Malaysia’s equity crowdfunding and P2P platform raise RM432m, says SC

The funds have benefitted over 1,200 MSMEs and attracted more than 12,000 investors

By DASHVEENJIT KAUR / Pic By MUHD AMIN NAHARUL

THE local equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms have raised a total of RM432 million as at June this year, Securities Commission Malaysia (SC) chairman Datuk Syed Zaid Syed Jaffar Albar (picture) said.

Since 2015, the funds have benefitted over 1,200 micro small and medium enterprises (MSMEs), and these financing campaigns attracted more than 12,000 investors, 90% of whom are local and retail investors.

“Approximately, 53% of the participating investors are aged below 35, demonstrating the potential of this segment in democratising access to a new generation of investors,” Syed Zaid Albar said in his keynote address at the Future of Fintech in Asean conference by CIMB Asean Research Institute (CARI) yesterday.

Still, the capital raised for local small businesses is still a long way from sufficient, with a massive funding gap of up to RM80 billion, as estimated by the SC.

On May 17, the commission announced the registration of five new P2P financing platform operators and three new ECF platform operators to include to the existing six P2P and seven ECF players.

There are now 21 licensed financing platform operators in Malaysia. Its role is to facilitate fundraising activities for businesses or companies from both retail and sophisticated investors through their online platforms.

The introduction of P2P and ECF financing has helped narrow a massive funding gap by providing an alternative source of capital for MSMEs to fund — business expansion, finance working capital and meet other financial requirements.

ECF is a mechanism that enables groups of investors to fund start-ups by taking up stakes in investee companies and selling the shares later, whereas P2P involves funds being lent at a fixed interest rate over a fixed tenure.

According to the regulatory guidelines, P2P funding cannot be termed as loans even though their characteristics are similar.

In response to the emerging pool of digital-savvy investors, Syed Zaid Albar said the SC is facilitating the provision of digital-only services such as robo-advisory, which offers investing convenience, better accessibility and transparency at a relatively affordable cost.

To date, the SC has licensed three digital investment managers and one digital-only equities broker, and has issued an approval in principle to one digital investment manager.

“We have also introduced new requirements for electronic platforms to facilitate the trading of digital assets.

“We have also registered three recognised market operators to establish and operate digital asset exchanges in Malaysia,” he added.

Moving forward, Syed Zaid Albar expects more participants entering the local market, especially in micro-investing, financial planning, investment advice, social investing and automated trading,” he said.

Commenting on the future of financial technology (fintech), CARI chairman Tan Sri Dr Munir Majid said it can mitigate the main three problems faced by MSMEs and the poorest unbanked households. “The problems are namely — the payment and transfer gap, savings gaps and credit gap,” he said.

Munir noted that the Asean region is still at a nascent stage of development in the digital economy, with only a few countries beginning to set up a regulatory sandbox to pilot test fintech ideas.

“Asean needs to catch up, not just in terms of technology, but also realise that unless it creates a region-wide ecosystem, the benefits would be less impactful,” said Munir.

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