Touch ‘n Go loses its monopoly in Malaysia. What now?

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click
here
 to read past articles.

On Sunday, Prime Minister Anwar Ibrahim received thunderous applause after
telling
 youths during a town hall that his government will review the monopoly of digital payment provider Touch ’n Go (TNG).

A toll plaza in Malaysia / Photo credit: Touch ‘n Go

The firm has been a thorn among users simply because it disallowed them to pay for public transport and tolls with anything other than its prepaid card.

Imagine driving interstate and you are short of cash as you approach the toll booth. Or, you’re rushing to a meeting and you get off the train only to find out that your TNG card has insufficient balance? Yeah… What you have to do is ensure that you have cash on hand to either reload your card or pay the difference at the counter.

For toll fare payment, you can link your card to TNG’s e-wallet. If there’s not enough money in the card, the fare is deducted from the e-wallet.

The other problem is TNG’s RFID: a sticker with a radio-frequency chip that drivers need to attach to their front windscreen.

This tag is unique to each user and is synced to TNG’s e-wallet. So a driver simply needs to pass through the RFID toll gate, and the fees are deducted from the e-wallet directly. But take-up is
slow
 and toll companies haven’t increased RFID lanes, leading to congestion during peak hours.

What followed the town hall was a swift action from Anwar’s administration. Just after a few days, it
announced
 that first, commuters can also use credit or debit cards to pay for bus and train fares. Second, there will be a
phased introduction
 of the said payment system for tolls.

The unprecedented announcement came with promises that the measures will be implemented in the coming months. Why unprecedented? Simply because of how quickly things progressed since the town hall. Government moving fast?

Anyway, this has led to chatter about the end of TNG’s dominance. To be sure, the government did say that it isn’t going to
kill off
 the fintech firm for good reason: Doing so will surely invoke some sort of severance clause requiring the government to pay for breaking up the state-controlled monopoly.

Quicker tech adoption

So, what does this mean? Well, obviously, financial services companies will get a chance to ride this by issuing cards to pay for public transport or toll fares. Fintech companies such as Wise have also released their prepaid cards.

The number of providers will increase. I won’t rule out the likes of Grab and Sea joining the bandwagon too simply because they have digital wallets. So it’s just a matter of linking their wallets to a smart card.

Grab and Sea are also digital bank licensees, so naturally users can also connect their bank accounts to their e-wallets and cards. Malaysia’s largest bank Maybank already has this system in place with its MAE prepaid Visa debit card. Customers can sync it with the Maybank e-wallet, also called MAE, as well as with their account.

Secondly, Malaysia will be moving to a
multi-lane free flow system
, an electronic tolling tech that enables smooth traffic flow. Motorists don’t need to slow down or stop as they approach the highway. And there will be no gates. The government has earmarked 3.46 billion ringgit (US$800 million) for this.

Missed opportunity

But what about TNG? For starters, it suffered the textbook monopoly problem: failure to innovate. To recap: TNG was introduced in 1997, is government-owned, and was Malaysia’s first fintech offering. The smart card is its flagship product and is similar to Hong Kong’s Octopus card.

Malaysian identity cards also have the TNG features embedded into the chips.

But, somehow, TNG didn’t capitalize on all its advantages. When the firm rolled out the TNG e-Wallet, it couldn’t sync to the prepaid card. This means you couldn’t use the app to top up your card’s balance. You needed to go to a physical kiosk, a bank, a petrol station, or the nearest grocery store for that.

The state-owned highway operator, PLUS, wanted to roll out its own open payments system that would allow road users to use services aside from TNG’s.

But TNG’s major shareholder CIMB Bank
sued
 PLUS. In 2020, both reached a settlement but the details were not made public.

The suit was another awkward moment in this whole debacle: CIMB and PLUS are controlled by sovereign wealth fund Khazanah. Talk about family drama.

TNG Digital, the subsidiary in charge of the e-wallet, would soon be substantially owned by China’s Ant Group and its subsidiaries. To be sure, since TNG is no longer TNG Digital’s major shareholder, Ant’s investment in the latter is insulated from what’s happening at TNG. Also, the investment is more toward the digital wallet.

Image credit: Timmy Loen

Ownership nuances here also mean that TNG and TNG Digital remain further apart. The former is wholly owned by CIMB Bank, which in turn is controlled by Khazanah. But TNG Digital isn’t – the government doesn’t even have a golden share in it. This means that the mobile wallet provider is a purely commercial entity.

TNG resolved the top-up problem by issuing a newer or “enhanced”card that can be reloaded through the e-wallet app. But till today, that card is an exotic species. Questions remain as to why the card isn’t
widely available
, more so for one issued by a monopoly.

A poster of the Touch ‘n Go Enhanced Card / Image credit: Touch ‘n Go

The further divide between TNG and its e-wallet arm means that the original dream of having a monolithic tech ecosystem hasn’t been realized. Whether this is good or not will be for another day and isn’t the purpose of my column today.

Riding on momentum

What we know is that Prasarana, the country’s public transport operator, has been experimenting with open payment systems and was planning to
pilot
 one in 2020 for intercity rail services.

If we were to take the PLUS incident above and Prasarana’s program, then the reason the government is moving at warp speed is because there’s already work done.

But there are still details that need to be hammered out. If the government isn’t killing TNG, then does this mean that payment services will have to ride on the firm’s infrastructure? If so, there will be costs that will definitely be pushed to users – a “transaction fee” of sorts.

Easily there will be problems that the government will need to address as it chugs along toward the goal of having a multi-lane free-flow system. For example, how do you ensure road users pay for toll fees if they pass through the gate with insufficient funds? There needs to be not only a legal framework but also a tech component to this, like Singapore’s
ERP
 system: If you drive through a gantry without paying, you’ll receive a violation notice, so you’ll have to pay the charge plus an administrative fee.

Such scenarios can certainly spell opportunity for both tech upstarts and incumbents.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.42 ringgit


1337 Ventures names 11 finalists for accelerator with RHB Banking

The 1337 Ventures team / Photo credit: 1337 Ventures

Malaysian VC firm
1337 Ventures
 and local financial services provider
RHB Banking Group
 have announced the 11 finalists of their accelerator focused on startups driving digital adoption.

The
RHB Xcelerator
 aims to link the bank with the region’s tech and startup ecosystem.

Selected startups for the program will be mentored by RHB business leaders and get paid for developing proof-of-concepts with the bank. The top two teams may also receive potential seed fundraising opportunities with the help of 1337 Ventures.

Nine of the companies are based in Malaysia, with the remaining two coming from Singapore.

See also:
Has Malaysia’s largest VC lost its luster?

The 11 finalists of the program are:

Agiliux Cloud Insurance

Agiliux digitalizes the commercial insurance industry by providing software for insurance brokers.

Alfie Tech Asia

Alfie specializes in using alternative credit scoring (ACS) for microfinance. ACS integrates behavioral, digital, and financial data points to predict the credit risk of a borrower.

Du-it

Du-it offers flexible payment options that cater to its users’ budgets.

Moby

Moby is a buy now, pay later service that offers installment plans that last up to six months and have 0% interest fees.

PayRecon

PayRecon is a marketplace software provider offering IT products and services catered to SMEs.

Pewarisan

Pewarisan, meaning inheritance in Malay, provides digital solutions for Islamic inheritance planning. Its offerings include succession planning and estate management.

Protos Labs

Protos Labs is a Singapore-based cyberinsurtech company that helps insurers to better price their cyberinsurance policies. It also offers active protection for policyholders against cyber attacks.

Swipey

Swipey helps Malaysian businesses in managing their corporate prepaid cards, expenses, invoices, and more through a simplified dashboard.

The Woke Company

The Woke Company is a Singapore-based platform that mentors investors through structured four-week programs. It also provides stock market analyses to inform investing decisions.

TrinityEco

TrinityEco provides sustainability reports for both physical and digital assets.

Vircle

Vircle (short for Visible Circle) enables parents to give their kids pocket money through an app and a payment card, helping them teach their children how to save and spend responsibly.


Don’t build a business to just capture Malaysia, says VC

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy, and politics. Click
here
 to read past articles.

We don’t usually hear about Malaysia’s so-called founders 2.0 – entrepreneurs with successful exits. I wanted to use the term “tech mafias” but then I’d be caught in the crosshairs of grammar gurus.

Scaleup Malaysia managing partner Tay Shan Li. / Pic credit: Tay Shan Li

This time around, I wanted to get in touch with someone successful but under the radar. So, after some digging and asking around, I connected with Tay Shan Li, a managing partner at Kuala Lumpur-based accelerator ScaleUp Malaysia.

After years in corporate finance and investment banking, Tay ventured into the startup world as co-founder of Baby Dash, an online platform for baby products. Her past accolades include working with PricewaterhouseCoopers and the CIMB banking group.

When Tay and Lavinie Thiruchelvam, her business partner and friend, launched Babydash in 2011, ecommerce was still a nascent sector in Malaysia. But the platform was able to grow, raising funds via equity crowdfunding at a time when the concept was still new here.

Tay exited Baby Dash in 2018 by relinquishing her stake in the company, and, in 2019, joined ScaleUp Malaysia, an accelerator that buys equity in startups while helping them, well, scale.

ScaleUp announced its first cohort in 2020 and will be announcing its fourth cohort soon, where it’ll invest up to US$100,000 in each of the 10 selected startups.

Here’s our short interview edited for brevity and clarity:

Why are we not seeing more founders reinvest in the scene?

Tay:
 I think most founders are not qualified as investment managers. So it’s mostly that, right? You could come back and reinvest as an angel and that would be mostly through the equity crowdfunding platforms that are available.

But a lot of that is you doing your own work, having to read up and find out about the companies and making your own decisions. So, I’m not sure whether the founders out there are comfortable – I am because of my background.

I would say put your money with someone who knows what to do with money.

