KUALA LUMPUR (Aug 27): Malaysia needs to help diversify the financing ecosystem in order to help the small and medium enterprises (SMEs) obtain funds for business growth, beyond the orthodox banking system, said Finance Minister Lim Guan Eng.
He said in terms of share of SME financing between the financial institutions (FIs) and capital market, approximately 90 per cent of the financing was from the FIs while the remaining 10 per cent was obtained from the capital market.
“Financing from the capital market and innovative platforms such as the LEAP Market, Equity Crowd Funding (ECF), Peer-to-Peer (P2P), Private Equity and Venture Capital should be further explored as funding options for SMEs and start-ups,” said Lim during his opening remarks at the ‘Improving Access To Financing Through Financial Innovation’ at the Securities Commission yesterday.
The session was in conjunction with the focus group meeting for the 2020 Budget.
Lim said with the range of funding that could be obtained via ECF and P2P of between RM1,000 and RM3 million, there are financing opportunities for SMEs across all stages of the business cycle.
“With the rise of financial technology, financing solutions are becoming more personalised, accessible and attractive through a wide range of products and services offered at competitive rates.
“This can be attested by the 900 SMEs which have successfully raised a total funding of RM344 million through more than 3,400 deals since 2015,” he said.
As reported by the World Bank in 2018, Malaysians have shown impressive entrepreneurial talent and have even produced some of Southeast Asia’s most recognisable startups such as Grab and Fave.
“Broader access and opportunities to financing for all provides the foundation for an inclusive and sustainable Malaysian economy,” he said.
Enhancing the access to financing for SMEs effectively would require a coordinated approach from the public and private sector, added Lim.