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Background

Recognising the importance of venture capital industry in stimulating the nation economic growth, the Government announced in Budget 2001 the setting up of a one-stop agency to ensure that the venture capital industry develops and expands more efficiently and effectively. It was envisaged that the one-stop agency would formulate, coordinate and monitor all policies, strategies and incentives as well as supervise the development of the venture capital industry.

Following this, an interim coordinating body known as the Venture Capital Consultative Council (VCCC) was set up in August 2002 under the purview of the National Economic Action Council (NEAC) for a period of three years, with Malaysian Venture Capital Association (MVCA) as its secretariat. It played a role as a platform to discuss and address issues pertaining to the industry and other related matters until a formal one-stop agency is established.

The VCCC was chaired by Datuk Mustapa Mohamed and consists of representatives from the public and private sectors:

Public Sector : Science Advisor to the Prime Minister, Ministry of Finance, Ministry of Science, Technology and Environment (MOSTE), NEAC, Securities Commission (SC) and Bank Negara Malaysia.
Private Sector : MAVCAP, Angels Club, Technopreneurs Association of Malaysia (TeAM) and MVCA.


In January 2004, it was decided that the VCCC be dissolved and replaced by a one-stop agency named Malaysian Venture Capital Development Council (MVCDC), under the purview of SC.

The Minister of Finance approved the VCCC broad proposal for the establishment of the MVCDC in July 2004. In September 2004, the Minister of Finance approved SC proposal on the structure and terms of reference to enable MVCDC to provide the strategic vision and direction for the development of the Malaysian venture capital industry and ensure coordinated implementation of relevant strategies and initiatives.

Specifically, the terms of reference for MVCDC is as follows:

To provide vision and direction, and assist in the development of the venture capital industry
To advise the Government on overall development of the venture capital industry
To facilitate greater coordination of strategies and initiatives relating to the venture capital industry
To act as a conduit between policy makers and practitioners in relation to the development of the venture capital industry


The MVCDC comprises of the Chairman of the SC who is also the Chairman of MVCDC, the Deputy Chief Executive of the SC, and representatives from the public and private sector who are appointed by the Minister of Finance on recommendation of the SC.

The establishment of MVCDC is consistent with the recommendation of the Capital Market Master Plan (CMP) for the promotion and development of the VC industry to be centrally coordinated. At the same time, efforts to further facilitate the development of the VC industry as a competitive source of private risk capital funding are also reflected in the CMP, which include:

Allowing the listing of technology incubators;

Granting venture capital companies an exempt dealer status under the Securities Industry Act 1983;

Allowing the establishment of venture capital trusts that can invest up to 100% in unquoted companies;

Reviewing the tax framework for the VC industry in collaboration with the tax authorities, industry participants and the central coordinating agency for the VC industry;

Increasing joint investment programmes between the Government and private sector venture capitalists to boost private sector participation in disbursing government funds for seed and start-up capital;

Promoting the participation of local institutional investors in venture capital funds; and

Allowing greater foreign participation in the VC industry.
 
 
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