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SC, Agro-based Agencies Eye Alternative Financing for Agriculture Sector

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The Securities Commission Malaysia (SC) and key agriculture agencies have discussed ways to address financing gaps faced by Micro, Small and Medium-sized enterprises (MSMEs) involved in the agriculture sector in a bid to boost the country’s food security.

Some 40 representatives from agencies and industry players this week attended a workshop called GROW® – a new collaborative programme under SC’s fintech flagship initiative, SCxSC.

GROW® is a collaborative effort by the SC and ecosystem partners to harness the potential of alternative fund-raising digital platforms to meet the needs of underserved players in strategic sectors, such as agriculture.

Equity crowdfunding (ECF) and peer-to-peer (P2P) financing were among the alternative financing mechanisms that were addressed during the workshop as potential ways to help fund the sector.

The SC Chairman Dato’ Seri Dr. Awang Adek Hussin stressed the importance of broadening access to the capital market for local businesses.

“We have seen how technology has democratised financing via digital platforms such as ECF and P2P financing,” he told the workshop. “We believe these alternative financing avenues have the potential to address some of the funding needs of the MSMEs in the agriculture sector as well.”

Senior officials from relevant ministries, agencies and key players in the agriculture ecosystem attended the one-day workshop. They include the Ministry of Agriculture and Food Industry, Federal Agricultural Marketing Authority (FAMA) and Agrobank.

At the workshop, participants called for greater ecosystem coordination to move the agriculture sector forward and strengthen the country’s food security.

They also emphasised the need for greater awareness on the role of alternative financing for the agriculture sector. They welcomed the development of more innovative financing instruments to cater to the diverse agro-business needs.

Following the workshop, the SC plans to have greater industry engagements with key stakeholders next year including organising a GROW® Fintech Conference. This will be followed by a nationwide GROW® roadshow to raise awareness on ECF and P2P financing as viable funding options for agro-based MSMEs to grow their businesses.

These programmes will complement ongoing efforts by the government to support alternative fundraising by agriculture businesses such as the Malaysia Co-investment Fund (MyCIF).

MyCIF, a public-private co-investment vehicle administered by the SC on behalf of the Ministry of Finance, has observed a greater uptake of ECF campaigns in the agriculture sector after implementing a special ratio of 1:2 in 2022 for this sector. MyCIF invests RM1 for every RM2 raised from private investors on the participating platforms by eligible issuers.

It has co-invested in a range of agriculture projects in upstream and downstream activities, including firms applying technology to improve agriculture yields and aquaculture production.

About the Securities Commission Malaysia

The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Malaysia Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my. Follow the SC on twitter at @SecComMy for more updates.

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