SPEECH BY YB DATUK SERI JOHARI ABDUL GHANI FINANCE MINISTER II LAUNCH OF MDV S THIRD FUND

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1 SPEECH BY YB DATUK SERI JOHARI ABDUL GHANI FINANCE MINISTER II LAUNCH OF MDV S THIRD FUND Date : 5 September 2017 (Tuesday) Time : 9.00 am Venue : Mandarin Oriental, Kuala Lumpur Attire : Business Formal

2 SALUTATION Bismillahirrahmanirrahim YBhg. Tan Sri Zarinah Anwar Chairman of Malaysia Debt Ventures Berhad YBhg. Datuk Md Zubir Ansori Yahaya Managing Director/Chief Executive Officer, Malaysia Debt Ventures Berhad Distinguished members of the Board of MDV Members of the Media Distinguished Guests Assalamualaikum warahmatullahi wabarakatuh, selamat sejahtera and a very good morning to all. INTRODUCTION 1. First and foremost, allow me to extend my heartiest congratulations to MDV for the launch of their third fund today. It is indeed a pleasure for me to be here this morning and to be part of another significant milestone in MDV s history. 2. I would like to thank MDV s Chairman, Tan Sri Zarinah Anwar as well as the management for inviting me to this special occasion today to deliver the keynote address and to officiate the launch of MDV s third fund. 3. The launch of this third fund is indeed timely as continued access to funding for ICT companies, startups and technology SMEs is crucial to ensure their continued growth and success. THE JOURNEY TOWARDS BECOMING A HIGH INCOME NATION 4. Malaysia is determined to achieve the status of a fully developed nation. Over the past six decades, the government has continuously redefined Malaysia s economic direction to ensure that we remain on the right track towards achieving this target. 5. In view of the various economic policies including the diversification of the economy and the strengthening of the Government s fiscal position, the Malaysian economy is well-positioned to expand further in a sustainable manner. As of 2Q 2017, our economy has recorded another respectable growth of 5.8% and we hope that we can sustain this momentum for the rest of the year. 6. Moving forward, we need to focus more on the efforts to promote sustainable and equitable growth to propel us to a new height. Along with the on-going infrastructure projects that we are embarking which are expected to spur our economic growth, I believe that digital economy also has a huge potential to act as a catalyst to support an inclusive and sustainable growth for Malaysia. As of 2016, Malaysia's Digital Economy contribution to Gross Domestic Product (GDP) has already touched 17.8 percent, just shy of its 2020 target of 20%. 2

3 7. Malaysians now are no longer a stranger to technologies such as FinTech and Cryptocurrencies, virtual market place like Amazon and Alibaba, online transportation service like Uber and Grabcar, online entertainment platform like Netflix and hospitality services like AirBnB and TripAdvisor, which are fast changing the way businesses and service providers traditionally operate and will continue to evolve even further. We are now nearing the age of driverless car, quantum computers and the rise of Artificial Intelligence (AI) which will all be impacting our lives in unimaginable ways. 8. With these rapid advancements and the world s ever increasing dependence on technology, we must ensure that we are ready and able to harness new and much more complex expertise to enable us to compete and benefit in the wave of this revolutionary current. BUILDING A CONDUCIVE ECOSYSTEM TO SUPPORT MALAYSIA S COMPETITIVENESS IN THE DIGITAL ECONOMY Ladies and gentlemen, 9. In its Global Competitiveness Report , the World Economic Forum ranked Malaysia 43rd out of 140 economies in terms of technological readiness. Notwithstanding the current strategic initiatives to promote innovation and high technology industries, more efforts are needed to drive Malaysia further up the technology curve, in line with our action plans to reengineer and intensify productivity growth. 10. Moving forward, we must build a conducive ecosystem to all players to grow and provide the right facilities to encourage innovation and creativity. As start-ups and entrepreneurs in the technology play a critical component in this value chain, a pipeline of quality entrepreneurs is necessary to drive the technology sector. 11. In encouraging the creation of an entrepreneurial culture in Malaysia and to nurture the existing pipeline of entrepreneurs, the Government has laid the foundation towards building a comprehensive ecosystem for SMEs including technology SMEs through several initiatives over the years, including putting in place the institutional building and structured policy framework. 12. Of significance, the Government of Malaysia has announced in its 2017 Budget that 2017 will be the Startup and SME Promotion Year. This bodes well with Malaysia s economy as our SMEs are indeed the backbone of our economic growth. Statistics show that 98% of business establishments in Malaysia are SMEs and these businesses are responsible for nearly 36% of the country s GDP, 65% of the country s employment and nearly 18% of Malaysia s export. SMEs employ about 6.6 million people of which, the majority is in the service sector. 13. To this end, the Government has allocated more than RM17 billion in various initiatives to promote technology export, financing and guarantees for SMEs, bridging the digital divide as well as to encourage entrepreneurship in the technology sector. 14. Malaysia had also launched the world s first Digital Free Trade Zone (DFTZ) earlier this year, which will provide physical and virtual zones to facilitate SMEs to capitalize on the convergence of exponential growth of the internet economy and cross-border ecommerce activities. DFTZ is expected to double the growth rate of SMEs' goods export, increase overall goods export by USD25 billion, and create 60,000 direct and indirect jobs by In addition, the Government facilitated the launch of new funding platforms such as the Equity Crowdfunding (ECF), Peer-to-Peer (P2P) lending and the Investment Account Platform (IAP) to assist budding entrepreneurs obtain adequate funds to turn their ideas into revenuegenerating products or services. Bursa Malaysia had also very recently launched the Leading Entrepreneur Accelerator Platform (LEAP) Market - the first of its kind in Asean - which aims to 3

