Malaysia should build on core sub-sectors in promoting venture capital

KUALA LUMPUR, Oct 26 (Bernama) -- Malaysia should boost its core sub-sectors -- medical tourism, green technology, biomass and biotechnology -- to further strengthen the development of venture capital industry.

Co-chairman of Malaysian Life Sciences Capital Fund, Dr Roger Wyse, said the sub-sectors offered high potentials and were high risk.

"Therefore Malaysia needs to attract venture capital to fund the start-up companies or businesses.

"Malaysia can adapt, integrate and commercialise global innovation where it has sustainable competitive market advantage, for example, in the area of biomass," he told Bernama in an interview.

Wyse said Malaysia should build a bio-renewable chemical industry to produce "waste to wealth", for example, enhancing palm productivity, convert biomass to sugar, convert sugar to high-value intermediates, and convert intermediates into green products.

"There is a great demand for products derived from renewable feedstock and that biomass is the important renewable feedstock in the future.

"You (Malaysia) have the market and competitive advantage. What Malaysia does not have is technology," Wyse said.

He said most of the technology was being developed in Europe and US, and most of the companies in these countries were seeking access to capital and biomass.

"There is a perfect alignment of opportunities to woo them to come to Malaysia and partner with the local plantation companies and convert the biomass into high-value chemicals and materials," he said.

Meanwhile, Rushdi Siddiqui, global head of Islamic finance, Thomson Reuters, said Malaysia could promote venture capital in the context of Islamic practice in medical tourism with focus on diabetes.

He said the medical tourism offered investment opportunity, especially in diabetes, given the fact that 366 million people were living with the disease and global sales of diabetes medicines could rise to US$48 billion by 2015 from US$35 billion in 2010.

A professor at Harvard Business School, Josh Lerner, said Malaysia should build on its strengths, like in building the green technology and biofuel sector, to develop the venture capital industry.

"Make sure there is a real link between the traditional skills and strengths of the areas rather than making something totally new," he said.

Lerner said the venture capital industry in Malaysia although considered young, has full of promises and challenges ahead.

"The venture capital investment as a share of gross domestic product is below 0.1%," he said.

He said venture capital industry in Malaysia was much dominated by the government funding, adding, it needed capital from pension funds or sovereign wealth fund to ensure a mature industry.

"It (Malaysian market) is young and promising due to its position between China and India.

"There are lots of interest from investors for top-tier emerging market countries including Turkey, Chile and Malaysia," Lerner said.

On challenges, Lerner said, policymakers in Malaysia had put lots of efforts and thoughts and it was important to continue develop the universities, technology transfer and innovation within corporations.

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