Yeah, there are places you can invest in that will help invest your money for you. Of course, this has to be people that you believe in and you trust that they know how to grow your money. Founders can also invest in accelerators or VCs like us.

One bad rep Malaysia gets is that we are trailing Vietnam and Indonesia. Thoughts?

Firstly, it’s the population: Vietnam and Indonesia are much larger. But I also think the Vietnamese and the Indonesians go out there a lot faster to get funds.

And that’s where you build success stories. So, if you have more successful founders, then there is a chance they’ll come back and reinvest in the scene.

Here, if you talk about successful founders, there are only a handful of them.

For someone with your background, how do you add value to a startup?

Different people can add value differently. Because of my background, I know how to look at businesses. I know how to look at financials, so I help a lot of companies with their financial projections and with articulating these projections when they are going out to raise funds.

Most startup founders are tech people. While they may know how to build great apps, they’re not good at explaining their go-to-market strategy – for example, what their revenue drivers are.

A number of them can tell you how much revenue they make, but when I ask, “what can you do to make that revenue?” or “what drives this part of the business?” they either have to think really hard or don’t know. They’ll say, I just do this and it makes money.

So, a lot of it is going back to the basics of business. If you know what drives your revenue, what your costs are, how to grow revenue, and how to minimize your costs? So these are the areas where I add value – mostly strategic financial decisions and strategy.

Tips for startup founders when they fundraise or pitch?

I think the most important thing is, everybody thinks pitching for funds is about telling a nice story. But I always tell founders is: “That’s great, but don’t forget to back that story up with numbers.”

This is something I see with most Malaysian founders – they don’t really tell the story with data. They usually tell the story with big picture examples such as the global market is worth x billion or that we are 1% of that x billion.

But how are you going to achieve those figures? What is going to take you from your first million to your first 10 million? And if you can tell these stories then you’ve got it.

And it’s not complicated. It should be simple spreadsheets where people can understand what drives your numbers.

The mistake people make is that they get so worried about overcomplicating things – that you need to hire a consultant to do this. But I think boils down to identifying your revenue lines and other assumptions that drive them.

What’s your advice for Malaysian founders looking to scale overseas?

Aside from knowing the market well, you should not just scale for the sake of scaling. That said, I think companies, as they start, should think global from day one – or at least Southeast Asia from day one.

Don’t build a business to just capture the Malaysian market. If you take the Southeast Asian market, you can start with at least five countries. So if you don’t start from that kind of thinking, you’re never going to be able to take that first step overseas because it’ll be “Wait, wait, let me dominate the Malaysian market first.”

Again, don’t go overseas for the sake of doing so. Instead, think of a shared pain point in the countries that you can address and provide that solution.

I’ve been guilty of this where I wanted to dominate the local market first and then go overseas. But, hey, Lazada came and dominated Southeast Asia. So there you go.


How Netflix fares in OTT pricing across SEA

Image credit: S&P Global Market Intelligence

Netflix has been trying hard to win back price-conscious Southeast Asian audiences.

The global streaming giant
has recently reduced
 its prices in more than 100 countries, including five Southeast Asian markets. This stands in contrast with its move to hike subscription fees in developed markets like
the US
 and
the UK
.

The difference shows the importance of affordability for over-the-top streaming service providers to win in Southeast Asia,
according to a recent analysis
 by S&P Global Market Intelligence.

The analytics firm estimates that Netflix has slashed subscription fees for the basic plan by as much as 46% in some Southeast Asian countries. Other notable findings include:

Netflix’s price adjustment has resulted in a substantial reduction in the affordability gaps between the mobile-only and basic tiers in five markets.

Disney+ Hotstar and Lionsgate Play are among the most affordable international streaming platforms in the region.

More localized services such as WeTV iflix and Viu have also seen their popularity grow with a freemium model, which enables users to access both the free, ad-supported plan and paid subscription tiers.

In January, Netflix said
it added
 1.8 million subscribers from Asia Pacific in the fourth quarter of 2022. It’s
reportedly setting up
 an office in Vietnam.

See also:
Scrutinizing Amazon’s and Tesla’s Malaysian deals

Editing
: Thu Huong Le and Dhania Putri Sarahtika


Scrutinizing Amazon’s and Tesla’s Malaysian deals

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click
here
 to read past articles.

Last week, two names got many Malaysians excited: Tesla and Amazon. Why? Because, at least according to the government, both tech titans are going to invest in the country one way or another.

Photo credit: Amazon

Even Prime Minister Anwar Ibrahim
told
 the parliament’s lower house on Tuesday that Amazon and Tesla’s commitment was due to his five-month-old government.

Yes, I kid you not. Two capitalistic titans needed a fledgling administration made up of a pact of strange bedfellows to convince them to invest in Malaysia – at least that’s what the PM said.

Sadly there won’t be any fact-checking exercises here. So, Anwar wins.

Briefly, Amazon
said
 on March 2 that it will commit US$6 billion until 2037. Part of its investments include establishing data centers in Malaysia to host cloud services and applications.

Tesla, on the other hand, will be
setting up
 a sales and service office, allowing Malaysians to directly buy electric cars instead of relying on gray market imports.

The company will also build a network of electric car superchargers, too.

A laggard

Let’s put both firms in perspective. In the case of Amazon, we’re late to the game.

The online retail giant
has invested
 US$6.1 billion in Singapore since 2010. In 2021, it
pledged
 to allocate US$5 billion for Indonesia. And last year, the firm
increased
 investments in Thailand by US$5 billion for a 15-year period.

Other countries, on the other hand, are throwing larger baits to entice Tesla. Indonesia, for example, wants the company to
build
 a so-called gigafactory to produce electric vehicles (EVs). In return, the country is offering up a precious resource to make EV batteries: nickel.

Taken together, Tesla and Amazon’s commitment to Malaysia doesn’t seem much – at least not as substantial as the politicians are hyping it up to be. I can’t comment on Tesla, nor this will be commentary on how un-climate-friendly nickel-mining is.

But I have covered data centers for a bit and here’s what needs to be said: Execution is easier said than done.

In 2021, Amazon made a similar
commitment
 to Malaysia. That was under a different government and prime minister. You could ask, is Amazon’s recent announcement a new undertaking or just an extension of what it said in 2021? Or was it a
commitment
 made as far back as 2019? This is turning out to be a scene from the movie
Inception
.

Amazon isn’t the only one. Let’s take Microsoft, which announced that it would build a data center in 2014 out of Sedenak in Johor. Three years later, that plan hit a snag after the US tech major reviewed the entire project. At the time of writing, the project has yet to be completed.

But then in April 2021, Microsoft said it would
set up
 its first Azure data center in capital Kuala Lumpur instead, committing US$1 billion to that effort. But, what happened to… the delayed Sedenak project? Never mind.

To be fair to Amazon, especially, the last couple of years have been topsy-turvy for Malaysia. Anwar recently revealed to the lower house that Amazon had wanted to commit in 2019 but then decided against it due to factors such as political instability.

In 2021, there was an issue about data center regulations that saw Amazon, Microsoft, and even local players lobbying the government to amend the terms.

In the same year, Amazon and the tech giants appealed to Anwar’s predecessors to
reinstate
 a policy on undersea cable repairs. The man who drew up that favorable policy, Anthony Loke, is back in Anwar’s government.

Systemic issues still left untouched

Who will Amazon be catering too, really? The only pitch here is data residency, which will help businesses and government agencies use Amazon’s cloud services. That might trigger some positive moves, e.g., companies setting up tech infrastructure in Malaysia.

The reality is Amazon will not put its top-tier servers here because that will affect Singapore. In fact, the city-state will be the firm’s Asia-Pacific hub.

Tesla intends on setting up a sales and service center as well as a network of superchargers in Malaysia. / Photo credit: Tesla

It would be awesome if the hub packed up and moved to Malaysia instead. Now that’s something, but it won’t happen for all the right reasons, such as Singapore having better incentives and tax policies than us.

So what’s the hype about? Maybe websites and such will be hosted in Malaysia and that can bring in greater tax revenue for us – not to mention that data server providers need to
contribute
 a portion of their revenue to a government fund if sales exceed 2 million ringgit (US$442,000) annually.

But will Amazon and Tesla succeed? Who knows. To be sure, it’s good optics to have foreign companies proclaiming their love for Malaysia. But the truth is, there are so many systemic hurdles that need to be overcome to get at least the data centers running.

Also, like all good capitalists, Tesla and Amazon will move on to other countries where labor and the cost of doing business are cheaper.

Meanwhile, startups and tech investors will be still banging their heads against the wall dealing with bureaucratic hurdles such as visa requirements as well as the country’s lackluster and aloof tech agencies. And, please, let’s stop with so-called technology transfer. That may or may not happen.

Also, let’s remember that 2037 is a long time away and Amazon can shift the goalpost, especially if there are multiple changes in the government.

Good news is, you can still blog about your woes on a website hosted on Amazon Web Services, and pay the company in ringgit and not US dollars to keep your site alive. Be thankful, all right.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.52 ringgit.


Capital A names CEO, CFO of AirAsia Digital

Photo credit: AirAsia Super App

Capital A
 has appointed
Colin Currie
, its president for commercial, to also serve as CEO of AirAsia Digital.
John Cheing
, Capital A’s head of investments, has also been named CFO of AirAsia Digital and AirAsia Super App.

The changes are effective March 1, according to a statement.

AirAsia Digital houses the operations of its logistics firm Teleport, fintech arm BigPay, and the AirAsia Super App – which offers food and grocery deliveries, ride-hailing, and express shipping services, among others.

The super app currently has 51 million users and 40 million downloads, Currie said. With over 15 lines of products and services, he said there’s “much more room for growth” for AirAsia Digital as it aims to become one of the industry leaders in Southeast Asia and beyond.

Before AirAsia, Currie was with Adidas for over 16 years, serving as managing director for Hong Kong, Taiwan, and Greater China.

