25/06/2025

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WEDNESDAY | JUNE 25, 2025

New tax perks for venture capital, private equity sectors o Concessionary rate of 5% for up to 10 years for funds that invest at least 20% of capital in local startups and 10% for VC and PE management companies registered with Securities Commission

Ű BY HAYATUN RAZAK sunbiz@thesundaily.com

KUALA LUMPUR: The government has introduced new tax incentives to strengthen the venture capital (VC) and private equity (PE) sectors in the country, said Finance Minister II Datuk Seri Amir Hamzah Azizan ( pic ). He said the new incentive offers a con cessionary tax rate of 5% for up to 10 years for investment funds that invest at least 20% of their capital in local startups. In addition, VC and PE

management companies regis tered with the Securities Com mission Malaysia will benefit from a 10% tax rate. The incentives also apply to onshore limited liabi lity partnership structures. “Capital alone is not enough.

especially within Asean – offers significant potential. While progress may seem slow, Asean remains open and dynamic. “Malaysian firms are well-positioned to lead cross-border partnerships and leverage invest ment incentives across the region, yet too many still underutilise these opportunities,“ Tunku Naquiyuddin said. He added that technology must be seen as a core business driver, not just a trendy topic. Industry 4.0, artificial intelligence, blockchain, cloud computing and digital platforms have been reshaping industries for years. Ignoring these is no longer cautious – it is risky and threatens relevance, he stressed. Companies, Tunku Naquiyuddin said, must actively assess and adopt the right technologies tailored to their specific needs. Lastly, the private sector must recognise its central role in Malaysia’s development. Tunku Naquiyuddin said businesses are not bystanders. They must take initiative, shape policy, and drive progress with the urgency they expect from government. “The government must focus on disciplined execution. Business leaders must take res ponsibility for innovation, investment and competitiveness. “The world ahead will remain volatile. Markets will be shaped by power as much as price. But we are not without agency. “Malaysia has the experience, the talent and the institutional depth to compete – if we are willing to act with focus and urgency,“ he said. The second RMI partner is Granite Asia, a multistage investor with a record of building over 115 unicorns and achieving 61 initial public offerings globally. Through its early-stage fund, Granite Asia will invest in startups in sectors such as consumer tech, enterprise software, healthcare, advanced manufacturing and automation. The firm will collaborate with Khazanah and Jelawang Capital to give Malaysian founders access to ecosystem programmes, strategic guidance and Granite Asia’s extensive network of top founders and industry players. redomiciliation of global companies in Malaysia, expanding local job opportunities, and attracting high-quality talent. The first RMI partner is AppWorks, an early-stage venture capital firm based in Taiwan. AppWorks combines an equity-free accelerator with founder-first capital to help scale tech startups across Greater Southeast Asia. The firm has a performance track record, with top-quartile distributions to paid-in capital. AppWorks’ investment focus includes artificial intelligence, blockchain and the digital economy. It plans to launch Malaysia-focused cohorts for Web 2.0 and Web 3.0, supported by in-market experts, capital, and a regional network of founders to help accelerate the growth of Malaysian startups.

However, Tunku Naquiyuddin said Malaysia still has an edge. The nation’s connectivity, capital markets, and institutional depth are advantages that cannot be replicated overnight. “But advantages fade if they are not renewed. The gap between planning and delivery needs to be closed. The distance between government policy and private action must shrink. If we fail to act decisively now, we risk falling into managed decline, where we do just enough to stay afloat, but never enough to move ahead.” While the government must prioritise disci plined execution, businesses need to embrace risk, invest for the long term, and align with national goals. Tunku Naquiyuddin said Malaysian com panies must urgently analyse their geopolitical risks, looking beyond market diversification to address supply chain, funding and technology vulnerabilities. He said building resilience is now as crucial as growth, and ignoring geopolitics in business strategy invites unnecessary danger. Further, Malaysian businesses must move beyond simply following rules and start aligning their strategies with global expectations. Issues such as environmental, social and governance, data governance, carbon disclosure and technology localisation are now funda mental, not optional. Treating these as side concerns risks exclusion from higher-value supply chains and global opportunities. “At the same time, regional integration – The third is First Move, a venture capital firm that invests in pre-seed stage startups across Southeast Asia. The firm partners with second time founders and domain experts, not just as early investors, but also as co-builders, to help turn ideas into scalable businesses. First Move often serves as the first institutional investor. In addition to these three EMP recipients, two regional firms were selected under the RMI, which is designed to attract regional and global fund managers who are committed to enriching Malaysia’s startup ecosystem. This includes supporting the growth of Malaysian startups into regional and global players, facilitating the Malaysia’s role within the regional innovation landscape. Vynn Capital will focus on the mobility and supply chain sectors, investing across seed to Series A stages, with a focus on Southeast Asia. The second firm, Kairous Capital, is a venture capital firm with roots in private equity. It invests in technology companies and is positioned as a cross-border specialist, supporting Malaysian startups in expanding into key Southeast Asian markets such as Vietnam, Thailand and Indonesia. Kairous also facilitates regional growth through the transfer of innovation and know-how from more advanced technology markets like China.

