Page 68 - SC SCAR 2023 ENGLISH Flipbook

PART 3 STRENGTHENING THE SUSTAINABILITY AND COMPETITIVENESS OF THE CAPITAL MARKET
Expanding market segment for alternative financing
• Growing Islamic alternative financing market
Islamic ECF and P2P financing markets as an emerging asset class is gaining significant traction. Characterised by its adherence to Islamic principles, ethical and socially responsible investing, this Shariah-compliant asset class appeals to a diverse range of investors.
In efforts to spur the growth of the capital market and help support the country’s economic recovery, the SC opened registration for new ECF and P2P market operators with Shariah solutions and value proposition late in 2022. The initiatives mentioned move towards a ‘liberalisation of the capital market’ to allow MSMEs and MTCs to have better access to funding to grow their businesses. Since the announcement, the SC has approved two new ECF platform operators that focused on Shariah-compliant value propositions. This is in addition to the nine existing ECF and P2P market operators, providing conventional and Shariah- compliant alternative financing solutions.
• Expanding P2P financing for mid-tier companies
While Malaysia has a developed bond market, it remains largely confined to serve large issuers and institutional investors. In contrast, MTCs which have a sizeable contribution to Malaysia’s GDP have been primarily self-reliant in financing their business growth especially if they have outgrown existing financing avenues for MSMEs but are still too small for the traditional public market.
In line with this, the SC has allowed the registration of new P2P financing platforms to offer debt-based financing for MTCs as compared to existing P2P operators who are predominantly serving the financing needs of MSMEs. To be eligible for this new registration, interested applicants must demonstrate their ability to facilitate larger issuances (of no less than RM5 million) and long-term financing (of over 12 months).
The new registration has attracted positive interests from potential market operators, with one new P2P- MTC operator being registered by the SC.
SCxSC GROW: Expanding Alternative Financing for the Food Security Agenda
SCxSC GROW is a new collaborative programme under the SC’s fintech flagship initiative ‘Synergistic Collaboration by the SC’ (SCxSC). The SCxSC GROW embodies a collaborative effort with ecosystem partners to harness the potential of alternative financing digital platforms to meet the needs of MSMEs in strategic sectors.
The year 2023 marks the inaugural edition of the SCxSC GROW initiative, focusing on the crucial agricultural sector. Despite its economic significance, many agri-based MSMEs encounter hurdles in financing for growth and sustainability. This funding gap directly affects food security since these enterprises are fundamental contributors to the food supply chain. The first edition of SCxSC GROW endeavours to enable agricultural expansion through inclusive and innovative financing, recognising food security as a shared responsibility.
Alternative financing avenues such as ECF and P2P financing can play a key role in this respect. This form of financing democratises access to financing through innovative credit assessment and bespoke financing instruments, offering crucial support to early-stage, small-holder agribusinesses and agripreneurs striving to modernise agriculture. Since its inception, ECF and P2P financing have notably supported over 2,000 agri-related MSMEs across the entire value chain – spanning upstream, mid-stream, and downstream sectors with raising over RM800 million.
Four Main Objectives
GROW Grow, nurture and revitalise
targeted segments
REACH
Reach out to wider pool of MSMEs, ecosystem players and relevant stakeholders by enhancing awereness
OPEN
Open and explore opportunities for
further innovation and competition to better serve targeted segments
WIDEN
Widen the pool of investor base to
cater to different needs of specific targeted segments
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SECURITIES COMMISSION MALAYSIA ANNUAL REPORT 2023