KUALA LUMPUR (April 16): The Securities Commission Malaysia (SC) said today equity crowd funding (ECF) and peer-to-peer (P2P) financing had provided close to RM706 million in alternative funding to 1,943 Malaysian micro, small and medium enterprises (MSMEs).

In its 2019 annual report, the SC said ECF and P2P financing platforms continued to provide alternative sources of capital to fund business activities of MSMEs.

To address the unique requirements of businesses, particularly MSMEs, the SC said it facilitates the development of alternative financing avenues that connect issuers with traditionally untapped pools of investors through cheaper, faster and more convenient delivery channels.

These channels also aim to meet the demands of underserved investors, according to the regulator.

"First introduced in 2015, there are now 21 market-based financing platform operators in Malaysia, including three new ECF and five P2P financing operators approved in 2019.

"Given the success rate of over 8,000 fundraising campaigns, the crowdfunding framework continues to represent a structured and viable alternative access to capital for start-ups and MSMEs, while at the same time widening access for investors.

"The sustained growth of ECF and P2P financing in 2019 has largely benefitted the services sector.

"For the ECF market, key beneficiaries include the ‘wholesale and retail trade; repair of motor vehicles and motorcycles’ and ‘information and communication’ sectors comprising 20% and 11% of total funds raised respectively.

"The majority of P2P financing was directed to the ‘wholesale and retail trade; repair of motor vehicles and motorcycles’ sector, which accounted for 42% of the total funds raised.

"In terms of investors, ECF and P2P financing platforms continued to attract strong participation of investors including retail and youth segments, in line with the SC’s agenda to create a more inclusive capital market,” the SC said.