See also:
Org Chart: The C-suites powering Capital A

The leadership changes follow Teleport’s recent
US$50 million
 funding round in late 2022. The super app was also recently launched in Indonesia, with an initial focus on the country’s
travel hotspot of Bali
.


The green pastures of SEA’s agritech landscape

Welcome to On the Rise! Delivered every Tuesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in emerging tech. If you’re not a subscriber, get access by
registering here
.

Hi there,

As a child, I recall my grandfather haggling with a large man wearing a thick gold bracelet over the selling price of a crop of coconuts that had recently been harvested from our farm in south India. I was worried as this man was nearly twice the size of my grandfather – I remember thinking that he could easily beat my elderly grandfather to a pulp.

The large man was an agricultural distributor – commonly known as a middleman – who bought crops from smallholder farmers like my grandfather. The heated negotiations ended with the harvest being sold for one-tenth of the price the coconuts would fetch in the market. My grandfather was in a foul mood for the rest of the day.

Similar to India, Indonesia’s agricultural supply chain is riddled with middlemen. There are
up to 13 layers of middlemen
 in the country with each taking a 10% to 20% cut, leaving farmers with the lowest income in exchange for the greatest effort.

This large gap between farmer and end-consumer is one reason for the rise in agritech startups in Indonesia. The archipelago has more agritech firms than all other nations in Southeast Asia combined, my colleague Shadine reports in this edition’s Big Story.

The story highlights the extensive players in the region’s agritech space. The industry has definitely caught the attention of investors – they pumped in over 2.5x more funding in agritech startups last year compared to 2021. The number of deals have also doubled over the past year.

Speaking of investor attention, SoGal Ventures co-founder and managing partner Pocket Sun tells my colleague Melissa why investing in minority- and female-founded startups makes good business sense. And she’s walking the walk – 95% of the startups in SoGal Ventures’ first fund have at least one female co-founder and eight of its investments raised “up” rounds in 2022.

In this week’s AI Odyssey, I showcase a generative AI firm that is looking to build a sustainable business model by targeting enterprise customers. More on that later, but first, our Big Story.

—
Collin

THE BIG STORY

The key players in SEA’s agritech space

Image credit: Timmy Loen

The region’s agritech industry attracted over 2.5x more investment with funding deals in the sector reaching an all-time high in 2022.

MAKING WAVES

Investing in women founders is good business, says diversity-focused SoGal Ventures

Of the startups bankrolled by SoGal Ventures’ first fund, which had eight “up” rounds in 2022, 95% have at least one female co-founder.

AI ODYSSEY

Promising AI projects we’re noticing

A generative AI that means business

The world of generative AI seems to be growing every day with new players looking to launch their own chatbots. A few weeks ago, we saw a
host of Chinese players
 – including Baidu, Alibaba, and Tencent – firming up plans to launch their own AI bots.

While Microsoft-backed OpenAI and Google’s Bard attracted investors and a massive general user base, there have been
several questions about the huge costs
 of their use, especially in the integrations with search engines.

Analysts expect Google to see a US$6 billion rise in expenses by 2024 if the company’s AI bot was to answer half of its search queries. This is due to an AI-assisted search costing about 10x more than a standard search request, which will reduce profit margin significantly.

This is why players like Canada-based
Cohere
 are looking to build a more sustainable business model by targeting enterprise customers. The company is planning to launch a generative AI chatbot and is already in talks with marketing, consulting, and tech companies to incorporate its offering.

Image credit:
blocberry / 123RF

Taking a shot at OpenAI and Google, Cohere CEO Aidan Gomez
told
Reuters
 that the company doesn’t plan to open its chat models for everyone to use for free, as it is looking to build “a healthy and sustainable business.”

The firm has a
foundation model
 like OpenAI and Anthropic, and it is trained on large sets of data and can perform a variety of tasks. Cohere has listed three products in its website: Classify, a service that helps in content moderation and analysis; Generate, an AI-powered content writer tool; and Embed, a platform to extract deeper insights.

“Sustainable business model” and “generative AI” are the two phrases that are music to investors in this current environment. It’s no wonder that Cohere, which is backed by the likes of Tiger Global and Index Ventures, is
already in talks
 to raise millions of dollars at an over US$6 billion valuation.

What’s also interesting to investors is that Cohere was founded by former researchers at Alphabet. It also has a cloud partnership with Alphabet and its language AI will be available on Amazon’s machine learning platform SageMaker.

That said, Gomez wants Cohere to stay independent and work with different cloud partners.

—
Collin

FYI

1⃣
Mapping Malaysia’s government tech entities
:
 Jobs will be cut if the government decides to overhaul the sector.

2⃣
Sense checking for product-market fit in 2023
:
 Startups seeking funding amid this year’s tough economy should take a look at product-market fit in a fresh light.

NEWS YOU SHOULD KNOW

Also check out Tech in Asia’s coverage of the emerging tech scene
here

1⃣
All investment in good health
:
 B Capital Group closed its first healthcare fund at over US$500 million.

2⃣
Time to take a TikTok break
:
 The platform is putting a screen time limit of 60 minutes per day for users under 18.

Image credit: Timmy Loen

3⃣
PropertyGuru trims losses by 81% in Q4 2022
:
 The company’s marketplace revenue grew 15% to US$28.2 million in the same quarter.

4⃣
Streaming platform for Muslim children
:
 Malaysia-based Durioo+ has raised US$2.9 million in seed funding in a round led by Y Combinator and Gobi Partners.

5⃣
A breath of fresh air
:
 Japanese climate tech startup Asuene has secured US$1.1 million in series B money. It’s raised about US$22.8 million in total for the round.

That’s it for this edition – we hope you liked it! Do also check out previous issues of the newsletter
here.
.

See you next week!


Khazanah looking to team up with SG-based Antler, sources say

Pic credit: Khazanah Nasional

Khazanah Nasional, Malaysia’s sovereign wealth fund, is ironing out a partnership with Singapore-based VC and accelerator Antler to help the former invest in early-stage startups, people familiar with the matter tell
Tech in Asia
.

Details are scant at the moment as the deal has yet to be finalized, but talks “had been going on for some time,” sources say on condition of anonymity.

Spokespersons from Antler and Khazanah declined to comment on the matter.

A Kuala Lumpur-based investor who’s aware of the discussions tells
Tech in Asia
 that Khazanah’s deal with Antler may mimic the programs of national oil company Petronas.

For instance, its VC arm Petronas Ventures has been running the
FutureTech accelerator
 since 2019. The program’s partners include 500 Startups and
StartupX
, among others.

Antler was established by Magnus Grimeland in 2017. He was a co-founder of Zalora before leaving the fashion ecommerce firm to start Antler.

On its website, Antler
claims
 to be “one of the most active early-stage investors,” with a portfolio value of US$3.1 billion.

Malaysian Prime Minister Anwar Ibrahim’s government has
set aside
 US$832 million for startups in this year’s federal budget, in addition to the usual allocations for government tech agencies.

Among the highlights is US$335 million being set aside by government-owned institutional investors such as Khazanah and pension fund Employees Provident Fund to invest in “innovative and high-growth” local startups.

Amirul Feisal Wan Zahir, Khazanah’s managing director,
said
 in February that the sovereign wealth fund will be deploying money from its 6 billion ringgit (US$1.3 billion) Dana Impak fund to meet Anwar’s mandate.


The key players in SEA’s agritech space

Agriculture is a key sector in Southeast Asia, with the industry
contributing around 17%
 of the region’s gross domestic product (GDP).

That said,
problems such as
 loan sharks, low-quality agriculture inputs, lack of education, and a fragmented supply chain make the process for farmers in the region difficult. In Indonesia, most smallholder farmers earn less than a living wage –
nine in 10
 are impoverished.

Agritech startups have emerged to solve these challenges through tech.

This industry has caught the eye of investors, who have pumped in 2.5x more funding in 2022 than in the year before,
Tech in Asia’s
 data shows. Funding deals nearly doubled in 2022.

This jump isn’t a one off – the sector has been witnessing a consistent growth of over 2x in funding amounts over the last three years.

Indonesian startups dominate Southeast Asia’s agritech sector. The archipelago has produced more agritech firms than all other nations in the region combined,
Tech in Asia’s
 database shows.

This is understandable as agriculture is one of the major contributors to Indonesia’s GDP – accounting for
about 13.3% of it in 2021
. It also employs a sizable workforce of
40.6 million people
 – or 15% of the country’s total population – who work in agriculture, forestry, and fishery sectors, as per Indonesian government data in February 2022.

See also:
Mapping Indonesia’s key agritech players

Singapore, Southeast Asia’s smallest country by size, has the second-highest number of agritech firms in the region.

After realizing that the city-state imported 90% of its food, the government devised in 2019 the 30-by-30 plan, which aims for the country to
produce at least 30%
 of its nutritional needs by 2030. This has boosted agritech firms in the country.

Given Singapore’s lack of land mass, vertical or rooftop farming has become its most popular agritech startup category – five of its 14 agritech companies are engaged in this field.

See also:
Singapore’s agritech vision hits speed bumps

In total, Southeast Asia’s agritech startups have had 114 disclosed funding deals since 2011.

However, it seems that a fair share of active companies may be bootstrapped as well. According to our data, 24 of the firms listed have not obtained any venture funding.

The most common category of agritech startups in the region is B2B commerce.

Accessibility to supply chains is a large problem across much of Southeast Asia. This is especially applicable to Indonesia, which is not only
the largest country
 in the region but also has an extensive archipelago.

The supply chain from agricultural producer to end consumer can involve up to
13 layers of middlemen
 in the country, with each taking a 10%-20% cut, leaving farmers with the lowest income in exchange for the greatest effort.

Many agritech startups are cutting out these middlemen through their platforms, enabling smallholder farmers to sell their produce directly to businesses and pushing up farmers’ income.

