The Institute for Capital Market Research Malaysia (ICMR) has unveiled its latest research report titled “Market-Based Financing for SMEs in Malaysia: Issues, Challenges, and Way Forward” during an event hosted at the Securities Commission Malaysia. The launch event featured a presentation of the research findings and a panel discussion involving experts from industry and academia.
Recognising the pivotal role of small and medium-sized enterprises (SMEs) in Malaysia’s economic growth, ICMR’s research aims to provide a comprehensive overview of the current state of access to market-based financing for SMEs, alongside the challenges and opportunities.
The report underscored the growing need for a diversified financing ecosystem to empower SMEs to thrive in new innovation-driven growth sectors.
Market-based financing offers a range of funding options, including IPOs, venture capital, private equity, equity crowdfunding, and peer-to-peer lending.
By providing access to these diverse funding sources, market-based financing addresses challenges such as limited collateral and credit history, thereby enhancing SMEs’ financial resilience.
ICMR conducted an enterprise-level survey targeting key decision-makers in various types of SMEs to provide insights into the financing landscape across Malaysia. The survey, complemented by qualitative interviews and focus groups, revealed that while 64% of SMEs have experience in raising external finance, market-based financing remains underutilized due to complex procedures, stringent requirements, and high funding costs.
Key challenges highlighted include a lack of awareness among SMEs about market-based financing options, particularly outside urban areas, as well as knowledge gaps and talent shortages within the SME financing ecosystem. Additionally, the scarcity of data available to investors and financial institutions poses challenges for SMEs in accessing funding.
In response to these findings, the report presents recommendations to narrow funding gaps across the SME life cycle and strengthen the overall ecosystem. These recommendations include leveraging FinTech, enhancing data infrastructure, focusing on Islamic finance, and addressing non-financial challenges faced by SMEs.
ICMR Chairman, Tan Sri Dato’ Dr. Mohd Munir Majid, emphasised the importance of market-based financing in accelerating innovation among SMEs to propel Malaysia towards becoming a resilient and advanced economy.
The report launch was accompanied by a panel discussion moderated by Tan Sri Andrew Sheng, featuring experts from academia, finance, and government agencies, who delved deeper into the research findings and discussed potential solutions to enhance SME financing in Malaysia.
