BUILDING GLOBALLY COMPETITIVE FIRMS TO DRIVE MALAYSIA'S ECONOMIC DEVELOPMENT
MALAYSIA'S economic journey since the 1960s has been marked by progress, diversification and industrialisation. The transition to high-income status is steadily being pursued through bold policy choices and long-term planning.
Khazanah Nasional Bhd (Khazanah), through its Dana Impak initiative, endeavours to change that trajectory by fostering homegrown firms that can compete globally, while drawing lessons from the world's most successful economies.
Dana Impak is the cornerstone of Khazanah's Malaysia Investment Strategy, anchored on 'A Nation That Creates' (ANTC) framework, with the aim of driving Malaysia into the next phase of economic transformation. The five themes under ANTC are Transforming Firms, Energy Transition, Connectivity, Digitalisation and Community Development.
Under the ANTC framework, Dana Impak is positioned to support transformation across firms of all sizes toward enhanced competitiveness, resilience and socio-economic impact.
'Dana Impak is not just about deploying capital; it's about building the conditions that allow globally competitive firms to emerge and thrive – at all stages of the company lifecycle,' says Datuk Amirul Feisal Wan Zahir, managing director of Khazanah.
Learning from the Asian Miracles
Reflecting on Malaysia's economic evolution in the 1960s, the country's top exports were largely raw commodities – natural rubber, tin and alloys, and iron ore. Today, Malaysia exports electrical and electronics products, fuel and machinery. This shift reflects the country's progress in diversifying its economy, economic complexity and sophistication.
However, Malaysia has not yet made the final leap to high-income status – also often referred to as being stuck in the 'Middle Income Trap'.
While it is not necessarily a 'trap' per se, in a 2019 International Monetary Fund (IMF) study, it was concluded that only 16 out of 18 economies successfully made the leap between 1960 and 2014. These success stories, including the 'Asian Miracles' of Japan, Korea and Taiwan, deliberately pursued industrialisation through bold state-driven strategies.
Amirul Feisal says: 'There's plenty of literature on Asian Miracles, but a recent, very accessible, work is by Joe Studwell. His book, How Asia Works, provides a good historical review of East Asian economic development with a three-step recipe of land reform, export-oriented state-driven industrial policy, and financial direction.'
The Asian Miracles didn't just grow by accident. These nations systematically built manufacturing capabilities, invested heavily in education and fostered export-led industries. The critical difference lies in what happens next: they succeeded because they deliberately leveraged the foreign investments and partnerships as stepping stones to build domestic champions like Samsung, TSMC (Taiwan Semiconductor Manufacturing Company) and Nissan.
In contrast, while Malaysia's early industrialisation push in the 1970s and 1980s yielded growth, we remain as an outsourced hub for multinationals (MNCs) rather than producing competitive local champions.
Development through public and private partnerships
Across all contexts – industrial success has never been left purely to market forces. It has always been an intentional combination of private ambition and public commitment.
Where Japan, Korea and Taiwan developed globally competitive companies that could take on the United States and Germany, Malaysia's journey has been more uneven – with pockets of success, but fewer domestic firms reaching that global scale.
The domestic companies of the Asian Tigers did not succeed on their own. The governments of those economies undertook all kinds of state interventions to support the critical industries that drive long-term economic growth. Firms either met export targets or were forced to be subsumed or consolidated under better-performing firms. The states did not let zombies survive – it was survival of the fittest.
And this isn't unique to Asia. In every successful case – whether the Asian Tigers, China, the United States or Europe – some form of state support has always been present to spur national industrial strength. The United States had the Department of Defense and NASA to catalyse innovation and commercial spin-offs.
The European Union channels billions into priority sectors through coordinated strategic investments. China's rapid rise has been fuelled by sweeping state support and long-term national planning.
South Korea's government actively steered its conglomerates – like Samsung and Hyundai – towards global leadership. In this instance, Malaysia must take a similarly intentional path where meaningful development depends on private ambition and public commitment.
