Malaysia’s strategic role in ASEAN’s Digital Economy

With a population of over 35 million and a digital economy projected to contribute 22.6% to GDP by 2025, Malaysia is emerging as a strategic launchpad for regional expansion, thanks to its talent pool, strong digital infrastructure, and business-friendly environment.

Founders and funders at HSBC Malaysia’s New Economy Roundtable noted more companies are choosing Malaysia to export services to ASEAN, thanks to its digital infrastructure, ecosystem, and cost advantages.

Alex Wrigley, Head of Structural and Sustainable Finance at HSBC Malaysia, noted that clients consider Malaysia’s strengths in talent, affordability, and legal familiarity as key drivers of its regional appeal.

“Clients tell us that Malaysia is the perfect place for expansion into ASEAN and beyond given the high levels of English, reasonable cost of labour, and the legal framework being based on common law,” said Wrigley.

Boasting a dynamic fintech sector, Malaysia provides an ideal environment for innovation to thrive, supported by initiatives such as Bank Negara Malaysia’s Financial Sector Blueprint 2022-2026, which projects e-payment per capita to increase at a CAGR exceeding 15%.

From investments in Open Finance and instant payment systems to regional initiatives like Project Nexus and bilateral payment linkages with Indonesia and Thailand, Malaysia is steadily laying the groundwork for a more connected financial future.

To create a modern and interoperable payment infrastructure for businesses, Malaysia has also rolled out real-time payment networks (RPP) and is ISO 20022-ready, positioning itself to support enhanced cross-border payments by 2025.

Leveraging RPPs and FX solutions, HSBC’s innovative platforms provide faster, more transparent and cost-efficient international transactions in a secure manner, continuing its 140-year legacy in Malaysia, of supporting its customers with simplifying cross-border trade.

Anand Mukati, Country Head of Global Payment Solutions, HSBC Malaysia, said real-time banking is reshaping business transactions, highlighting HSBC's Global Wallet as a game-changer for reducing cross-border payment friction, allowing businesses to transact in major currencies with a single account.

“It helps clients pay and receive like a local, with faster settlement and competitive pricing,” he said.

Malaysia’s compact tech ecosystem encourages fast, meaningful partnerships, as the close-knit community makes it easier to collaborate and form early-stage alliances.

"Because it’s small, there is a lot of connectivity—not just within tech but also with major banks like HSBC," said Alex Kim, co-founder of PayWatch. "Working together, we’ve been able to launch in many countries quickly."

According to Kim, PayWatch leveraged Malaysia’s tech ecosystem to subsequently expand to the Philippines and Indonesia.

“It seems like Malaysia, and the Philippines, are two markets where we were immediately able to get a lot of support from the ecosystem. The strength of their ecosystems often goes unrecognised on a global scale.,” he said.

Headquartered in Malaysia, PayWatch has since expanded into five markets: the Philippines, Indonesia, South Korea, and Hong Kong.

The presence of many large and prominent companies in Malaysia provides a strategic entry point for B2B startups - securing a deal locally often opens doors to regional expansion, as these same clients typically operate across multiple ASEAN markets.

Mukati reinforces this: “Malaysia’s ecosystem is small but highly connected - if you work in silos, you just can’t grow by yourself. We see more partnerships forming to overcome scale limitations,” he said.

"Malaysia allows us time to experiment, pilot, and pivot before expanding regionally," said Aaron Kee, Chief Business Officer at Carsome. "It gives us a platform to build our tech and bring it to ASEAN."

Since its humble beginnings in 2015 as an online platform to buy and sell used cars, Carsome leveraged its position in Malaysia to grow into Southeast Asia’s largest online used car platform.

As a leading international bank, with an extensive network across 58 markets, including in six ASEAN countries, HSBC plays a crucial role in helping startups and growth-stage companies navigate cross-border expansion, banking infrastructure, and foreign exchange risks.

“We’re seeing startups scale across ASEAN with the help of efficient payment and FX solutions. HSBC provides highly tailored solutions to match different business models,” said Manoj Dugar, Regional Co-Head of Global Payments Solutions, Asia Pacific, HSBC.

HSBC supports high-growth companies by offering funding solutions through its RM500 million Malaysia New Economy Fund, providing access to working capital facilities and alternative equity funding to help these companies further expand.

The fund offers fast-growing startups access to working capital facilities to help in the next growth stage and provide an alternative to funding solely from equity.

Beyond funding, HSBC is also playing a key role in strengthening the ecosystem that supports these startups.

“The new economy space is a fast-changing environment where it’s imperative that we continue to understand the opportunities and challenges. At HSBC, we use our network to facilitate conversations within the start-up ecosystem,” said Wrigley.

As ASEAN’s new economy gains momentum, Malaysia is poised to serve as a crucial launchpad into the region—and HSBC is here for the long haul.

Citations/References:
Bank Negara Malaysia, Financial Sector Blueprint 2022-2026