For innovation to flourish, policy reform must walk hand in hand with investment,” he said in his speech at the announcement of the appoint ment of fund managers under Jelawang Capital’s Emerging Fund Managers’ Programme (EMP) and Regional Fund Managers’ Initiative (RMI) yesterday. Previously, Malaysia offered tax exemptions rather than concessionary tax rates. VC firms investing at least 70% of their funds in early-stage startups could apply for a 100% tax exemption on statutory income for five years and could apply to extend it. Management companies also enjoyed exemptions, but only on income from VC management fees, and were subject to strict qualifying conditions and definitions. To complement these changes, Amir Hamzah said, Bank Negara Malaysia is enhancing the Foreign Exchange Policy (FEP) framework. “VC and PE firms may now apply based on their fund mandate size, rather than on a transactional basis, for cross-border fundraising and investments exceeding standard FEP limits.” He said this streamlines VC and PE operations to enable capital to move more efficiently across KUALA LUMPUR: Malaysia is at a crossroads, balancing its deep economic ties with China while relying on US security guarantees and Western investment flows. While Chinese companies increasingly shape the country’s digital infrastructure, Malaysia’s financial markets remain closely linked to Western systems. Tunku Laksamana of Negeri Sembilan Tunku Datuk Seri Utama Naquiyuddin ibni Almarhum Tuanku Ja’afar said this growing split in strategic alliances is making it increasingly challenging for the nation to maintain a steady course. “We are witnessing the end of what many considered a stable global order. For three decades, markets operated on the assumption that goods would move freely, capital would flow without interference, and geopolitical tensions would be contained. “That assumption is now dead. “The post-Cold War consensus, where economics and security were treated as separate spheres, has collapsed. Trade, technology and finance have become instruments of power,” he said in his luncheon special address at the Malaysia Economic Forum 2025 yesterday. Tunku Naquiyuddin said the US is decoupling from China, but only selectively. In turn, China is building parallel systems of commerce, finance, and diplomacy that bypass Western institutions. The European Union is Ű BY JOHN GILBERT sunbiz@thesundaily.com

Malaysia’s borders and boosting regional competitiveness. “These reforms mark mea ningful progress in positioning Malaysia as a globally com petitive hub for venture and private capital,” he added. Khazanah Nasional Bhd and its subsidiary Jelawang Capital have selected the first five VC

pursuing a new model of economic nationalism, dressed in green industrial policy. “Even in Southeast Asia, hedging has its limits. Asean’s traditional strategy of avoiding alignment is under pressure. Supply chains are being redrawn around political lines. Multi nationals are shifting production, not purely for cost reasons, but because governments are directing them to do so. “Malaysia is caught in this cross-current.” Tunku Naquiyuddin said that for businesses, this means the world is no longer global in the old sense. “Markets are fragmenting. Standards are diverging. Sanctions, export controls and national security reviews are no longer exceptions. They are policy tools used routinely. “If Malaysian firms continue to plan based on pre-2016 assumptions, they will find themselves vulnerable. Old models based on cost arbitrage and passive market access are becoming obsolete. “It is not enough to think in terms of growth. We must now think in terms of exposure, resilience and strategic alignment,“ he told delegates at the forum attended by economists, market analysts and experts, corporate business leaders and various government agencies. This is not a passing phase, Tunku Naquiyuddin said, adding that the global economy is being permanently restructured by competition between major powers. “Trade is now a strategy, politics shapes investment decisions and supply chains are being redesigned for control, not just efficiency.” firms under EMP and RMI. “Together, these five managers are expected to deploy over RM200 million. A significant portion of this will be channeled into Malaysia Nexus companies, supporting around 50 early stage firms,” said Khazanah managing director Datuk Amirul Feisal Wan Zahir. Out of the first five fund managers appointed, three firms were selected under the EMP. The programme is structured to support Malaysian fund managers in raising their first, second, or third fund, with the aim of developing regionally competitive venture capital firms by improving governance, building investment track records and attracting capital. The first of the three is Vynn Capital, a home grown venture capital firm focused on specific sectors. It was established in response to

M’sia at crossroads of deep ties with China and reliance on Western systems