FORMER prime minister Najib Razak recently pointed out the need for Malaysia to look at cryptocurrency.

He rightly quoted the large size of global cryptocoins and that Malaysia would miss out if we did not tap into this 2.4 trillion-dollar market. 

That’s half right. In the background, many Malaysian investors, both casual and corporate, are already doing so privately.

Malaysian firms are already involved in issuing of ICOs, and the Securities Commission already have started issuing licences for both IEO platforms (initial exchange offerings) and DAC (digital access custodians), essentially attempting to regulate, and tax, ICOs that were previously run by developers independent of any real governmental oversight.

The law governing this has already been issued by the Securities Commission and came into effect in 2019, with three crypto platforms being approved.  

IEOs solve the governance and taxation issues in ICOs, but its centralised nature may put off investors drawn in by cryptocurrencies’ relative freedom from oversight.

A compromise model, STOs (security token offerings), more regulated forms of private financing, is also covered under the same law, and also back in 2019, ahead of most Asian countries and around the same time as Singapore.  

In terms of legislation, we had a two-year head start, but only now are more platforms being developed and launched. Former prime minister Dr Mahathir Mohamad had in fact spoken about an Islamic cryptocurrency with Iran three years ago. 

In the meantime, other countries like China and Singapore have more mature platforms and have started talking about incorporating cryptocurrency into mainstream banking, led by companies like Stack. 

We have missed several digital boats and cannot afford to miss this one. 

Malaysia needs to shift focus to digitalisation in a big way or risk losing an even bigger slice of the pie to countries like Singapore. 

Grab, brainchild of a Malaysian team, currently Asean’s most popular multipurpose super-app, is headquartered out of Singapore. The top three online shopping platforms used by Malaysians are also based out of the tiny island nation. 

Malaysia has its own start-up promotion teams, technology enthusiast groups, funding, infrastructure and ecosystem, but it pales in comparison to allocations by our neighbouring countries like Indonesia and Vietnam. More conspicuously missing, is the general tone set by the government. 

While Najib is also right that we should tax companies like Facebook and Google, we should also strive to make Malaysia a desirable destination for them to invest in the first place.

The technology sector is a consistently growing industry, and involves long-term projects, making it a more stable and permanent source of employment, foreign direct investment, and transfer of expertise. 

Issues like our cabotage policy and routing of undersea Internet cables matter a lot to mega IT companies, who would naturally prefer to set up shop in countries where they have data centres and help desk teams stationed.

Singapore, a much smaller country which does not even meet most standards for IT disaster recovery in terms of geographical distance between their primary and backup data centres, and the Philippines, which has a disadvantage compared to us with natural disasters, are both outperforming Malaysia.  

With sufficient competent IT employees, basic infrastructure in place and geographical advantage, what is missing is really political will to fund and push this sector forward.  

We have had enough missed opportunities. – September 22, 2021. 

* Emmanuel Joseph firmly believes that Klang is the best place on Earth, and that motivated people can do far more good than any leader with motive.