 event on Monday.
“We are positioning Malaysia as an axis for leaders in semiconductors, clean energy, agritech and Islamic fintech. Doubling down on our edge will tap into the higher-value effort necessary to create new growth verticals and transform our fortunes,” said Anwar.
The IC design park in Selangor, set to be the largest in South-east Asia, will be developed by the Selangor state Information Technology and Digital Economy Corporation, in collaboration with British semiconductor and software design company Arm.
The South-east Asian nation has over 50 years of experience in the back-end of semiconductor manufacturing, including assembly, testing and packaging.
The unveiling of the New Industrial Master Plan 2030 in August last year, spearheaded by Anwar, aspired to propel Malaysia’s tech industry to a higher level, with more front-end activities such as wafer fabrication and IC design.
Khazanah is set to establish the “National Fund-of-Funds” with an initial allocation of RM1 billion. This fund will focus on investing in first-time Malaysian fund managers who specialise in seed and pre-seed stage funding. Additionally, it aims to invest over 50 per cent of its resources in tech-related companies within Malaysia.
Economy Minister Rafizi Ramli also announced a few incentives under the KL20 Action Plan, which outlines new initiatives that will accelerate the critical areas of a startup ecosystem, including capital, talent and the quality of startups.
“KL20 represents our ambition to bring Malaysia to become one of the top 20 startup ecosystems in the world. Within this concept is an emphasis on pragmatism and action,” he added.
For instance, the introduction of the VC Golden Pass by the Securities Commission Malaysia will offer a green lane process to expedite company registrations from the current six weeks to two weeks.
The programme is targeting world leading venture capital firms with assets under management of more than US$100 million, with other incentives such as subsidised office rents and expedited licence registration.
The Unicorn Golden Pass and Innovation Pass, meanwhile, aim to smoothen the process of setting up a physical presence in the country for startups.
The Unicorn Golden Pass targets globally recognised startups to set up offices in Malaysia, with incentives such as exempted fees for employment passes and concessionary tax rates for corporate profits.
The Innovation Pass is designed for a larger pool of talent through a multi-tier employment pass programme for founders, senior management and high-skilled talent in the tech industry.
To ensure an easy and seamless operation in Malaysia, Rafizi said there are other initiatives to cater to different needs. For example, the GPU Scheme focuses on providing infrastructure support, and the Single Window initiative will offer a one-stop concierge service to assist companies in setting up their offices in Malaysia.
