KUALA LUMPUR (Nov 6): The government will set up a co-investment fund (CIF) with RM50 million from existing grants to be co-invested in small and medium enterprises (SMEs), with private investors through equity crowdfunding (ECF) and peer-to-peer (P2P) platforms.

Second Finance Minister Datuk Seri Johari Abdul Ghani said Securities Commission Malaysia (SC) would assist in the set-up of CIF and define the co-investment criteria for both equity and debt-based financing.

“Once the fund is operationalised, it will co-invest in ECF and P2P financing campaigns which have managed to attract the required amount of private funding and other criteria.

“Through this co-investment fund, we hope to provide efficient mechanism for shared partnership and responsibility between Malaysian investors and the government to co-invest and grow our SMEs,” he said.

Speaking during his keynote speech at the Synergistic Collaborations by SC (SCxSC) Digital Finance Conference 2017, he said for investors, democratisation of funding would strengthen the investor base among retails investors.

Later, he told reporters that the platform is important to the ecosystem of SMEs due to the ability to tap into the open market via ECF or P2P to raise funds.

“So we are democratising the platform for start-ups, and those already operating in micro financing,” he said.

Johari said the government and SME Corp would ensure companies seeking grant would have to visit in the platforms, after SC draws up the structure.

“Then we will see how we can participate in the P2P and ECF to help SMEs. Together with venture capitalist, these are part of the SME ecosystem we have to create in order to take the risk from our banking sector,” he added.

“With the availability of the right products and platforms, retail investors can participate easily in investment activities and stand to gain from their ventures,” he said.

Johari said for investors who view investing as a powerful tool to drive sustainable and inclusive agenda, participation in investment activities enabled this class of investors to be directly involved in making impactful changes through sustainable investment options.

He said the government would consider increasing the number of ECFs and P2Ps, if there is a demand.

Malaysia is the first in Asia Pacific to introduce the regulatory framework to facilitate ECF in 2015, P2P financing last year and digital investment management in May this year.

SC said its digital markets strategy with 12 ECF and P2P platforms funded a total of 450 campaigns, raising RM50 million for micro SMEs (MSMEs).

As of Oct 27, ECF funded 32 campaigns for 31 issuers with RM26 million raised, while P2P saw RM17.2 million raised to fund 418 campaigns for more than 50 issuers.
For ECF, more than 70% of the issuers were made up of women and youth founders, while 40% of investors were below the age of 35.