The Securities Commission Malaysia (SC) recently hosted the sixth edition of the SCxSC Fintech Conference on 22 October 2019, an event aimed at helping to scale up the Malaysia Fintech industry.
Notably, Malaysia’s Fintech sector has seen several new players enter its ecosystem, following the regulatory agency’s move to provide more opportunities for under-served segments including micro, small and medium-sized enterprises (MSMEs) and a new generation of potential investors to raise funds or fulfill their financial goals.
For the past five years, the event has been providing a platform for local policymakers, entrepreneurs, investors and financial services firms to collaborate on innovative projects in finance through the adoption of the latest technologies.
The nation’s Fintech sector now includes alternative market-based financing platforms such as equity crowdfunding (ECF) and peer-to-peer financing (P2P).
Malaysia’s Fintech industry is also home to various Fintech startups such as digital investment consultants, crypto exchanges and real estate crowdfunding managers.
At present, the nation has 21 ECF and P2P platforms that are registered with the SC, and have raised a total of RM587 million (appr. $140.2 million) for over 1600 MSMEs.
The Chairman of the SC stated that it is encouraging to see these platforms continue to serve a number of MSME sectors including high tech, education, retail, F&B and consumer product; and have attracted many new investors, especially young investors aged 35 and below.
The nation’s government has, under Budget 2020, set aside RM50 million for the Malaysia Co-Investment Fund (MyCIF), in order to provide financing for local start-ups and SMEs by making joint investments on a “one-to-four basis” in campaigns that are active on ECF and P2P platforms.
An additional RM10 million has been set aside for the MyCIF under Budget 2020, specifically for social enterprises to generate funds through local P2P financing platforms.
It is expected that this injection of funds to further spur the growth of Malaysia’s ECF and P2P financing industry, which in turn could catalyse growth in Malaysian MSMEs by providing access to alternative sources of financing.
The SCxSC 2019 attracted over 800 participants who were given the opportunity to meet with global Fintech experts. Topics discussed during the two-day event included fintech entrepreneurship, digital identity verification, crypto assets, Islamic fintech, and the application of artificial intelligence in cybersecurity.
Growing Malaysia into ASEAN’s Fintech Hub
MDEC, a government-owned institution responsible for the management of Malaysia’s technology industry and commerce zone, recently announced that Malaysia has the potential to become a digital hub for ASEAN as Malaysia is in a position to spread the growth of the digital economy throughout the region, a recent report noted.
Likewise, the ASEAN FinTech Census 2018 by a multinational professional services firm dubbed Malaysia as an “emerging fintech hub in Asia”.
The country’s increasingly digitalised economy, which is tailored to boost start-up presence and draw in investors, together with support from the Malaysian government and regulators, will also create a mature fintech ecosystem that will contribute to Malaysia’s potential to be the hub for the digital economy of the ASEAN region.
According to the Network Readiness Index (NRI), Malaysia is ranked at number 31 out of 139 countries in terms of their readiness to transition to a digitised economy and society. Whilst Singapore is ranked at number 1, the rest of the ASEAN countries were ranked quite low in the NRI (with a ranking between 60 and 80). This measure is important for businesses looking to enter new countries as it can easily determine if the country can support a business that relies on the Internet.
This, coupled with the support from the government, regulators and industry players, provide Malaysia with the opportunities and potential as an emerging market to catch up to Singapore and to be the preferred fintech home in ASEAN.
