New initiatives to help micro to mid-tier businesses in Malaysia
KUALA LUMPUR: The Securities Commission (SC) has launched several new initiatives to help businesses — from micro to mid-tier in size — gain access to funding.
This effort will include revitalising the LEAP market, which is a key fundraising destination and feeder market for small and medium enterprises.
The initiative will open the way to greater financing accessibility for micro, small and medium enterprises (MSMEs) and mid-tier companies (MTCs).
Second finance minister Amir Hamzah Azizan said part of the effort will involve widening the pool of listing advisers to include professional bodies such as accounting and legal firms.
He said another intiative that will allow alternative remuneration methods for advisers, such as payment in equity will make it easier to meet cashflow requirements expected of listed companies.
His speech, at the launch of the SC’s “Catalysing MSME and MTC Access to the Capital Market: A 5-Year Roadmap”, was delivered by treasury secretary-general Johan Mahmood.
Amir said the aim is to have these new LEAP market measures ready by early next year.
He also announced the introduction of new products by Credit Guarantee Corporation Malaysia Bhd (CGC Malaysia) to de-risk various debt-based and equity-based capital market instruments for investors.
He said this would be an incentive and will encourage more lending and investment activities in this segment.
“As a result, MSMEs that are now underserved or unserved yet creditworthy will have greater access to financing opportunities, empowering them to expand and sustain their operations,” he added.
CGC Malaysia recently introduced another portfolio guarantee (PG) of RM30 million that businesses can draw on for financing of up to RM500,000.
The PG, which was launched early this month, is for working capital under term loan with funding societies.
This is in addition to its first PG programme of RM10 million introduced in April last year, which has been fully utilised.
Amir said that building on this momentum, CGC Malaysia will explore more equity crowdfunding and peer-to-peer financing platforms to offer guarantees for their funding solutions.
These guarantees will be offered from the first half of 2024.
Amir said the recently released Sustainable and Responsible Investment Guide for Private Markets and Simplified ESG Disclosure Guide (SEDG) is yet another effort to enhance ready access to financing.
In the SEDG are enhanced disclosures for five significant sectors in the Malaysian economy, namely energy, transport and storage, construction and real estate, agriculture as well as manufacturing.
“This will provide (businesses) guidance on the additional environmental and social disclosures expected of them to remain competitive within the global supply chain and marketplace,” he said.
Amir said the Elevate 2.0, which is a market incubation programme introduced in collaboration with Matrade and SME Corp, will support the development of MTCs and MSMEs.
SC chairman Awang Adek Hussin said the target of the commission’s five-year roadmap is to provide RM40 billion in financing in 2028 to catalyse access to the capital market for MSMEs and MTCs.
He said the target is seven times the current fundraising levels, representing a compound annual growth rate (CAGR) of 46% over the next five years.
In 2023, MSMEs and MTCs raised RM6.3 billion in the capital market through fundraising in the public market, particularly the LEAP and ACE Markets, and from market segments such as venture capital, private equity, equity crowdfunding and peer-to-peer financing.
MSMEs and MTCs are the country’s engine of growth, with MSMEs accounting for about 38.4% of Malaysia’s GDP and 48.2% of total employment in 2022.
There are about 8,500 MTCs, accounting for around 36% of GDP and 16% of the workforce.
