Malaysia recently tabled its Budget for 2020. The Budget charts the economic direction of the nation. Broadly speaking, it places more focus on building a digital economy.
The CEO of MDEC, the agency responsible for driving Malaysia’s digital economy, noted in a media statement that the Malaysia Budget 2020 marks an inflection point in the Government’s steering of the Digital Economy.
No digital economic agenda is complete without having fintech as the backbone to power its commerce. Hence, it made sense that this year’s budget places emphasis on fintech compared to the previous years.
Many in the public sphere gravitated towards the announcement that the Malaysian government is attempting to boost the use of e-wallets by offering a one-time RM30 stimulus to Malaysians below the age of 18 earning less than RM100,000.
Commenting on the stimulus, one expert stated that the Government’s e-wallet stimulus initiative will also greatly drive the adoption of e-wallets as an exceedingly convenient method of payment for consumers. Importantly, it can also be viewed as a form of endorsement of the technology used which is safe and very secure for financial transactions.
Besides the e-wallet stimulus, there were, of course, other fintech-related announcements that got many in the industry excited, chief among them was the timeline announcement for the virtual banking framework. It is a much-anticipated piece of regulation that will pave the way for a new breed of banks in Malaysia.
Malaysia’s Finance Minister stated that the virtual banking framework will be ready for public consultation by end of this year and applications will be open by the first half of 2020.
The new budget also seems to illustrate that the administration is receptive towards alternative financings like Equity Crowdfunding (ECF) and P2P Financing.
It is confirmed that the government will allocate an additional RM50 million to the My Co-Investment Fund (MyCIF) and separate RM10 Million will be allocated to the same fund specifically for social enterprises fundraising via P2P Financing platforms. Industry players are in favour of the announcement.
In a statement, it was noted that the initiative will boost the alternative financing industry and Malaysia as a whole. This is the second time that the government has allocated RM50 million to co-invest at a 1 to 4 ratio for ECF and P2P Financing Platforms.
This practical support will not only help to fund creditworthy SMEs but also bring awareness to the public about ECF and P2P Financing — a much need platform to help SMEs grow.
The government has also announced that it will be formulating an Islamic Economic Blueprint and that it will be setting up a Special Islamic Finance Committee to position Malaysia as a centre of excellence for Islamic Finance.
While it is not specifically targeted a fintech, experts anticipate that those who are operating within the Islamic fintech space will also likely benefit from the new policies.
All in all, both the public and private sectors appear pleased that the government increasingly recognising the important role that fintech plays in society. More fintech-friendly policies are eagerly awaited from the government of the day.
