kuala lumpur: The Securities Commission Malaysia (SC) today released a five-year roadmap to better position the capital markets as an attractive and robust source of funding for micro, small and medium enterprises (MSMEs) and medium-sized enterprises (MTCs).
The roadmap complements existing national development policies such as the Madani Economic Framework, the 12th Malaysia Plan, New Industry Master Plan 2030 and the National Energy Transition Roadmap. It envisages a capital market to complement traditional financing avenues and cater to the growing financing needs of MSMEs and MTCs, which could reach RM40 billion by 2028.
The commission said the seven-fold increase on current funding levels equates to a five-year compound annual growth rate of 46% from RM6.3 billion in 2023.
SC chairman Datuk Seri Awang Adek Hussin said the roadmap is based on five guiding principles, outlining nine cross-cutting strategies and 36 key initiatives to be implemented over the short, medium and long term. He added that the launch of the roadmap reinforces the Malaysian capital market’s efforts to support the financing needs of MSMEs and MTCs.
“In 2023, the total amount of funds raised by MSMEs and MTCs through the capital markets was RM6.3 billion. This includes fundraising through the public markets, particularly the LEAP and ACE markets, as well as from market segments such as venture capital, private equity, equity crowdfunding (ECF) and peer-to-peer (P2P) financing,” Awang Adek said during his roadmap presentation at the SC.
“I am confident that if there is a systematic approach to supporting SCs, as envisaged in the roadmap, many more SCs will follow their lead,” he added.
According to the SC, MSMEs and MTCs have emerged as the country’s growth engines, with MSMEs contributing about 38.4% of Malaysia’s gross domestic product (GDP) and 48.2% of total employment. By 2022, there will be about 8,500 MTCs, accounting for about 36% of GDP and 16% of the workforce.
Secretary-General of Finance Yohan Mahmoud Merican, on behalf of Second Minister of Finance Amir Hamza Azizan, presented the 93-page roadmap titled “Facilitating Access to Capital Markets for MSMEs and MTCs: Five-Year Roadmap (2024-2028).”
In his keynote address, he stressed that the government is targeting to lift the economic cap. In terms of the 1.2 million MSMEs, startups and MTCs, this means raising the country’s economic output by developing these enterprises into regional champions and enhancing their ability to compete on a larger scale.
“The SC will consider further rebalancing of the LEAP market, such as expanding the pool of listed advisers to include professionals and allowing alternative methods of remuneration for advisers, such as payment in shares to manage listed companies’ cash flow requirements, subject to effective safeguards to manage conflicts of interest. The goal is to have these new LEAP market measures ready by early 2025,” he said.
“Building on this momentum, CGC will be exploring and consulting more ECF and P2P lending platforms to provide guarantees for those solutions. The aim is to have more guaranteed products available for issuance by the first half of 2024,” said Yohan Mahmood.
Another key area of focus is capacity building and creating a visible and sustainable pipeline of high potential SMEs and mid-cap enterprises that are ready to access funding in capital markets.
“As an extension of the simplified ESG disclosure guide, Capital Markets Malaysia, an affiliate of SC, will be publishing sector guides featuring enhanced disclosures for five key sectors in the Malaysian economy comprising energy, transportation & storage, construction & property, agriculture and manufacturing,” he said.