See also:
Indonesian chicken startup’s 20x revenue jump sees it take off

This category also includes marketplaces for farmers, who often lack access to high-quality farming inputs.

Farming management tech is the next most popular agritech category, with 29 active companies adopting this model.

Indonesia-based firms dominate this vertical and include some of the most well-funded agritech companies. EFishery tops the list with a total of US$306 million in funding.

The aquaculture-focused firm offers a range of services, including farming management tech for fish and shrimp cultivators, a fresh seafood marketplace, and financing for farmers. Its
US$90 million series C round
 made up nearly a third of the region’s agritech funding in 2022.

See also:
Indonesia’s eFishery revels in farmer financing foray, but there’s a catch

Unsurprisingly, the biggest investors in the space are also Indonesian, with East Ventures investing in six companies across a total of 14 deals since 2016.

The VC’s most recent investment was in Aruna’s
US$35 million series A last year
. Its other bets include
PasarNow
,
Gokomodo
, and
Chickin
.

Agriculture in the region is feeling the heat from
labor shortages
 as well as climate change – it shed an estimated
US$21 billion in production losses
 from 2008 to 2018. Farmers will need to rely more heavily on tech to improve their produce, and that may bring more investors to partake in this harvest.

As
Tech in Asia’s
 database is updated, we hope it will be a useful reference for anyone interested in Southeast Asia’s agritech space.

You can also catch our coverage of the sector
here
 and check out more landscape reports
here
. We acknowledge that we’re missing some data, so do reach out to shadine@techinasia.com to help us fill in the gaps.

Credits

Data:
 Ivan Tan and Shadine Taufik

Graphics:
Susi Susanti Wu

Editing:
Collin Furtado and Arpit Nayak


Jaya Grocer, Grab launch loyalty reward scheme

Jaya Grocer has more than 40 stores in Peninsular Malaysia / Photo credit: Jaya Grocer

Malaysian grocery startup
Jaya Grocer
 has introduced a new membership program in collaboration with
Grab
.

The program is available on the Grab app and enables customers to earn and redeem
GrabRewards
 points at Jaya Grocer stores throughout the country. The membership is free and activated automatically when a purchase is made in-store or through the Grab app.

Customers can redeem Jaya Grocer e-vouchers in-store after their membership barcode is scanned by the cashier. For every 1 ringgit spent using cash, credit/debit card, or GrabPay, customers will earn 0.75 GrabRewards.

Grab announced
its acquisition of Jaya Grocer
 in December 2021. While the Singapore giant did not disclose the deal amount, it bought all the ordinary shares and 75% of the preference shares of the Malaysian firm, with an option to purchase the remaining 25%.

In its most recent earnings call, Grab boss Anthony Tan said that the Jaya Grocer partnership, along with other initiatives like its food subscription plan
Grab Unlimited
, can help it through an expectedly slower first half in 2023.

See also:
Grab’s financial health in 9 charts


Amazon commits to invest $6b in Malaysia by 2037

Photo credit:
Andy Hay / Flickr

Amazon Web Services
 (AWS) plans to invest US$6 billion in Malaysia by 2037, making it the largest international technology investment in the country to date. As part of the investment, it will be launching an
infrastructure region
 in Malaysia.

The new AWS region will enable customers who prefer to keep their data in Malaysia to do so securely. It will also increase data transfer speed and meet the growing demand for cloud services across Southeast Asia.

The region will have three availability zones when it starts, adding to the current 99 availability zones in 31 geographic regions that AWS has rolled out around the world. Availability zones are separate and distinct locations within an AWS region that are engineered to be isolated from failures.

AWS provides services such as analytics, compute, database, IoT, machine learning, mobile services, storage, and other cloud technologies. It counts Astro Malaysia Berhad, Axiata Group, and Bank Islam Malaysia as some of its customers in the country.

“We look forward to helping Malaysian institutions, startups, and companies deliver cloud-powered applications to fuel economic development across the country and to spur job creation, skills training, and educational opportunities in the communities surrounding our data centers,” said
Prasad Kalyanaraman
, vice president of infrastructure services at AWS.

See also:
Can Sociolla become the AWS for smart retail?


Mapping Malaysia’s government tech entities

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click
here
 to read past articles.

If you’ve followed my
coverage
 of Malaysia’s recently unveiled 2023 budget, then this piece comes as no surprise.

The Malaysian Finance Ministry’s headquarters in Putrajaya. The ministry owns many of the country’s tech agencies. / Pic credit: Putrajaya Insights

I’m not going to rehash many of the points in my previous articles, but I’m going to zero in on Malaysia’s government-backed agencies that target the tech and startup sectors.

This is one of the reforms that Prime Minister Anwar Ibrahim announced in last Friday’s budget speech, where he said there’ll be a restructuring of government tech agencies. To get a glimpse of how “crowded” the space is, below is a landscape map:

Before I get into the nitty gritty, we need to bear in mind a few things.

A complex web

Firstly, Some of the names featured in the chart are agencies such as Mavcap and Malaysia Debt Ventures, which are specifically for tech or startup investments. Others are agencies such as SME Corp and Ekuinas, which dabbled in the VC space through an external partnership with established private VCs.

Still others are large state financial and non-financial institutions that have their own venture arms – for example, Petronas, Khazanah, asset manager Permodalan Nasional Bhd (PNB), and civil servants’ pensions pot Kumpulan Wang Pesaraan Diperbadankan (KWAP).

PNB was in
talks
 to lead a 2021 funding round in Singapore-based car marketplace Carro while KWAP
invested
 in Uber.

Secondly, Malaysia has a convoluted governance structure. For example, Mavcap falls under the purview of the Ministry of Science, Technology, and Innovation. But the Finance Ministry is its shareholder and dictates board appointments as well as mandates.

SME Corp, for example, is an agency under the Entrepreneur and Cooperatives Development Ministry.

Thirdly, I didn’t categorize these according to the funding lifecycle of a startup — seed to IPO — because these agencies do not have specific mandates to target a certain stage. That in itself is a problem because you end up not only with overcrowding but also cannibalizing certain segments while ignoring the rest.

For example, Malaysia
still lags
 in seed and early-stage funding compared to its regional peers. Also, Mavcap and Penjana are basically doing the same thing, i.e., launching fund-of-funds and developing local VC talent.

A lack of political will?

Now, onto the meat of this article: Restructuring the VC space has been a proposal of governments past, but that ambition has always lacked political will and smarts.

In terms of will, it’s the usual issue of lobbying. Restructuring means people will lose their jobs – we’re not talking about middle management but chiefs.

You can be sure to suddenly see these folk come crawling out of the woodwork, claiming to love startups and why they matter to the VC space and that they have been championing the startup space from day one. Yeah, right…

As for smarts, we have seen a merger happen last year: Tech agencies Technology Park Malaysia and the Malaysian Global Innovation and Creativity Centre became a single entity, now known as the Malaysian Research Accelerator for Technology and Innovation (MRANTI).

So it’s possible. The minister or an adviser to the prime minister can make it happen. If they want to.

The lowest hanging fruit will be to tackle entities under a certain ministry like with the MRANTI example.

The
easiest proposal
 – which has always been on the table but is yet to be executed – involved bringing Mavcap, Cradle, Malaysia Debt Ventures, Malaysian Technology Development Corp, and Kumpulan Modal Perdana under a single umbrella.

This is simply because they fall under the purview of the Ministry of Science, Technology, and Innovation.

You might argue that Mavcap and Penjana Kapital need to merge, or at least that one must subsume the other because both have overlapping roles. But Penjana falls under finance while Mavcap comes under science, technology, and innovation. A merger can be done, but expect pushback and lobbying – and ego too since the merged entity will have to be under a ministry.

Affirmative action policies: a bane

The most annoying thing, however, will be so-called national interests, which are tied to the country’s affirmative action policies that favor the majority Bumiputera ethnic group.

Examples include having a Bumiputera director on the board of a financial services company and a percentage of the company being Bumiputera hires.

Unraveling this will be near impossible since it’ll ruffle too many feathers – an unpopular decision to say the least.

But the problem is that the pro-Bumiputera policy isn’t driven by data and doesn’t make commercial sense. It can also be an annoyance — what if you can’t find a good Bumiputera director? You’d be forced to make a token hire.

And while there are investors who might brave the challenge and put their money here, there are those who will look elsewhere because, at the end of the day, it’s all about the money.


Malaysia streaming platform for Muslim children raises $2.8m

The Durioo team / Photo credit: Durioo

Malaysia-based
Durioo+
, an Islamic video-streaming platform for children, has raised US$2.85 million in a seed round led by Y Combinator and Gobi Partners. The round also saw former employees of Meta, Google, and IQIYI participate as angel investors.

In February 2022, founder
Sinan Ismail
 launched Durioo+ to provide an edutainment alternative to Muslim children. The startup graduated from Y Combinator’s winter batch of the same year.

Since then, Durioo+ has also produced 20 original programs and licensed over 1,500 episodes from series such as
Baby Shark
 and
Upin & Ipin
. The firm says it has also recorded over 22,000 subscribers. The platform
charges
 subscribers about US$7.99 a month or US$79.99 annually.

The startup says that over the next five years, it wants to diversify its viewership base in countries and regions such as the UK, the US, Indonesia, the Middle East, and North Africa. It also aims to create more original content and launch Durioo Games. Durioo+ targets having 100,000 subscribers by 2023 and 1 million subscribers by 2026.

See also:
The lowdown on Malaysia’s new $804m tech budget

With initiatives such as the
Islamic Digital Economy
 and
nearly 64%
 of its population identifying as Muslim, Malaysia has become a hotbed for halal tech startups.

