Malaysia is a dynamic country in Southeast Asia with a population of over 32 million people.The country has a vibrant　startup ecosystem with an increasing number of entrepreneurs and investors interested in building innovative solutions. As the world becomes more digital and global, Malaysian startups are embracing new technologies and business models to solve
societal problems and create new markets. There are several startup trends happening in Malaysia and they are mainly on digital payments, e-commerce, fintech and IR4.0 technologies.

Digital payments have gained significant traction in Malaysia in recent years, driven by the increasing adoption of smartphones and the internet. According to a report by the Malaysian Communications and Multimedia Commission (MCMC), there were over 25 million internet users in the country in 2020, representing a penetration rate of 75.9%. Additionally, there were over 40 million mobile subscribers, with 4G LTE coverage reaching over 96% of the population. These figures indicate a favourable environment for digital payments, which are expected to grow at a CAGR of 16.3% from 2021 to 2025. Several startups have emerged in the digital payments space in Malaysia, including Boost, GrabPay, and Touch ‘n Go eWallet. Boost is a mobile wallet that allows users to pay for goods and services, transfer funds, and top up their mobile phone credit. It has over 9 million registered users and is accepted at over 180,000 merchant locations nationwide. GrabPay is another mobile wallet that is integrated with the Grab ride-hailing app. It allows users to pay for rides, food deliveries, and online purchases. Touch ‘n Go eWallet is a mobile wallet that is integrated with the Touch ‘n Go card, which is widely used for toll payments and parking fees. It allows users to make payments, transfer funds, and redeem rewards.

E-commerce has also experienced significant growth in Malaysia, driven by the increasing preference for online shopping and the COVID-19 pandemic. According to a report by Google, Malaysia’s e-commerce market is expected to grow at a CAGR of 20% from 2020 to 2025, reaching a market size of USD 30 billion. One such startup is FashionValet, an online marketplace for Southeast Asian fashion. Founded in 2010, the company has grown to become one of Malaysia’s largest online fashion retailers, with over 500 brands and a presence in several countries. Another notable e-commerce platform is iPrice, a price comparison site that enables consumers to compare prices across different online retailers. The company has raised over $10 million in funding and has expanded its operations to several Southeast Asian countries.

Fintech is another emerging trend in Malaysia, driven by the increasing demand for financial services and the growing interest in digital payments. According to a report by Ernst & Young, the fintech industry in Malaysia is expected to grow at a CAGR of 30% from 2020 to 2025, reaching a market size of USD 3 billion. One notable fintech startup is Grab Financial, a subsidiary of ride-hailing giant Grab. The company provides a range of financial services, including lending, insurance, and digital wallets. Another fintech startup worth mentioning is Funding Societies, a peer-to-peer lending platform that connects small and medium-sized enterprises with investors. The company has raised over $60 million in funding and expanded its operations to several Southeast Asian countries.

Several Asian Entrepreneurship Award alumni from Malaysia have made progress and some of them managed to foster collaboration with their Japanese counterparts:

Nitium Technology (www.nitiumtech.com)　-AEA Alumni 2020, Second Place
Nitium Technology is one of the first to successfully utilize the powder metallurgy technology to produce intricately shaped nitinol parts for the medical and aerospace applications. Nitium’s patented technology has received multiple international awards and recognition, and the world’s first porous nitinol dental implant system, invented by Nitium, was recently employed in a clinical study. Nitium also developed the first nitinol filament for fused deposition modelling, making it one of the world’s few metal 3D printing filament producers. Nitinol has been identified as one of four focused materials in the Government’s Advanced Materials Roadmap due to its potential, and as Malaysia’s sole nitinol producer, Nitium has been actively contributing to the plan. Nitium is now in talks with a Japanese company, Takasago Electric, about incorporating Nitium’s nitinol into Takasago’s SMA micro-actuator.

Aphelia (www.aphelia.space)　-AEA Alumni 2022, Semi-finalist
Aphelia created a wireless charging station, that delivers kW-level of electrical power to a dedicated satellite constellation. The company has secured several LOIs with satellite constellation and space companies. They are in the final round of Cradle funding to produce the prototypes and has been selected as the finalists for Amazon’s AWS Space Accelerator 2023.

Futurun Technologies (www.futuruntech.com/)　-AEA Alumni 2019, Semi-finalist
Futurun Technologies specialising in quantum technology to produce innovative products that solve everyday problems. From one product in 2019, they have developed and produced eight more products with multiple daily use applications. They are in the process of seeking potential investors to scale up their production capacity.

Japanese companies should aim to collaborate with Malaysian startups for several reasons. Firstly, Malaysia is strategically located in Southeast Asia, which is one of the fastest-growing regions in the world. By collaborating with Malaysian startups, Japanese companies can tap into the growing market potential of the region and expand their businesses beyond their domestic markets. Secondly, Malaysia has a highly skilled workforce and a well-developed infrastructure that is conducive to innovation and entrepreneurship. The country has a strong education system, with several universities and institutions that offer programs in technology and business. Additionally, the government has implemented several initiatives to foster innovation and entrepreneurship, such as the Malaysia Digital Economy Blueprint and the National Innovation and Creative Economy Strategy. Thirdly, Malaysia has a diverse range of startups that operate in various sectors, such as e-commerce, fintech, logistics, and healthcare. These startups have developed unique business models and innovative solutions that can help Japanese companies overcome their business challenges and create new opportunities. Fourthly, collaborating with Malaysian startups can provide Japanese companies with access to a talented pool of entrepreneurs, developers, and engineers who are familiar with the Southeast Asian market. These startups have a deep understanding of the local market dynamics, consumer behaviours, and regulatory frameworks, which can help Japanese companies navigate the complexities of doing business in the region. Fifthly, collaborating with Malaysian startups can provide Japanese companies with an opportunity to leverage emerging technologies such as artificial intelligence, blockchain, and the Internet of Things. These startups are at the forefront of developing and implementing these technologies in their businesses, which can help Japanese companies stay competitive and relevant in the digital age. Finally, collaborating with Malaysian startups can help Japanese companies build their brand presence and reputation in Southeast Asia. By partnering with successful startups and investing in their growth, Japanese companies can demonstrate their commitment to the region and establish themselves as key players in the local ecosystem. This can help them attract new customers, partners, and investors, and differentiate themselves from their competitors.

In conclusion, Japanese companies should aim to collaborate with Malaysian startups for several reasons. Malaysia’s strategic location, skilled workforce, well-developed infrastructure, diverse range of startups, and emerging technologies make it an attractive destination for Japanese companies looking to expand their businesses in Southeast Asia. By collaborating with Malaysian startups, Japanese companies can tap into the growing market potential of the region, leverage emerging technologies, and establish themselves as key players in the local ecosystem.

Author：AHMED RAZMAN Abdul Latiff　Dr. / Associate Professor, Putra Business School
Associate Professor Dr. AHMED RAZMAN Abdul Latiff is currently teaching MBA courses in Putra Business School. He holds postgraduate degrees from Nanyang Technological University, Lancaster University and Liverpool John Moores University. He is an Associate Member of Malaysian Institute of Accountants (MIA). He is also the Vice President (Finance) of Case Writers’ Association of Malaysia and the Vice Chairman of Movement of Monetary Justice.