4 provide SMEs with an alternative and efficient fund-raising platform and visibility through the capital market. 16. Amid the constantly changing economic landscape, the Government is ever committed in ensuring that businesses with sound plans have continued access to funding options so they are able to pursue growth. These initiatives will help spur the development of SMEs further and support broader economic activities. BRIDGING THE FINANCING GAP FOR TECHNOLOGY COMPANIES, 17. One of the main constraints to starting and expanding a business is access to finance. This is especially true for startups or companies that are still in its growth stage and is even more prevalent for those in the technology sectors. 18. As technology-based projects are deemed high risk, traditional mode of financing is hard to secure. However, the government believes that such projects hold great promise of success and carry an immense potential to contribute significantly to the economy. This is precisely the reason why the Government believes that alternative funding must be made available for these companies to ensure that they are able to develop and grow to their utmost potential. 19. In this respect, MDV plays a critical catalytic role particularly in identifying and financing technology companies and projects. Established in 2002, MDV is mandated to support and accelerate the development of technology companies by providing accessible, flexible and competitive financing for technology companies. MDV, throughout the years, has evolved to meet market needs and played a vital role in bridging the financing gap for technology companies, and to support the Government s agenda in promoting the technology sector. 20. I applaud MDV s success in channeling over RM11 Billion to 680 technology-based companies. From this 680 companies, 82% are SMEs and 68% are Bumiputera. This is indeed a great and commendable achievement by MDV, which illustrates its significance as a key nation builder in supporting Malaysia s technology agenda. 21. With the launch of this third fund, MDV is able to continue its role in financing the technology sector. The third fund will ensure that MDV continues to have adequate funding to meet its mandate and to meet financing demands from technology firms. 22. As a company wholly owned by the Minister of Finance Incorporated, I am proud of MDV s achievements so far and I believe that MDV will continue to fulfill its mandated financing and development facilitation roles. 23. Having said that, more needs to be done to make Malaysia more competitive in cutting edge areas such as FinTech, robotics, 3D printing, infrastructure software, Edu Tech, renewable energy and advanced mechanical & engineering, just to name a few, and I trust that MDV will continue to intensify its efforts in supporting these areas through its financing and nurturing capabilities. CONCLUDING REMARKS 24. One of the aspects that the Government will improve upon is the quality of life for the Rakyat and this can be achieved by utilising emerging technology trends. This is one of the reasons why the Government is determined to heighten the implementation of best technology 4

5 practices in the country. Financing from MDV, as well as other financiers is a key catalyst in ensuring the continued development of the Malaysian technology sector. 25. I would like to take this opportunity to again congratulate MDV for today s launch of their fund and their great achievements so far. I am confident that MDV will continue to move forward and progress even further as the Nation s Leading Technology Financier. 26. On that note, it is with great pleasure that I officially launch Malaysia Debt Ventures third fund. Thank you. 5