A lack of testbeds, unclear regulations and low confidence in local solutions are some of the common complaints one hears from Malaysian start-ups. These issues hamper their growth, leading some of them to leave the country in search of greener pastures.
“We are giving a lot of seed funding to start-ups, but we have two big issues. One is we don’t have a buyer’s ecosystem. The government and private sector are not buying enough from these companies, so they are left to fend for themselves after getting the seed funding,” says Mahadhir Aziz, CEO of Futurise Sdn Bhd, a company under the Ministry of Finance that focuses on innovation, regulation and commercialisation.
“The other problem is the procurement policies of the government and government-linked companies. They have to be more open to buying from local start-ups. Otherwise, the start-ups will fail and give rise to ‘grantpreneurs’, who just move from one grant to another to fund new ideas [without keeping the start-up alive].”
Last June, the government launched the National Technology & Innovation Sandbox (NTIS) in an attempt to address this issue. It allows start-ups’ products and services to be tested in a safe and controlled environment, with the goal being to accelerate the commercialisation process by collaborating with the government, regulators and private sector.
NTIS is spearheaded by the Ministry of Science, Technology and Innovation and supported by the Malaysian Global Innovation and Creativity Centre (MaGIC), Technology Park Malaysia and Futurise. Funding for NTIS start-ups is provided by Malaysia Technology Development Corporation (MTDC).
The target sectors are medical and healthcare technology, manufacturing, agriculture, education and travel and tourism. Priority is given to technologies involving blockchain, drones, sensors, advanced materials and robotics, among others. The participating start-ups need to have a prototype system ready to be demonstrated in an operational environment.
As at Jan 13, NTIS had received 2,078 applications from start-ups, according to MaGIC.
“Some of the challenges these companies face are a lack of participation or investment from the private sector, a low commercialisation rate after R&D, regulatory red tape and a high dependence on foreign talent for high-tech solutions. Priority [in NTIS] is given to choosing technologies and solutions that will resolve problems affecting our environment and core economic activities and allow the country to rebound, in addition to transitioning to a low-touch and high-tech economy,” says MaGIC CEO Dzuleira Abu Bakar.
NTIS allows the start-ups to test their solutions with government agencies and private companies that it partners with. Additionally, it can help resolve the regulatory concerns that new tech start-ups often encounter.
It is a lesson that governments globally learnt when dealing with the emergence of ride-hailing companies such as Grab and on-demand vacation rental platforms like Airbnb.
Futurise is tasked with reviewing regulatory issues for NTIS. This is particularly important for companies in the drone service and autonomous vehicle space.
“Currently, drone operations are heavily regulated. Stringent certification and permits are needed for low-flying drones, and there is a long turnaround time for permit approval. Other challenges include limited guidelines on a special Beyond Visual Line of Sight flight, weight limits and multiple approvals needed from various regulators and authorities,” says Dzuleira.
An example of how NTIS can bring together start-ups, private or government-linked companies and regulators is in the drone service sector. It chose five companies to stress test drone and robotic solutions to improve the harvesting, maintenance and fertilisation of oil palm plantations at selected Federal Land Development Authority (FELDA) sites.
The companies that are part of this programme are Aerodyne Group Sdn Bhd, Poladrone Solutions Sdn Bhd, OFO Tech Sdn Bhd, Braintree Technologies Sdn Bhd and Universiti Putra Malaysia’s Institute of Advanced Technology (ITMA). The first three companies are drone solution providers, Braintree offers precision agriculture solutions and ITMA has developed Nanoezinn, a potent antifungal nano delivery system that can treat the Ganoderma disease affecting oil palm.
Additionally, NTIS is working with Iskandar Investment Bhd (IIB) and DHL Asia Pacific Innovation Centre (DHL-APIC) to drive Malaysia’s drone tech industry. “Through this partnership, NTIS will be able to connect our local technology companies to bigger industry players and multinational corporations such as DHL,” says Dzuleira.
She adds that the regulatory aspect will be taken care of. “Through NTIS, we will work with Civil Aviation Authority Malaysia to streamline permit applications, especially for agriculture drones that fly at low altitude and in remote areas and, thus, pose a lower risk.”
Up to 22% of the applications received by NTIS so far are in the medical and healthcare sector, according to MaGIC. The solutions provided include delivery and disinfection robots and a thermal cautery device for surgeries.
One of the participants is Saora Industries, which invented the Ethovent semi-ventilator, an automated bagging machine that assists patients with breathing difficulties. It replaces the need for a handheld manual resuscitator which, in turn, reduces the workload of medical personnel.
Another participant in this category is DF Automation, which has developed robots that can help with tasks such as delivery, disinfection, cleaning and monitoring in the healthcare sector.
The next most popular category is agriculture and forestry. Solutions provided by participants include a quality control system that grades fresh fruit bunches in the palm oil industry using machine vision and artificial intelligence and small robots that assist farmers in hazardous tasks such as pesticide spraying. A participant in this sector is Farmotic, which has a lightweight mobile robot that can work on farms.
Meanwhile, for business and financial services, the solutions provided include a microfinancing platform to catalyse e-commerce spending and an integrated platform for secure product labelling, verification and enforcement built on near-field communication (NFC) technologies.
Participants in other categories include TechCapital Resources Sdn Bhd, which has robots that can be used in factories for pick-and-place functions, and Pandai Education Sdn Bhd, which provides a learning app for students and is testing its application in selected schools.
So far, NTIS has partnered with FELDA, IIB and DHL-APIC and is open to partners who want to join as facility or programme providers, experts or investors. Applications to join NTIS are open and processed on a monthly basis.
“We matchmake solutions offered by start-ups to real community and industry problems faced by stakeholders as our core initiative is to increase the commercialisation of solutions upon [the start-ups’] graduation from NTIS,” says Dzuleira.