Other investors that participated in this round include:

Uncommon Capital

Lynett Capital

New Venture Order

Innate Capital


500 Global accelerates hiring in Southeast Asia

Photo credit: 500 Southeast Asia

US-based VC firm
500 Global
 is ramping up hiring for its
Southeast Asia fund
. It currently has openings for
16 positions
 across Singapore, Malaysia, and Indonesia.

Some of the roles that 500 Global is looking to fill include director of investments, director of strategic development, director of investor relations and fundraising, and chief of staff. Most of these openings are for its Singapore and Malaysia offices, with only one job listing specific to Indonesia.

This comes after the VC firm
expanded its leadership team in Southeast Asia
 with the appointments of Shahril Ibrahim, Saemin Ahn, and Martin Cu last month.

As to why the company is hiring despite the current headwinds, 500 Global said on its website that “venture capital has historically had a stellar performance during economic downturns. As each venture fund we operate are 10-year vehicles, we plan our resources for the long-term, and for every season.”

In the past decade, 500 Global has invested in more than 340 companies in Southeast Asia. Its portfolio includes major tech players like Grab, Bukalapak, FinAccel, Carsome, Carousell, and eFishery.

The VC firm has a global portfolio with more than US$2.7 billion in assets under management.

See also:
Recession Run: 500 Global’s investment plan in SEA


GrabFood Malaysia expands reduced delivery fee program

Photo credit: Grab

GrabFood Malaysia
 has expanded its Saver Delivery option to additional cities, allowing more users to choose from delivery fees starting at 1 ringgit (US$0.22).

The program was first piloted in November 2022, allowing customers to order from a range of restaurants on GrabFood and pay less in exchange for a slightly longer delivery time.

Grab does this by grouping orders in the same direction a delivery rider will travel. This means that the feature only supports orders from certain merchants, depending on the time and location.

Though this may be more cost-efficient for customers, riders’ earnings will not be affected, as they will be compensated for these deliveries.

Another service, Direct Delivery, has become a new alternative for shorter wait times. Other features customers can opt for are scheduled orders and self-pickup.

Grab saw its
revenue soar
 to US$502 million in Q4 2022, more than tripling the previous year’s amount. The firm expects to hit
adjusted EBITDA breakeven
 by the end of 2023.

See also:
Grab’s financial health in 9 charts

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.49 ringgit.


The lowdown on Malaysia’s new $832m tech budget

Update: (March 2, 12.16 p.m. SGT): This article was updated to include extra funding for startups in Budget 2023.

Malaysian Prime Minister Anwar Ibrahim tabled this year’s federal budget last Friday, setting aside 388.1 billion ringgit (US$86.7 billion) for operating and development expenditure.

Prime Minister Anwar Ibrahim (center, light blue traditional Malay wear) holds a copy of the Budget 2023 before tabling it in Parliament on February 24. / Photo credit: Prime Minister’s Office

This will be the first major test of his government, which took power in November last year following a general election. In the coming days, the budget will be debated and voted on at the lower and upper houses of Parliament.

Of that sum, 3.6 billion ringgit (US$803.9 million) has been earmarked for tech and startups, together with a few promises of structural reforms.

Here’s a breakdown of the budget, based on excerpts from Anwar’s speech:

2 billion ringgit (US$446.6 million) “financing facility” by Bank Negara Malaysia to support tech startups in the sustainability space as well as to help SMEs implement low-carbon practices.

1.5 billion ringgit (US$335 million) from government-owned institutional investors such as sovereign wealth fund Khazanah Nasional and pension fund Employees Provident Fund to invest in “innovative and high-growth” local startups.

40 million ringgit (US$8.9 million) under the Malaysia Co-investment Fund as a matching amount to support alternative funding methods.

136 million ringgit (US$30.4 million) for startups via Malaysia Venture Capital Management (Mavcap), Modal Perdana and Ekuinas.

50 million ringgit (US$11.2 million) under Cradle.

One-stop tech shop?

The first major reform that Anwar mentioned in his speech is the restructuring of government agencies involved in the tech and startup space.

He said his government is studying the setup to “effectively coordinate efforts to develop local startup companies, from seed stage to successful listing on Bursa Malaysia.”

The restructuring of government-owned tech agencies was
on the table
 in 2018.

Back then, the exercise involved five tech-related agencies: Malaysia Venture Capital Management (Mavcap), Cradle, Malaysia Debt Ventures, Malaysian Technology Development Corp, and Kumpulan Modal Perdana.

Mranti is, so far, the only successful result of a merger between two government tech agencies. / Pic credit: Mranti

This never took off because of multiple regime changes since then. During this roller-coaster period in Malaysian politics, however, two things happened: the launch of a fund-of-funds called Penjana Kapital, and the merger between tech agencies Technology Park Malaysia and the Malaysian Global Innovation and Creativity Centre, which is known today as the Malaysian Research Accelerator for Technology and Innovation.

The creation of Penjana Kapital led to the questioning of Mavcap’s existence since both agencies had similar mandates. There was an expectation that Penjana Kapital would subsume the role of Mavcap but that, too, is now being reviewed.

Kuala Lumpur-based investors tell
Tech in Asia
 that the restructuring is a long time coming. They agree that it’s the right move but also caution that it takes immense political will and smarts to ensure that the merger of tech entities will end up doing more good than harm.

One problem that has made it difficult for both investors and founders to engage the government is the litany of agencies under different ministries, a Malaysian venture capitalist tells us.

“If the end-result is a one-stop tech shop where startups and investors can just engage the government on all related issues, then it makes the job easier,” they say.

Penjana Kapital, for example, is under the Finance Ministry, while Malaysia Debt Ventures, which also invests in tech startups, comes under the purview of the Science, Innovation, and Technology Ministry. The Malaysia Digital Economy Corporation, on the other hand, is parked with the Communications and Digital Ministry.

Focus on IPOs

Malaysia’s stock exchange, Bursa Malaysia, consists of three markets: ACE, LEAP and Main. / Pic: Bursa Malaysia

The second noteworthy reform involves the country’s stock market. Anwar said the government will allow the issuance of dual-class shares.

Last year, sources told
Tech in Asia
 that this prohibition was among the
reasons
 Malaysian companies shunned the local bourse for the Nasdaq. Singapore and Hong Kong introduced dual-class shares in 2018.

Anwar added that there will be a tax deduction of up to 1.5 million ringgit (US$335,000) on expenses incurred for listings on the ACE and LEAP markets of Bursa Malaysia until 2025.

This tax deduction will also be expanded to include the cost of listing tech companies on Bursa’s Main Market.

See also:
Why Malaysian tech firms are shunning Bursa for Nasdaq

Industry regulator Securities Commission Malaysia will be tasked to create more secondary markets and push for the listing of local tech companies, Anwar said in his speech.

That iffy tax bit

Like all budget pronouncements, the devils are in the details and execution.

But at this stage, one major concern from investors is the possibility of a new capital gains tax (CGT) being levied on profits made from the sale of shares in unlisted companies.

This is currently being studied, with the government thinking of introducing the tax at a “low rate” from 2024, according to Anwar. But the proposal is divisive.

Investors speaking to
Tech in Asia
 highlight that the CGT may spur companies to list on the Bursa, which is in line with the government’s focus to make the stock market more attractive. Others say that it’s time for a CGT to be introduced as a progressive measure to redistribute wealth.

But some investors tell us that the CGT needs to be clarified – for example, whether divestment of unlisted shares to a listed entity will also be subject to the tax, one source says.

Private equity deals, group restructuring, or even mergers and acquisitions could be affected, so more details on the tax are needed, the source adds. “One example is share transfers as part of an internal group restructuring. Will this be exempted?” they ask.

While neighboring countries such as Vietnam, Japan, and Indonesia have a variation of the CGT, Singapore and Hong Kong do not, another source says. “So depending on how heavy the tax is, companies might continue to be domiciled elsewhere or skip Malaysia as an investment destination,” they add.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.48 ringgit.


Gaw Capital, A3 Capital launch data center in Malaysia

Photo credit: Gaw Capital Partners

Gaw Capital Partners
, a Hong Kong-based real estate private equity firm, has formed a joint venture with Singapore-based investment company
A3 Capital
.

Both firms aim to invest in greenfield and underperforming data center assets in Southeast Asia, as well as to create a portfolio of
Tier-3 certified data center assets
.

The joint venture has also launched its first data center in Cyberjaya, Malaysia. It’s managed by
Infinaxis
, a Singapore-headquartered data center specialist.

The collaboration aims to launch similar projects in Indonesia and Singapore.

Moreover, Gaw Capital and A3 Capital will adopt ESG principles for its data centers. The two firms plan to gradually implement advanced sustainability features for the facilities.

See also:
Malaysia wants to farm unicorns. It’s going to fail


Malaysia wants to farm unicorns. It’s going to fail

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click
here
 to read past articles.

Malaysia will table its federal budget tomorrow. It’s going to be closely watched since it’s the first test for the country’s new government.

Malaysian Prime Minister Anwar Ibrahim (centre, dark blue suit) attending a virtual meeting with tech and startup founders on February 9. / Pic credit: Prime Minister’s Office

I have written about expectations, and I won’t rehash them here. But just as I hit publish last week after talking about the lack of goodies for the startup and tech space, Malaysia’s Prime Minister Anwar Ibrahim
announced
 that his government would pump more than a billion ringgit (US$225 million) into “innovative” and “high-growth” startups.

The money won’t come directly out of public coffers. Instead, the government will order the country’s state-owned institutional investors, such as sovereign wealth fund Khazanah and pensions pot Employees Provident Fund, to pony up the cash.

Anwar said this after a
February 9 meeting
 with the who’s who of Malaysia’s tech scene – including the chiefs of Aerodyne and Carsome.

The nexus of business and politics

Malaysia’s state-owned financial institutions form a complex web that deserves an explainer of its own. But, for this article, all you need to know is that the government controls a few institutional financiers, known as government-linked investment companies (GLICs).

