40% of technology startups may fold from June if aid not provided

ABOUT 40% of technology startups and social enterprises may fold from June this year if assistance are not rendered to the local startup community, says Future Digital, the think tank arm of the National Tech Association of Malaysia (Pikom).

Future Digital chairman Ganesh Kumar Bangah, in a statement, said the RM250 bil Prihatin Rakyat Economic Stimulus Package, aimed to cushion the negative impact of Covid-19, should also cover the local technology startup community.

“The current stimulus provides little or no help to technology startups because they do not qualify for most loan as most of them are less than one year old, have no track record and do not meet the minimum staffing count required.

“Should the Movement Control Order be extended for another few weeks, it would be difficult for many of these companies to survive as they may have insufficient cash flow,” said Ganesh, who is also Pikom immediate past chairman.

Findings from a March 2020 survey conducted by the Malaysian Global and Innovation Centre (MaGIC) also indicated that less than 3% of startups would survive if Covid-19 drags on for the next 12 months.

Hence, Pikom Future Digital has recommended that the government set aside RM200 mil from the allocation of RM4.5 bil announced to assist SMEs under the current stimulus package to fund technology companies and startups, via funding agencies such as Malaysia Venture Capital Management Bhd (Mavcap) and Malaysia Debt Ventures (MDV).

In turn, these funding agencies could work with other government agencies such as the Malaysia Digital Economy Corporation (MDEC) and MaGIC to disburse the funds to tech entities in need, as these agencies have a strong community of tech companies and startups.

“The government should also continue to encourage private sector investments into technology companies and startups by providing matching investments and/or partial guarantees to Malaysian investors investing into Malaysian startups,” it added. – April 6, 2020, Bernama






Share on facebook
Share on twitter
Share on whatsapp
Share on email

Subscribe and get top news delivered to your Inbox everyday for FREE

Latest News