Malaysia is a growing economy, with a plethora of opportunities. If you plan to invest in or start a business in Malaysia, you will need to first measure the advantages and disadvantages of entrepreneurship in Malaysia.
Advantages Of Entrepreneurship In Malaysia
The Malaysian government is proactive in terms of developing a good infrastructure that can boost new startup companies. This is one of the reasons why even foreign investors are finding Malaysia as a suitable market for their endeavours.
One example of a startup that was funded by the Malaysian government is that of Mardil Medical. The CEO, Jim Buck, couldn’t find a funding source in the US, which is why he approached a Malaysian venture capitalist. He was able to source $5million, all from his base office in Minnesota, US.
Jim gives credit for his startup to the Malaysian startup environment. He made a statement about it saying, “ ..These are very educated, sophisticated, hungry people that want to do good, that realize they’re on the brink of major growth’.
Malysian startup funding derives its prevalence from its large petroleum industry as well as its basic desire to significantly improve the quality and diversity of its economy.
Some examples of successful startups that have been funded by Malaysia are Groupsmore (now a part of Groupon) and iCar. In fact, most of the largest and most successful tech companies in South East Asia are in Malaysia.
One of the reasons why Malaysia is a good place for startups is its proximity to Singapore. Malaysia is able to take advantage of resources for talent and funding from Singapore. Singapore also offers a large network base for new businesses.
Current Issues In Entrepreneurship In Malaysia
Although entrepreneurship in Malaysia has a lot of benefits, it does have its challenges. However, these challenges can be overcome with the right kind of planning and strategic connections.
Most countries have issues when it comes to digital entrepreneurship, and Malaysia is no exception. Issues like corruption, bureaucracy, culture issues, fake/ imitation products, and ethical issues.
The lack of stringent policies that aid and encourage entrepreneurship has led to bureaucracy, which is an issue. Corruption is also a main issue, as this hampers the growth of entrepreneurs in Malaysia.
The Malaysian market also faces issues such as counterfeiting and fake products, grey markets, and the protection of intellectual property rights. Grey markets are where products are sold legally, but without proper permission or authorization from the original producer of the product.
These problems affect the economy as a whole and should be stringently dealt with.
The Malaysian government is constantly working hard to improve the situation for entrepreneurs by creating aid programs and releasing funds that help drive away some of the issues faced by them.
Entrepreneurship Development In Malaysia
Before you begin your entrepreneurial journey, it is important for you to understand the development and current trends of entrepreneurship in Malaysia.
Syahida Abdullah and Amran Muhammad in their research paper titled “The Development of Entrepreneurship in Malaysia: State-led Initiatives”, delve into the development of entreprenership in Malaysia as well as the various trends in this field.
The paper talks about the economic and industrial activities of Malaysia from the time of its independence till the year 2005. It categorizes this into four phases according to the first major government policy of Malaysia called the “New Economic Policy”, or “NEP”.
The four phases are as follows:
First Phase: Before the introduction of NEP,
Second Phase: The initial period after NEP was introduced,
Third Phase: The latter period after NEP, and
Fourth Phase: The period after NEP
In the third and fourth phases, entrepreneurship activities were carried out with full vigour as the government did much to support and protect the national automotive industry. This gave rise to multiple businesses dealing with automobile parts and other components. There was a special emphasis on technology in most of the new entrepreneurial businesses.
Although all four phases of this entrepreneurial support focused on different fields, they were all similar in that they were state-led initiatives.
The automotive industry in malaysia, thus, led to the springing up of multiple new businesses, thus improving the entrepreneurial scene in Malaysia. These new businesses then led to the need for advanced technological know-how, skills, and talent that could help these businesses grow and thrive.
The state-led industrialization thus paved the way for a whole new world of opportunities for entrepreneurship in Malaysia. This effort by the Malaysian government is one of the main reasons why entrepreneurship in Malaysia is growing at a rapid pace and it is also the reason why foreign investors and entrepreneurs are being attracted to the country.
Entrepreneurship Education In Malaysia
The Malaysian government has gone to the lengths of making subjects dealing with entrepreneurship compulsory to every student that studies in a national public university. This is because the country realizes the importance of entrepreneurship in the overall growth and development of the country.
Apart from these subjects taught in the classroom, students are also encouraged to participate in many entrepreneurship activities such as seminars, trainings, and other events related to entrepreneurship.
This government led initiative can greatly reduce the rate of unemployment, and produce large opportunities for business, thus helping the development of the country.
In spite of all the issues regarding entrepreneurship that are quite prevalent in the country and also in the education system of the country, Malaysia is still way ahead of many other countries in this aspect.
Malaysia has a focused vision to attain ‘developed country’ status by the year 2020. Most of the country’s efforts are in the education sector, trying to educate young minds to think like entrepreneurs. WIth the vast knowledge of entrepreneurship spread among its younger generations, the country is fast becoming a knowledge-rich economy.
For more about how entrepreneurship education is aiding the development of Malaysia, you can read the research paper titled “Entrepreneurship Education In Malaysia: A Critical Review” written by Hardy Loh Rahim, Mohd Ali Bahari Abdul Kadir, Zanariah Zainal Abidin, and Junainah Junid.
The paper talks about the present status of entrepreneurship education in Malaysia, what challenges lie ahead, and what paths the country can take to move forward. It reviews entrepreneurial literature, stresses the importance of entrepreneurial education in higher education institutions, the type of business ecosystem, and the issues faced by the government in terms of entrepreneurial education.
The research paper also provides research-backed advice and recommendations to combat these issues.
Regular entrepreneurship activities create employment opportunities, increase the wealth of the country, and help developing countries grow. Entrepreneurship helps transform nations both politically and socio-economically.
As the Malaysian government continues to foster entrepreneurial education in the country, it will lead to the rise of many entrepreneurs once these students graduate.
Social Entrepreneurship In Malaysia
New age entrepreneurs are starting to think of how they can make a social impact on the world. There are multiple new businesses rising that want to have a social cause for their business. The British Council reports over 20,000 businesses based on social entrepreneurship in Malaysia.
Social entrepreneurship in Malaysia helps uplift minority communities in the country, helps grant employment, and helps in achieving sustainable goals as set by the United Nations. Apart from these social benefits, social entrepreneurship also helps build the country’s economy.
Although social entrepreneurship is growing by leaps and bounds, people are still not aware of these enterprises. This lack of knowledge could hamper entrepreneurs who want to make a social impact while being sustainable. It also lowers their chances of gaining support from investors to scale their company/ enterprise.
It is found that the most common source of funding for social entrepreneurship in Malaysia is bootstrapping, followed by lesser funds from donations and grants.
Most of this funding is used for operation costs and the purchase and maintenance of equipment required to run the company. Most often, there is not enough revenue to cover these costs. This is why more public awareness about social entrepreneurship must be created.
As you can see, there are a large number of opportunities for entrepreneurship in Malaysia, and it will only become easier for more and more entrepreneurs, both native and foreign, to invest in and build great companies.
Entrepreneurship is good for the society as well as the economy, as it gives rise to employment opportunities and better business opportunities.
It is truly encouraging to see how entrepreneurship has grown in Malaysia, and how it continues to develop and take on new forms. As entrepreneurial education takes a front seat, more and more graduates with knowledge of entrepreneurship will arise, making the business ecosystem more conducive for both present and future entrepreneurs.