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updated at: Wed, 09 Dec 2020, 05:25PM MYT

Registered market operators offer alternative fundraising for MSMEs — CMM

Original Source From TheEdge Publish at Tue, 10 Nov 2020, 09:07AM

KUALA LUMPUR (Nov 10): Micro, small and medium enterprises (MSMEs) in Malaysia need to consider alternative methods of raising capital which are accessible via digital platforms provided by Islamic financial technology (fintech) companies known as Registered Market Operators (RMOs).

In a statement today, Capital Markets Malaysia (CMM) said RMOs that are regulated by the Securities Commission Malaysia (SC) offered peer-to-peer (P2P) financing or equity crowdfunding (ECF) platform.

The affiliate body of the SC said three of the 22 RMOs offered capital fundraising solutions that complied with Shariah.

“By providing Shariah-compliant options for fundraising, Islamic fintech is able to assist in the expansion of local companies that offer halal products and services,” CMM general manager Zalina Shamsudin said.

Meanwhile, Tunku Danny Nasaifuddin Mudzaffar, chief executive officer (CEO) of microLEAP, an Islamic and conventional P2P microfinancing platform regulated by the SC, said the awareness and appetite for fundraising in Malaysia via ECF or P2P platforms is growing but a lot more needs to be done especially for micro-enterprises.

He said the conventional version is believed to be more popular in the general P2P market because there hasn’t been an active Islamic P2P financing operator until now.

“microLEAP launched our Islamic Investment Notes/Islamic Financing in April 2020 and since then the funds disbursed to micro enterprises hosted on our platform have grown more than 1,000% in five months. That just shows the demand for Islamic P2P investments at the moment.

“On microLEAP’s platform, where we are the first platform to be able to do both Islamic and conventional P2P financing, we see Islamic financing is more popular. In fact, our Islamic financing is 92% versus eight per cent for conventional financing,” he added.

He said the popularity of the Islamic version on the microLEAP platform is because there is not much difference in cost of raising Islamic funds compared to raising conventional funds as the platform will absorb the Commodity Murabahah brokerage fee.

Tunku Danny said he also suggested companies to consider raising Islamic P2P financing if they want to raise funds in an ethical and Islamic manner while getting investors who are not only looking for Shariah-compliant investments but also sustainable investments.

Another RMO, Ethis Malaysia CEO Mohd Shehzad Islam said the company's platform was developed to bridge the funding gap by enabling local companies to raise capital through Shariah-compliant equity public funds.

“We are aware that obtaining funds, especially at a time when the economy is currently affected by the impact of Covid-19, is a challenge to businesses,” he said.

Although Ethis does not guarantee investors from investment risk, a company is only allowed to raise funds through Ethis Malaysia after satisfactory due diligence.

“We aim to be a leading global Islamic fintech platform, using state-of-the-art technology that activates retail and institutional investors from around the world,” he added.

Besides that, the founder and CEO of Funding Societies Malaysia Wong Kah Meng said P2P financing has been gaining traction in recent years owing to its digital approach and speedy process that swiftly addresses the pain points of traditional financing with the mission of benefitting the underserved and unserved SME segments.

updated at: Fri, 29 May 2020 MYT
Participation (%)
Bought (MYR)
Sold (MYR)
( 24,36 % )
2.31 B 2.23 B 77.37 M
Local Institution
( 39,38 % )
3.66 B 3.67 B 0.00 B
Local Retail
( 36,26 % )
3.34 B 3.41 B -0.07 B