SC, agro-based agencies eye alternative financing for agriculture sector

THE Securities Commission Malaysia (SC) and key agriculture agencies have discussed ways to address financing gaps faced by micro, small and medium enterprises (MSMEs) involved in the agriculture sector in a bid to boost the country’s food security.

Some 40 representatives from agencies and industry players this week attended a workshop called GROW® — a new collaborative programme under SC’s financial technology (fintech) flagship initiative, SCxSC.

GROW® is a collaborative effort by the SC and ecosystem partners to harness the potential of alternative fundraising digital platforms to meet the needs of underserved players in strategic sectors, such as agriculture.

Equity crowdfunding (ECF) and peer-to-peer (P2P) financing were among the alternative financing mechanisms that were addressed during the workshop as potential ways to help fund the sector, the financial market regulator said in a statement released today.

The SC chairman Datuk Seri Dr Awang Adek Hussin (picture) stressed the importance of broadening access to the capital market for local businesses.

“We have seen how technology has democratised financing via digital platforms such as ECF and P2P financing,” he told the workshop. “We believe these alternative financing avenues have the potential to address some of the funding needs of the MSMEs in the agriculture sector as well.”

Senior officials from relevant ministries, agencies and key players in the agriculture ecosystem attended the one-day workshop. They include the Ministry of Agriculture and Food Industries, Federal Agricultural Marketing Authority and Agrobank.

At the workshop, participants called for greater ecosystem coordination to move the agriculture sector forward and strengthen the country’s food security.

They also emphasised the need for greater awareness on the role of alternative financing for the agriculture sector. They welcomed the development of more innovative financing instruments to cater to the diverse agro-business needs.

Following the workshop, the SC plans to have greater industry engagements with key stakeholders next year, including organising a GROW® Fintech Conference. This will be followed by a nationwide GROW® roadshow to raise awareness on ECF and P2P financing as viable funding options for agro-based MSMEs to grow their businesses.

These programmes will complement ongoing efforts by the government to support alternative fundraising by agriculture businesses such as the Malaysia Co-investment Fund (MyCIF).

MyCIF, a public-private co-investment vehicle administered by the SC on behalf of the Ministry of Finance, has observed a greater uptake of ECF campaigns in the agriculture sector after implementing a special ratio of 1:2 in 2022 for this sector. MyCIF invests RM1 for every RM2 raised from private investors on the participating platforms by eligible issuers.

It has co-invested in a range of agriculture projects in upstream and downstream activities, including firms applying technology to improve agriculture yields and aquaculture production. — TMR / TMRpic