Malaysia aims to improve agriculture sector through alternative financing

The Kuala Lumpur cityscape / Photo credit: Wikimedia Commons

Securities Commission Malaysia chair Awang Adek Hussin has reaffirmed the importance of applying fintech in agriculture to strengthen the country’s food security.

The SC chairman delivered an opening address at the SCxSC Grow Fintech Conference held in Kuala Lumpur earlier today.

He noted that the agricultural sector’s contribution to Malaysia’s GDP declined from 29% in the 1970s to 6.6% in 2022. This has encouraged the Malaysian government to accelerate its financing initiatives to support the sector.

“Alternative financing avenues such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing allow investors with the right risk appetite to mobilize capital directly for agripreneurs,” Awang Adek said. “This provides more options for younger and high-growth companies to access capital relevant to their business risk profiles.”

He added that SC-registered ECF and P2P financing, launched in 2015, has supported over 7,000 micro, small, and medium enterprises (MSMEs), which have raised more than 4.4 billion ringgit (US$952 million). However, only 600 MSMEs were agriculture-related, signaling room for growth.

In 2019, the government created the Malaysia Co-Investment Fund (MyCIF) to co-invest in micro, small, and medium enterprises (MSMEs) through ECF and P2P financing platforms.

To help local businesses during the COVID-19 pandemic, MyCIF lowered the investment ratio to 1:2, meaning that MyCIF would invest 1 ringgit for every 2 ringgit raised from private investors.

Last year, this scheme was specifically extended to agriculture industry players. Awang Adek said that there has been a 4x increase in agribusinesses raising funds through ECF and P2P platforms since the change.

See also: The key players in SEA’s agritech space

Currency converted from Malaysian ringgit to US dollar: US$1 = 4.62 ringgit.