The Government of Malaysia has commissioned McKinsey & Company to develop the country’s hub for start-ups, the MaGIC centre, into the Silicon Valley of Southeast Asia. The aim is to attract large US and Australian investors into its technology district Cyberjaya, 50 km from Kuala Lumpur. A first report is expected later this month on the transformation of the region into a new Silicon Valley.
In a bid to improve the countries international competitiveness and attract high value capital to its shores, the Malaysian government has hired McKinsey & Company to develop a technology hub that is intended to one day, rival Silicon Valley, the globe’s best place for startups and entrepreneurs. As part of its research into the development of the area, the company has reached out to venture capitalist firms internationally, including those from the US and Australia, to consider ways of developing potential funding and entrepreneur partnership programmes.
The centre, titled the Malaysian Global Innovation and Creative Centre (MaGIC), came into existence in April 2012 after it forged a partnership with California's Stanford University to enable student and faculty exchange programmes. The US president officially opened MaGIC's headquarters in April as part of his visit to the country.
MaGIC was initially funded by $50 million from the Malaysian government, and will feature as a central link in the continued investment of funds by the Government into technology start-ups in the country. "We'll have to put more [money in]. How much I'm not sure yet," says Tan Sri Dr Mohd Irwan Serigar Abdullah, secretary general of Malaysia's Treasury, Ministry of Finance, going on to add that the review by McKinsey will give broader scope for government investment opportunities. With the further development of MaGIC in the countries’ technology district, its leadership remains optimistic in the face of the competition. CEO Cheryl Yeoh of the MaGIC states: "Singapore is known to be the start-up hub right now [in the region] because the government has made it easy for VCs to set up there … Malaysia has all the ingredients, we just need to pull it all together.”
One aim of the move, and for which McKinsey consultants are laying the foundations, is luring wealthy Australian investors from the more mature markets into the south-east Asian region, with the potential of developing technologies to meet the growing expectations of its 630 million inhabitants.
With the proximity of the countries, the hope is that successful start-ups fostered in Malaysia will continue to make their way onto the Australian Stock Exchange, with the likes of iProperty and iCar already down under. With other large exists by IPO in the wider pacific region stemming from Malaysia, including JobStreet which was bought out by SEEK, Japanese telco SoftBank backed GrabTaxi and ASX-listed iSelect backed iMoney. "The market is available already, you don't have to depend on the US or Chinese market, we have the population here. The problem isn't the market, the problem is you need the globally-competitive technology and you need the programs," Dr Irwan concludes.