The Securities Commission Malaysia (SC) has announced eight new recognised market operators comprising three equity crowdfunding (ECF) and five peer-to-peer (P2P) financing platforms. The fintech companies received their letters of registration from SC Chairman Datuk Syed Zaid Albar witnessed by Minister of Finance YB Tuan Lim Guan Eng at the Securities Commission building in Kuala Lumpur today.
The latest addition brings the number of market-based financing platform operators registered in Malaysia to 21. As at end-March 2019, the ECF and P2P financing market has provided close to RM350 million of alternative financing for nearly 900 Malaysian MSMEs.
“The SC will continue to facilitate development of innovative digital solutions which democratise access to investments while broadening financing options available for all Malaysians. The introduction of ECF and P2P financing provides an alternative source of capital for MSMEs to fund business expansion, finance working capital and meet other financial requirements,” said Syed Zaid.
“To illustrate how ECF and P2P financing have opened an opportunity for smaller businesses to access market-based financing, consider the fact that almost half of ECF issuers have raised RM500,000 and below, while 67 percent of P2P financing issuers raised RM50,000 and below.”
YB Lim later met with representatives of fintech industry during a rountable discussion on progress of the fintech industry in fostering digital innovation to meet the needs of micro, small and medium enterprises (MSMEs) in the country, held on the sidelines of the handing over of recognition letters ceremony today.
“For the ECF financing, the range of funding obtained is between RM130,000 and RM3 million, with the median being RM750,000. While for the P2P financing, the range of funding received is wider that is between RM1,000 and RM1 million and the median being RM14,000. With the potential of sourcing such wide range of funding amounts, ECF and P2P financing has the potential to be a fundraising platform for all type of businesses,” Lim said in a special address speech.
Elaborating on that the minister said P2P and ECF would give more alternative to borrowers and allow them to enjoy lower costs of borrowing as online platforms cut down overhead costs.
“Smaller loans offered by these platforms also helps to solve loan shark issues. They offer loans with much lower interest rates compared to banks and loan sharks. These type of facility is very important for MSMEs. We hope to expand the size to provide funds for even larger organisations in future. There is a lot of room for the growth of fintech, this is only the starting point,” he added.
To boost the development of market-based financing which has shown great success in funding MSMEs, the Government has committed RM50 million towards a co-investment fund (CIF) for ECF and P2P investments.
Lim said the CIF was aimed at creating an entrepreneurial society by creating more entrepreneurs.
“It should not be the government alone doing everything, it should be done with private sector partnership. The CIF will match investments from private sector on a one-to-four basis, where the government provides RM1 and the private sector will then contribute RM4. This is how we work together to grow the economy.”
“I hope the ECF and P2P financing operators would take this opportunity to embark on this mutually beneficial initiative.” the minister concluded.
As an initiative to provide alternative source of financing avenue for first-time homebuyers, the SC also released a new property crowdfunding network following amendments made to its Guidelines on Recognised Markets.
The property crowdfunding offers the same benefits as that of ECP and P2P in providing an alternative source of funding but is specifically tailored for first-time homebuyers. It will also provide investors access to a new investment option.