They deploy public funds — directly or indirectly — into investments deemed to be important to national or strategic interests.

“Directly” means that the money comes from the government through annual budget allocations. “Indirectly” refers to a variety of other sources – for example, unit trust investments or forced savings, where private sector workers have to contribute a certain sum of their salary to a pension pot.

How does the government control these entities? Simple: Each institution has its respective act that legally dictates it to report to the finance minister. Alternatively,the finance ministry acts as an owner via a golden share.

The owner of a golden share is enormously powerful. Regardless of whether that entity is listed or not, the government has the right to veto decisions like board appointments, as dictated in the shareholder’s agreement.

For what it’s worth, tech institutions or agencies, such as the Malaysia Digital Economy Corporation, Cradle, Mavcap, and even fund of funds Penjana Kapital, all have the finance ministry as a golden shareholder.

To digress a little, all this is because of the so-called nexus of business and politics in the country, where both somehow converge. That’s why these agencies fear a change in management or leadership when there’s a regime change. The post of finance minister is, after all, a political one.

To greener pastures?

Anyway, this idea of marshaling government-linked investment companies (GLICs) to invest in startups isn’t new.

But despite all the money being set aside, one major theme that Malaysians have been wrestling with is losing unicorns or soonicorns to Singapore. This became more apparent after Grab decided to move across the causeway.

The ride-hailing giant still does have a sizable operations team in Malaysia because, at the end of the day, Malaysia is still cheaper to do business in than the city-state.

Somewhere along the lines there were publications that played up this angle, saying we might be also losing the country’s first unicorn, Carsome, to Singapore.

Look, it’s no secret that many viable Malaysian startups with Temasek as an investor have a unit domiciled in Singapore. It’s just a matter of time before the founders and key management will do the same song and dance as Grab did. It’s just how the game is played.

The Malaysian government has also tried to dole out money to get a startup listed on the Nasdaq.

In 2020, the government
invested
 20 million ringgit (US$4.5 million) into Aerodyne just for that exact purpose. It has until 2025 to make good on those public funds, failing which, it will have to repay the government the loan at a 12% interest rate.

Nothing much to say here, just that the clocking is ticking for Aerodyne to come good on its promise.

Going down to the ground

The problem with the government’s approach in farming unicorns is that it only focuses on the glitz and glam: taking established startups and making them, well, even more established.

Note that even with the February 9 engagement mentioned above, the government is only listening to the apparent winners of the scene. That isn’t the wrong idea, but it also means that the government remains in an echo chamber.

Startups in the middle and bottom of the pecking order face a different set of challenges. One of the major problems they have in dealing with the government are the terms and conditions attached to grants, for example.

What I gather from speaking with some founders and investors is that there are approaches and clauses set by government agencies that may be off putting for seed or early-stage startups, such as a
small funding purse
 which may be insufficient for young startups.

Another
problem
 that many VCs and investors face is the difficulty of setting up shop in Malaysia, which is expensive and takes up months. By the end of that arduous journey, investors will likely be looking elsewhere.

These are just two of the litany of problems that these startups face in Malaysia. And I won’t even start with how government-owned tech agencies have been
slow
 in championing the scene either.

Perhaps what the government needs to do is something basic: Listen to as many stakeholders as possible and not only the winners. Go down to the ground.

No shortcuts or hacks

Capital isn’t confined to Malaysia, and founders these days are resourceful enough to find it elsewhere. In a connected world, geography isn’t an obstacle. So why not domicile elsewhere if it’s the price to pay for a better shot at success?

And, since we’re talking farming, anyone who has gotten their hands dirty will know that you can’t grow tomatoes in the Arctic – OK, maybe you technically can, but you’d need an engineering miracle.

The easiest way to grow them, however, is to plant them in an environment that encourages seeds to sprout and yield. That’s what the Malaysian government is supposed to do with the startup and tech space — put in place the right ecosystem. For now, it isn’t doing that.

For what it’s worth, as part of his analysis on the budget tomorrow, Mavcap chairman Alizakri Alias is going to [talk]((https://www.facebook.com/officialmavcap/posts/pfbid031WUpkeKMjGWYVMoEeqAi7UX1GKUGHbYAnACxHHVWAMpS7QjgsbR4kffVnriuYdk3l) about Malaysia’s unicorn ambitions and when the country will be able to produce its own mythical beast.

I’d be surprised if anything substantial comes out of it. It’s like going to a motivational talk or spiritual camp. You’re psyched, pumped, and ready to take on the world. But a few days later, reality sinks in and you’re back to your old ways because true change is slow, painful, difficult, and, most importantly, hard work.

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.4 ringgit


Malaysian marketing platform bags $10m

Involve Asia co-founders Jimmy How (left) and Rene Menezes / Photo credit: Involve Asia

Involve Asia
 has secured over US$10 million in an investment round led by Bintang Capital Partners Berhad, with 500 Global, Monumental Productions, and Orbit Capital Malaysia participating.

The Malaysia-based company helps brands form marketing partnerships with global content creators, developers, and affiliates.

Since being founded in 2014 by
Jimmy How
 and
Rene Menezes
, Involve Asia has seen a compound annual growth rate of 132% and remained profitable.

The fresh funding will be used to expand the startup’s product lines, serve new firms and partners, and deploy a suite of solutions that will allow advertisers to further leverage influencers.

Involve Asia’s also looking to invest in firms that can complement its business.

“We are in a position to invest and step on the gas while many are focused on consolidation and preserving cash. A number of industry-changing products are ready to be taken out of beta and will hit the market very soon,” Menezes said in a press statement.

The company’s currently hiring for nearly 50 positions, mostly in project management, business development, product, and development operations.

See also:
Malaysia budget: Expect fewer goodies for tech and startups

Involve Asia has handled over one million partnerships with more than 580,000 website partners, influencers, and affiliates in Southeast Asia to date, yielding US$1.5 billion in sales. Its clients include Nike, Lazada, Shopee, Grab, Marriott, and Citibank.


TikTok TV launches in Malaysia

Photo credit: TikTok

Short-video platform
TikTok
 has launched its TV app in Malaysia. It is available to download on Samsung Smart TVs, LG devices, and Android TV OS devices.

The platform will enable users to log into their accounts on their TVs, showing their personalized ‘For You’ and ‘Following’ video feeds.

In 2020, the Chinese tech firm first launched its dedicated TV app with features similar to its mobile platform on
Samsung Smart TVs in the UK
.

It’s unclear whether TikTok TV is available in other SEA countries.

Globally, TikTok saw its user base grow to
1 billion
 last September. In Southeast Asia, the platform has a reach of about
266 million people
.

The firm has constantly received backlash from regulators, especially in the US, over its data collection practices. TikTok CEO Shou Zi Chew
is scheduled to testify
 before US lawmakers next month.

See also:
TikTok Shop has set SEA on fire within months


Will Sea’s investments in Malaysia bear fruit?

Welcome to the Opening Bell 🔔! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly-listed tech companies. Get it in your email inbox by
registering here

Hello reader,

Singapore and Malaysia have a complex relationship – which I frequently experience first hand.

Some of this is harmless rivalry (who has the better food?) But much of it is also driven by Singaporeans’ misplaced sense of superiority. At a friend’s wedding in Kuala Lumpur recently, I kept rolling my eyes at some Singaporean guests who repeatedly reminded their Malaysian counterparts that one Singapore dollar was worth three ringgit.

Singapore’s Sea is putting some of those Singapore dollars to good use with its investments in a mega warehouse and data center in Malaysia, as my colleague, Emmanuel, analyzes in this week’s
featured story
.

This is part of a trend of data center firms establishing their campuses in Southeast Asian countries that offer lower operating costs and are outside of more developed and expensive markets like Hong Kong and Singapore.

Yet, as Emmanuel discovers, Sea may face the same hurdles that other tech giants, such as Microsoft, have. Despite announcing the building of a data center in Johor in 2014, the US firm’s project has yet to be completed.

As Singaporeans, we may view such delays as “typical Malaysia,” a country not exactly known for its efficiency.

But we should instead hope for the best: that Sea’s investments pay off and it invests even more in Malaysia going forward. After all, we are two close neighbors that share a common history, culture, and destiny, with deep friendships and family relationships on both sides.

— Simon

THE BIG STORY

Image credit: Timmy Loen

Sea Group enters choppy waters with latest Malaysia deals

The tech titan’s ambitious plans have been panned by Malaysian analysts and former bureaucrats.

3 Trends to keep an eye on

Hot stocks, earnings reports, restructuring, pressure from activist investors, and more.

Photo credit: Tada Images / Shutterstock

1⃣
Temu goes north
: Temu, the US-based shopping app owned by PDD Holdings (PDD, NDAQ), is
rolling out its services in Canada
.

It’s the sister company of Pinduoduo, which is famous in China for connecting farmers directly with consumers and promoting group buying – a business model in which the prices of an item go down as the number of people purchasing it goes up.

Temu is replicating model this in the US, where shoppers are eligible for discounts when they share links to items with friends.

This expansion in North America comes even as tensions between China and the West remain high.

For all the talk of decoupling, business relationships between China and the United States – as well as the wider West – continue to grow, although perhaps in less sensitive areas, such as ecommerce.

PDD Holdings is up by over 9o% over the past six months, far outpacing Alibaba (BABA, NYSE), which is up by 11% over the same period. Investor excitement around Temu may have something to do with this.

2⃣
SLoan me the money
: Shopee, the ecommerce arm of Sea Group (SE, NYSE), launched a new financial services product called
SLoan
 for select Malaysian users.

Eligible users can obtain loans at an interest rate of 18% per annum, with options to repay in three, six, or twelve months. The credit limit is based on Shopee’s internal credit assessment data.

Once the cash hits their ShopeePay wallet, borrowers can use it to shop, send to others or even withdraw via a bank transfer.

