MSMEs in rural areas to jump on digital financial services bandwagon soon, says microLEAP

MSMEs in rural areas to jump on digital financial services bandwagon soon, says microLEAP
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KUALA LUMPUR (Oct 27): Small and medium enterprises (MSMEs) in rural areas are expected to jump on the digital financial services bandwagon soon given that Malaysia's internet penetration is at a high level, said financing platform microLEAP.

Founder and chief executive officer Tunku Danny Nasaifuddin Mudzaffar said Malaysians, including MSMEs and consumers, were quick to incorporate digitalisation in their daily lives and it was proven during the Covid-19 pandemic outbreak.

"Malaysians understand that there is a need for digitalisation and the need to go online. This is pushed forward, even more, when Covid-19 hit and people were forced to stay indoors.

"People are using online platforms to sell the products. I think slowly but surely those in the rural areas, as internet penetration increases, will soon jump on the digital financial services bandwagon and get online," he said on Wednesday during Securities Commission Malaysia’s (SC) eighth annual SCxSC Fintech Conference panel session, entitled Microfinancing: Breaking Socioeconomic Barriers.

He said according to a study done in 2018, internet penetration in Malaysia is at 78%, while smartphone penetration is in the region of 80%.

"We are on the same level as developed countries, say Hong Kong and Singapore. If compared against Indonesia, for example, internet penetration is only about 15%… maybe 20%.

"We are much higher in terms of internet penetration compared to other countries in Asia. So we are well placed for digital financial services," he said.

He noted that MSMEs have been impacted by the Covid-19 pandemic in terms of the ability to repay loans as microfinance companies are seeing loans getting paid at a slower rate.

"They ask us maybe they can pay (the monthly instalments) half this month and next month. That's what happens when the economy tanks," he said.