ABOUT 40% of technology start-ups and social enterprises may fold from June this year if assistance is not rendered to the sector, says Future Digital, the think tank arm of the National Tech Association of Malaysia (Pikom).

In a statement, Future Digital chairman Ganesh Kumar Bangah said the RM250 billion Prihatin economic stimulus package, aimed at cushioning the impact of Covid-19, should also cover the local technology start-up community.

“The current stimulus provides little or no help for technology start-ups because they do not qualify for most loans 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.

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

Hence, Future Digital wants the government set aside RM200 million from the RM4.5 billion announced to assist SMEs, through funding agencies such as Malaysia Venture Capital Management Bhd (Mavcap) and Malaysia Debt Ventures (MDV).

In turn, these agencies could work with the Malaysia Digital Economy Corporation and Magic to disburse the funds to tech entities in need.

“The government should also continue to encourage private sector investments into technology companies and start-ups by providing matching investments or partial guarantees to Malaysian investors,” he added. – Bernama, April 5, 2020.