Despite the recent struggles faced by Southeast Asia’s tech firms, this demonstrates that their financial services ambitions are still alive and well – Grab (GRAB, NDAQ) recently launched
Partner Cash Advance
, offering its driver-partners cash advances of up to US$7,600 at an interest rate of 18%.

Interest rates of 18% are high but still lower than the
average of 25%
 charged by credit cards in Singapore.

With growth in some of their other businesses, like gaming and food delivery, slowing sharply post-pandemic, much of the recently renewed investor enthusiasm for these tech giants may depend on how well the firms profitably monetize their data to offer financial services to consumers.

3⃣
Foodpanda layoffs: here we go again
: Foodpanda, the Singapore-based food delivery platform,
laid off
 an undisclosed number of staff – many of whom were based in Malaysia.

Following an initial round of cuts last September, this is the second round of layoffs that the subsidiary of Frankfurt-listed DeliveryHero (DHER, ETR) has undertaken recently.

But DeliveryHero’s stock price is still struggling and is down by 8% year to date, even as peers such as DoorDash (DASH, NYSE) and Deliveroo (ROO, LON) have seen gains over the same period.

Foodpanda is a decent runner-up to Grab in Singapore, the Philippines, and Malaysia, although it comes in third in Thailand. Research by Momentum Works shows that Grab has a share of over 50% in all four markets.

The question is whether second best is good enough to build a sustainable business.

More layoffs introduce further uncertainty and can’t be good for employee morale, making it even harder for Foodpanda to keep fighting. Could an acquisition of its business be on the cards?

2 Eye-popping facts

Tech in Asia scours the internet to bring you head-turning numbers from the world of business.

Zomato’s delivery executives / Source: Zomato

US$ 42 million
: The consolidated loss that India-based foodtech giant Zomato (ZOMATO, NSE) incurred in its most recent quarter, with the company exiting Indonesia and the Philippines.

US$20 million
: The amount raised by Mig, an Indonesia-based digital content distributor, in a round led by media conglomerate MNC Group (BHIT, IDX).

The one you didn’t see coming

We spotlight the story that had everyone talking and social media buzzing during the past week.

Warren Buffett / Photo credit: freeimage4life

Berkshire, the trader:

Over decades, US conglomerate Berkshire Hathaway (BRK.A, NYSE) has built a reputation for itself as a long-term investor, with its CEO Warren Buffett famously
saying
 that its “favorite holding period is forever.”

It was a bit of a surprise then that Berkshire was reported to have
disposed
 of most of its stake in Taiwan Semiconductor Manufacturing Compan
y (
TSMC) (2330, TPE) despite having disclosed a position in the firm in only November 2022.

Berkshire pocketed a 9% return after only three months – nothing to sniff at, but leaving observers with many unanswered questions.

Did Berkshire make an error in its initial assessment? Has something in the industry or macroeconomic environment changed in the interim that affected the investment case for TSMC? Did Berkshire simply find better opportunities elsewhere?

Or perhaps (
gasp
) today’s Berkshire is in the business of making opportunistic trades when the situation warrants.

In any case, Buffett and his business partner, Charlie Munger, are no longer the only ones making investment decisions at Berkshire – this responsibility is now shared with Todd Combs and Ted Weschler.

Food for thought for anyone tempted to mimic Berkshire’s trades.

That’s it for this edition – we hope you liked it!

Happy investing and see you next week!

Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice.


Bintang Capital’s Asia fund backs Malaysia influencer-marketing firm

Photo credit: Pexels

Bintang Capital Partners
‘ Asia-focused fund has backed Involve Asia, a Malaysian marketing tech company. The size of the deal, which was done through Bintang Capital Partners Asia Fund I, was not disclosed.

Involve Asia is a platform that connects businesses with content creators, influencers, developers, and affiliate partners across Southeast Asia. It aims to allow everyone to make money via digital marketing opportunities and is now working on a platform for small and medium-sized businesses.

The opportunity to partner with Involve Asia to create social impact while delivering strong equity returns aligns with Bintang’s philosophy of “investing in impact and innovation,” the private equity firm said in a statement.

The investment comes as the number of smartphone users in Southeast Asia continues to climb. According to Insider Intelligence, the region may see that number rise to
359.4 million users in 2026
 from around 314.8 million users in 2021.

Southeast Asia’s influencer-marketing industry is also expected to hit a market value of
US$2.59 billion
 by 2024, a steep increase from just US$638 million in 2019.

See also:
Social commerce platform WeBuy seeks $20m to launch financial services


Malaysia’s digibank race heats up: 3 things to watch

Dan Lain-Lain
 (Malay for “and others”) is a weekly column by TIA journalist Emmanuel Samarathisa that dissects the goings-on in the Malaysia tech scene but with a heavy mix of current affairs, policy and politics. Click
here
 to read past articles.

Malaysia’s digital banking race is heating up. ‘Tis the year for consortia to roll out their products, anyway.

Bank Negara Malaysia is expected to keep a close eye on the country’s digital banks when they launch this year. / Photo credit: Wikimedia Commons

Here’s a quick recap: In May 2022, Bank Negara Malaysia (BNM) announced five consortia for its maiden conventional and Islamic digital banking licenses. The winners are:

Conventional

Boost Holdings and RHB

Grab-Singtel and Kuok Brothers

YTL Digital Capital and Sea

Islamic

Aeon Financial Services, Aeon Credit Service, and MoneyLion

KAF Investment Bank, Jirnexu, MoneyMatch, and Carsome

The lineup came on the back of a competitive bidding round that included the Malaysian staples of lobbying and alleged political interference. BNM, however, stood its ground as the country’s central bank and delivered a credible and diverse list.

I won’t go into specifics for each consortium since I have
written
 about that last year. What we know now is that all of them are expected to be launching their digibanks sometime this year, with most looking at the fourth quarter.

To that end, Grab, for instance, has
embarked
 on a hiring spree for its digibank arm.

The female chiefs

Firstly, it seems that at least four out of the five consortia have picked strong female banking veterans or agency chiefs.

Aeon appointed
Raja Teh Maimunah
. She was AmBank’s wholesale banking managing director prior to becoming Aeon’s digital bank CEO. She is also on the board of Retirement Fund Inc., Malaysia’s pension fund for civil servants.

Grab-Singtel’s pick is
Lai Pei Si
. Also a seasoned professional in the financial services industry, Lai worked as Standard Chartered’s country head and managing director before taking up the Grab gig.

Rafiza Ghazali
 is leading the KAF consortium and she was formerly the CEO of Cradle, the state-owned startup investor. She also had a stint as innovation head of Sime Darby, a listed diversified group that’s also indirectly owned by the Malaysian government.

Finally,
Fozia Amanulla
 is helming the Boost-RHB consortium. She was previously Boost Credit deputy chief and Alliance Islamic Bank CEO.

Change of hands

Secondly, as everyone’s racing to launch their digital banks, many of their consortium partners will be put through a stringent due diligence test.

This means some of the names on the list might be found wanting. But these partnerships aren’t set in stone and BNM will approve of dropouts since it is what it is – running a bank is highly regulated and there are standards that need to be met.

It also means that there’s a chance for new, more capable partners to fill those gaps. For those who failed to clinch a digital bank license, this could be their shot to team up with any of the consortia.

Financial hurdles

Finally, the most important hurdle that’s worth watching is whether these consortia can meet BNM’s demands. And chief of those demands is to maintain a minimum of 100 million ringgit (US$23 million) in capital in the foundational phase – an amount that will be raised to 300 million ringgit (US$68 million) by their third year of operations.

Before the five digital banks can commence operations, they will be subjected to the central bank’s audit, which can take between 12 to 24 months.

As such, there’s a possibility of further cash injections from partners or lenders just to meet BNM’s milestones.

These digibanks will also go up against traditional banks, which are more established and entrenched in the Malaysian financial services ecosystem.

Brick-and-mortar banks are stepping up their digital game, too. You can, for example, apply for a loan online without stepping into a branch. They’re also equipped with electronic know-your-customer features.

Perhaps what’s interesting is the behavior of traditional banks toward their digital counterparts and vice versa.

Take the likes of Maybank, the country’s largest bank by total assets and market capitalization. It has an indirect 30% stake via Maybank Alliances in GPay Network Malaysia, the holding company that operates GrabPay. Some sort of partnerships, perhaps?

The horse I’m betting on

And which digibank am I betting on? Aeon. Simply because not only is it a company listed on the Bursa Malaysia that’s flush with cash, it also has experience offering loans to the underserved and underbanked. This is important because BNM’s primary mandate for digibanks is to accelerate financial inclusion.

Aeon is a brick-and-mortar business. It has shopping malls across the country, not only in the Klang Valley but also in second-tier cities and towns.

A mainstay in each of these malls is the credit department, where you can sign up for a credit card or personal loan. Although Aeon now offers online loan applications, its headstart into the market and its nationwide physical presence make this consortium a frontrunner.

Currency converted from Malaysian ringgit to US dollar: US$1 = ringgit.


Shopee quietly rolls out SLoan in Malaysia

Photo credit: Shopee

Shopee has quietly launched a new financial services product called SLoan for select users in Malaysia.

SLoan is already available in other Southeast Asian countries such as the Philippines, Indonesia, and Thailand but under different names. It is known as SPinjam in Indonesia and SEasyCash in Thailand.

Eligible Shopee users can get access to loans at “competitive interest rates, with flexible options to repay in 3, 6, or 12 months (12 months available to selected users only),” according to the company website.

The credit limit for the service is based on Shopee’s internal credit assessment criteria for eligible buyers. Once an eligible user activates the SLoan service on their Shopee account, the loan amount will be credited to their ShopeePay wallet. It can then be used for shopping, sending money, and withdrawals via bank transfer.

The company will charge an interest of 18% per annum on the loan amount, according to a
report
.

Tech in Asia
 has reached out to Shopee for more details.

