Given weak local market and low disposable income, many IT-related services are difficult to gain the mainstream customers here.

Entrepreneurship is not just about taking risk. To build a sustainable business, the founder's character is tested in good times and bad times, leadership, patience, endurance, courage, confidence etc. The rise and fall is on the leader and government can put more resources in building good character leaders in the marketplace.

In many cases, you'll want to get people in your foreign offices to get a handle on things by getting them to work at HQ for a while. However, getting Professional Visit Passes (PVPs) -- temporary work permits -- can't be done unless a company or university in the country of origin says they are employing this person or that they're studying there.

Malaysian companies prefer turning to foreign software/applications for their business

strange. no one asked this question. 

We need Telcos, Media Companies and Banks in Malaysia to do their part to cultivate local champions that can then go regional and international.

Being a Jaguh Kampung can be a curse and a blessing. For some businesses, it would make sense to build a foundation in Malaysia ASAP and use it as a springboard.

If MaGIC can get telcos, banks and media companies to work together by industry, instead of in isolation, Malaysia would be an ideal place to test many new ideas. Just like how South Korea was supercharged with heavy investments in broadband, we can lay the foundations for soft-wiring for the future.

Perhaps a structured way to highlight pre-filtered ideas and startups to them.

Scenarios that can supercharge Malaysia

1. Telcos, media companies and banks encouraged to set up pools of venture capital in collectives and syndicates. E.g. In addition of having an incubator each, it would make sense for the telcos to commit a few million each into a centralised fund and test this as an investment model. Same goes for banks if we are talking fintech.
2. Liberalised Payments: Easier mobile payments and in-app purchases- liberalise carrier billing and transaction costs in Malaysia!
3. National App Store: Easier app discovery instead of just having to rely on Google Play Store and iTunes- help Malaysian app makers reach the first 100k downloads locally
4. Coordinated marketing and cross promotion- get MediaPrima, Astro, The Star etc. to commit more to supporting startups in terms of coverage

As Malaysia tries to attract international players to produce and co-produce here through new incentives like FIMI (Film in Malaysia Incentive), it is clear that a knowledge and skills gap exists at the agencies responsible for the facilitation of this.  The rationale and the incentives are correct but as usual, the implementation lets us down.  There is always a disconnect between intention, strategy and implementation.