Four new digital liberalisation measures to boost MSMEs, MTC funding needs - SC

31 Oct 2022 03:36pm
The Securities Commission Malaysia (SC) Chairman Datuk Seri Dr Awang Adek Hussin at the Announcement of New Digital Centric Measures for Capital Market Growth - BERNAMA
The Securities Commission Malaysia (SC) Chairman Datuk Seri Dr Awang Adek Hussin at the Announcement of New Digital Centric Measures for Capital Market Growth - BERNAMA
PETALING JAYA - The Securities Commission Malaysia (SC) today announces four new liberalisation measures to bolster the capital market by addressing the funding needs of mainly micro, small, and medium enterprises (MSMEs) and mid-tier companies (MTCs).

Chairman Datuk Seri Dr Awang Adek Hussin said the SC will open registration of Equity Crowdfunding (ECF) and Peer-to-Peer (P2P) to new market operators with shariah solutions and value propositions to cater to the growing financing demand of the MSMEs.

"Building on the SC’s Islamic fintech accelerator programme (Fikra), this measure will enhance the Islamic fintech ecosystem and further strengthen the Islamic capital market proposition.

"It also aims to foster the growth of the MSMEs in the halal economy, while allowing greater access to investments for all capital market participants,” he told reporters during the unveiling of the new digital-led initiatives in the capital market.

Awang Adek said to allow MTCs to seek debt-based financing directly from investors, while reducing the number of intermediaries involved in the process, registration for new P2P operators will also be opened.

He said most MTCs have been largely self-reliant in financing their business growth, especially since they have outgrown existing financing avenues for MSMEs but are still too small for traditional public markets.

The regulator will also open registration for new Recognised Market Operators-Digital Asset Exchange (RMO-DAX) to facilitate regulated digital assets investments.

There are four operators currently, with the move set to attract domestic and international operators to participate.

He said this allows a greater variety of players to enter the market and increases capital market vibrancy by widening the number and types of exchange platforms available for investors to invest in, which is also safe and secure.
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Hence, he said interested parties are invited to engage with the SC on applications for the ECF, P2P and RMO-DAX platforms from Nov 1.

The updated guidelines will be made available from Nov 15.

As of the end of September 2022, the size of the Malaysian capital market stood at RM3.5 billion, with the Islamic portion constituting 64 per cent of the total figures.

"In fact, in the first half of this year, more than 1,760 MSMEs have raised about RM762 million through ECF and P2P platforms,” Awang Adek said.

Asked about the default rate in P2P lending, executive director market & corporate supervision Kamaruddin Hashim said the level is manageable at 2.6 per cent.

As of June 2022, a total of RM3.5 billion in capital has been raised through 41,000 successful campaigns by over 5,400 MSMEs since the framework’s inception.

SC also announced the establishment of an RM30 million Digital Innovation Fund (DIGID) to encourage digitalisation of the capital market.

DIGID will co-fund innovative projects that utilise technology to enable new and competitive propositions of the Malaysian capital market.

"Interested parties are invited to submit their applications beginning Jan 1, 2023. Successful candidates will receive funding on a reimbursement basis after meeting agreed-upon milestone deliverables,” he said, adding that the funding will cover up to 70 per cent of approved qualifying expenses, capped at RM500,000 per project. - BERNAMA