This sector has seen a significant increase in approaching peer-to-peer (P2P) lending and equity crowdfunding (ECF) for financing to secure business capital. Likewise, more investors are also embracing these platforms to earn higher yields.
This is observed by the Securities Commission Malaysia (SC), where MSME P2P lending and ECF activity have recorded a continued growth of 74% and 122% increase in total fundraising for both markets, respectively. Additionally, there was a 33.3% and 48.6% increase in the overall number of successful campaigns and participating issuers.
In total, ECF and P2P campaigns have raised more than RM 2.7 billion across 4,556 MSMEs.
Seeing the importance of sustaining the MSME sector as well as the potential of both ECF and P2P lending, the Malaysian government established the Malaysia Co-investment Fund (MyCIF) in 2019. As a public-private investment vehicle, MyCIF co-invests in MSMEs and social enterprises alongside private investors via ECF and P2P lending platforms. The fund was established with an initial allocation of RM100 million from the government.
Since MyCIF’s inception, a total of RM 357 million has been co-invested in more than 16,000 ECF and P2P lending campaigns that have benefitted 2,279 MSMEs. From this data, the most active co-investment is in P2P lending, totalling 15,946 P2P campaigns. Based on these efforts, MyCIF has accumulated a net return of RM 4.6 million.
Besides with the serious impact of the recent Covid-19 pandemic that has caused the closure of 37,415 businesses, mostly SMEs, and subsequently massive unemployment and significant household income decline, the government has allocated an additional RM 80 million to it to combat this issue.
Having said that, MyCIF will continue to assist in ECF and P2P financing, specifically focusing more on the agricultural sector, an industry that the SC identified to bring strategic importance to the local economic recovery.
Therefore, P2P financing platforms like Hap2py, which are regulated by the SC and aim to align with the initiatives of spurring and empowering entrepreneurs and individuals to achieve their financial goals at a much lower rate, will definitely contribute towards the government’s goal of developing a robust sector of small and medium-sized enterprises throughout the country.
Reference:
FintechNews Malaysia - ECF and P2P Lending has Helped Malaysia’s MSMEs Raise Over RM 2.7 Billion in Financing
https://fintechnews.my/32654/malaysia/msme-p2p-lending-and-equity-crowdfunding-pick-up-steam-in-malaysia/
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