That means blending patient capital, institutional strength, and entrepreneurial spirit to build future-ready Malaysian firms capable of competing on the world stage.
Turning vision into action
Dana Impak represents Khazanah's commitment to this philosophy. Its aim is not just to invest, but to lay the foundation for globally competitive Malaysian firms across the spectrum – from nimble start-ups to mid-sized enterprises and established corporates.
Amirul Feisal says: 'Dana Impak plays multiple roles: identifying gaps in the ecosystem, deploying patient capital where markets underserve, investing in talents and helping crowd in private investors and general partners (GPs) to scale promising ventures. Initiatives like Antler, Plug and Play, and 42 Malaysia show this commitment in action.'
This is also in line with our commitment in supporting the Ekonomi Madani framework, which are to drive innovation at the frontier while lifting all Malaysians and restore Malaysia's leading economic position in Asia. Economic progress, according to Khazanah, requires both raising the ceiling of competitiveness and the floor of inclusion.
'Because we're close to the ground, we also have a role to play in supporting government policy. As we invest and engage with the ecosystem, we continue to identify the areas of opportunities. This gives us the opportunity to share those insights with policymakers and help shape better, more targeted decisions.
'It is clear that we should expect a fair amount of challenges, learnings and failures along the way. The question is whether we can fail in a smart way and learn from those lessons.'
Jelawang Capital: A new chapter for venture capital in Malaysia
A key component under Dana Impak is Jelawang Capital, the National Fund-of-Funds designed to support the growth of Malaysia's venture capital (VC) ecosystem. Despite Malaysian entrepreneurs' talent, access to early-stage and growth capital remains fragmented. Jelawang Capital addresses this by backing both emerging Malaysian fund managers and drawing in global VCs.
'For Malaysia to unlock its next wave of growth, we need more than ideas – we need a VC ecosystem that nurtures bold ideas, rewards ambition and transform local potential into global success stories,' says Amirul Feisal.
'Globally, VC has disproportionate impact. In the United States, VC-backed companies represent less than 0.5% of all new firms, yet account for nearly 50% of those that go public. Malaysia needs this virtuous cycle – where successful VCs reinvest knowledge and returns into new ventures – to unlock a vibrant, self-sustaining startup ecosystem.
'With initiatives like Jelawang Capital, the aim is to bridge gaps in early and growth-stage funding, attract international expertise, and develop homegrown fund managers – building an ecosystem where Malaysian startups can thrive, scale and compete on the world stage,' he adds.
Through the Emerging Fund Managers' Programme (EMP) and the Regional Fund Managers' Initiative (RMI), Jelawang Capital supports new Malaysian fund managers as well as targeting international VCs to bring their expertise into Malaysia.
A VC-driven economic future
Khazanah believes VC is central to Malaysia's long-term transformation. Beyond funding, VC builds skills, connections and ambition – creating new industries, jobs and export opportunities. Successful startups drive a multiplier effect across the economy: hiring, supplier networks, reinvestment and inspiration for future innovators.
'Malaysia's future competitiveness depends on nurturing not just firms, but the funders, mentors and networks that help bold ideas become world-class businesses,' says Amirul Feisal.
Over time, this ecosystem can reduce Malaysia's reliance on a few large industries, building a more resilient and diversified economy.
Jelawang Capital signals a clear message: Malaysia is open for business and is seeding the future economy today.
But Khazanah acknowledges this ambition requires a whole-of-nation effort. No single institution, government-linked investment company or policy can succeed alone.
Progress depends on partnership – between private firms, public agencies, regulators, fund managers, NGOs, foundations and academia. Only by working together can Malaysia unlock its full economic potential.
As both a catalyst and connector, Khazanah remains committed to building globally competitive Malaysian firms. As Khazanah continues to shape Malaysia's future through its ANTC framework, Dana Impak will remain a key catalyst in creating high-value jobs and fostering innovation through strategic investments and partnerships.
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