See also:
Sea Group enters choppy waters with latest Malaysia deals


Sea Group enters choppy waters with latest Malaysia deals

Sea Group wants to boost its Malaysian investments. To that effect, it’s touting two initiatives – a mega warehouse and a data center – that aim to
create 2,000 jobs
 in the country.

Photo credit: Reuters

These are all well and good but some investors and former government officials
Tech in Asia
 spoke to believe that Sea’s targets may not be realistic.

Sea’s announcement came as part of a January 29
press release
 by Malaysia’s International Trade and Industry Ministry (Miti), which said that the firm, together with two other Singapore-based tech companies, will
invest
 a cumulative 13 billion ringgit (almost US$3 billion) over the next few years.

Miti didn’t provide a breakdown when asked by
Tech in Asia
 and was instead directed to the cumulative sum. Sea also declined our request for comments on the details of the investment.

But based on the ministry’s statement, Sea is committing to a cloud computing project that’ll be located in a three-story green facility in Johor, Malaysia’s southernmost state, and completed by the first quarter of 2024.

The tech titan’s ecommerce unit, Shopee, will also be expanding its Malaysia footprint through the construction of a mega warehouse in Klang, Selangor.

A history of delays

To be sure, Sea’s data center is old news. Last year, the firm was
revealed
 to be the anchor tenant for the Green Data Center Park in Johor, which will be constructed by local conglomerate YTL. This is the same announcement in Miti’s latest press release.

That aside, a former Miti official tells
Tech in Asia
 that Sea’s first hurdle is to realize the data center, citing Microsoft’s travails.

The US tech giant announced that it would build a data center in 2014 out of Sedenak in Johor. Three years later, that plan hit a snag with Microsoft reviewing the entire project. Fast forward to 2021, the firm reiterated its commitment to building a data center in the country. At the time of writing, the project has yet to be completed.

Sea’s data center ambition is also expected to meet regulatory requirements. Malaysian law dictates that data centers, just like telcos, are required to
pay
 a certain percentage of their revenue to a universal service provision (USP) fund run by the country’s communications and multimedia commission (MCMC).

An illustration of YTL’s data center in Johor / Photo credit: YTL

This was a problematic development two years ago as industry players expressed concerns that such stringent laws would subject data centers to not only lower margins but
enforcement
, including search-and-seizure, where service providers will be compelled to disclose whatever that is requested by MCMC.

The only relief here is if Sea’s data center brings less than 2 million ringgit (US$460,000) in revenue, which would then qualify it for an exemption from contributing to the USP fund. There’s also a possibility that Sea might use its data campus for internal purposes, which would then mean that some regulations may be relaxed.

A hot sector

To be sure, Sea is tapping on the Malaysian government’s desire to become a regional hub for data centers.

On paper, the tailwinds for Malaysia’s data center sector are the country being a regional manufacturing hub, lower electricity tariffs, sufficient water supply for the cooling of data centers, ample land, and tax incentives of up to five years from the local government.

London-based research firm Technavio
found
 that the data center market in Malaysia is expected to grow by US$2.1 billion between 2021 and 2026.

The sector saw strong demand from cloud service providers such as Microsoft and Amazon as well as other overseas heavyweights such as Vantage Data Centres and Bridge Data Centres. Local operators like AIMS Data Centre and TM One also contribute to the industry’s growth.

A Kuala Lumpur-based tech equity analyst tells
Tech in Asia
 that demand for data centers will outstrip supply in the next two or three years. “Hence, we’ll be seeing a few acquisitions of data center businesses by other local companies or even foreign ones,” the analyst adds.

Last year, Time Dotcom – a broadband service provider listed on the Bursa Malaysia –
sold
 its data center business, AIMS, for 2 billion ringgit (US$460 million).

The equity analyst also observes that there has been a trend of data center firms locating their campuses outside developed markets such as Hong Kong and Singapore to other Southeast Asian countries. Reasons include lower operating costs as well as increasing digitization across the region.

Aside from Microsoft, other large companies are also setting up their data centers in Johor, the analyst notes. GDS is building a data campus in the state while YTL and Bridge Data Centres are already setting up their respective facilities.

Despite the sector’s growth, an investor who has experience in setting up data centers in Malaysia tells
Tech in Asia
 that Sea’s goals may be “a tad ambitious” even if the firm has all the regulatory approvals down and are piggybacking on YTL for infrastructure.

That’s because Sea still needs to check a wide range of boxes, from acquiring hardware to talent to ensuring that the whole system doesn’t fail. “Given the demands, it’ll normally take more than a year,” the investor says.

He also notes that return on investment on these efforts usually takes a while. “There’s a so-called gestation period where you’ll need to put in a lot of money before seeing some returns,” the investor explains.

Coincidentally, this is Sea’s second tie-up with YTL. The first is a digital banking consortium, which is expected to launch this year.

See also:
Pleasant surprise in Malaysia’s digibank race

A Lazada copy?

Meanwhile, on Shopee’s warehouse ambitions, a Kuala Lumpur-based tech analyst says it is mimicking rival Lazada, which also has a large-scale central warehouse in the Klang Valley.

Lazada recently invested in Malaysian e-wallet provider TNG Digital / Pic credit: TNG Digital

But he notes that Lazada is already entrenched within the Malaysian ecosystem, citing Lazada’s investment in local fintech company Touch ‘n Go, which also has state backing. This is an advantage Sea lacks, the analyst points out.

In addition, the Malaysian logistics sector is facing a price war.

Tech-savvy upstarts such as J&T Express, Lalamove, and Ninja Van as well as ecommerce platforms such as Lazada and Shopee have all launched their own delivery services.

Many of their expansions, the analyst says, were fueled by easy money, which also led to incumbents not being able to cope and eventually closing shop.

Nationwide Express was delisted from the Bursa Malaysia and ceased operations last November after 37 years, ostensibly due to competition. The firm retrenched 1,100 staff members.

Another listed player, CJ Century Logistics Holdings, sold its loss-making courier arm last year for 7.5 million ringgit (US$1.7 million). Meanwhile, public companies GD Express and Pos Malaysia have posted consecutive quarterly losses over the past three years despite heavy demand for courier and last-mile delivery services.

But with easy money no longer a factor today, “how long can Sea undercut rivals in a move to dominate the logistics space?”, the analyst asks.

Sea posted an
adjusted EBITDA
 loss of US$357.7 million for the third quarter of 2022, a
29% improvement
 from the previous quarter.

But it lowered its guidance for last year, expecting 2022 bookings to be between US$2.6 billion and US$2.8 billion. It previously had a guidance pegged at US$2.9 billion to US$3.1 billion.

The past few months have also been tough for the firm as it had to
lay off
 more than 10% of its total workforce, translating to 7,000 employees.

Amid the negative news, it seems that Sea is looking for some reprieve. But the segments it is wading into for its Malaysian investments are choppy waters.


Foodpanda’s SEA staff face layoffs for second time

Photo credit: Foodpanda

Singapore-based
Foodpanda
 has laid off an undisclosed number of staff.

“As the global macroeconomic environment continues to be challenging, Foodpanda unfortunately had to make the difficult decision to downsize our team. We are doing all we can to support impacted employees during this transition as much as possible,” a spokesperson for the company said in a statement sent to
Tech in Asia
.

It appears that many of the affected staff were based in Malaysia,
as per

a number
 of
LinkedIn posts
. However, Foodpanda has laid off staff across the Southeast Asian markets it operates in, a source told
Tech in Asia
.

The food delivery firm declined to disclose any further details when questioned.

The company also said that no riders were cut in this round of cuts, the
New Straits Times
 reported.

The move comes after its parent company, Delivery Hero,
cut 156 jobs
 at its Berlin headquarters earlier this month. Days earlier, its Spanish acquisition, Glovo, shrank its headcount by 250.

This is the second round of layoffs that Foodpanda has undertaken recently. Last September, the company conducted a
round of cuts
 across Southeast Asia in pursuit of profitability.

Worldwide, the food delivery segment has slowed down in the past few months. After facing extensive losses, India-based giant Zomato recently
pulled out of 225 cities
 and exited
Indonesia
.

See also:
Tracking layoffs across Asia’s startup ecosystem (Updated)


Fave co-founder and CEO Joel Neoh to step down

Joel Neoh, outgoing CEO and co-founder of Fave / Photo credit: Fave

Joel Neoh
, co-founder and CEO of fintech firm Fave, will be stepping down in early March, two years after the company
was acquired
 by Indian merchant platform Pine Labs for US$45 million.

“I have had the privilege of a lifetime to work with some of the best talents in Southeast Asia to build Fave into a household brand name – today, one out of every three Singaporeans, and millions of consumers across Malaysia, Indonesia, and India use Fave on a daily basis for payments and rewards,” Neoh said in a statement.

See also:
Fave’s investors are getting all their money back, says CEO

Neoh is one of the most notable entrepreneurs-investors in Southeast Asia. In 2010, he co-founded group-buying platform GroupsMore in Malaysia, which was later acquired by Groupon.

Fave, which began as gym subscription service KFit in 2015, got a new lease on life when it acquired Groupon’s businesses in three Southeast Asian countries two years later.

Fave offers eCard, a digital card that provides cashback, as well as a digital payments system, a deals portal, and a buy now, pay later service. The startup said it reached its highest volumes of transactions with a 40% quarter-on-quarter growth at the end of 2022.

Its other co-founder
Yeoh Chen Chow
 will continue to lead the business, together with Singapore general manager
Avantika Jain
, newly appointed Malaysia general manager
Aik Kuang Heng
, and local leadership teams in Indonesia and India.

Neoh will remain active in the regional tech industry through his investments in over 25 startups, with advisory roles in Endeavor Malaysia, XA Network, and Sunway University. He’s also an investor in Nasdaq-listed Prenetics and a limited partner in 500 Southeast Asia III and Better Bite Ventures.