The Malaysian securities watchdog has high hopes that a new generation of fintech companies can turn the country into a regional Silicon Valley.
The push into fintech -- short for “financial technology” -- tallies with Malaysia's growing need to lessen its reliance on commodity export earnings, which have floundered as commodity prices have sunk, sending the ringgit to its weakest level against the US dollar since the Asian crisis of 1998.
“The objective is very clear. We want to create new growth for the Malaysian financial and capital markets, bringing the finance and technology together is very important enabler to grow our business today,” Datuk Ranjit Ajit Singh, chairman of the Malaysia securities watchdog, said on Thursday at the World Capital Markets Symposium. Entering its 4th round, the World Capital Markets Symposium is held every two years in Kuala Lumpur.
“We have six operators in the crowdfunding business and there are still other fintech elements that are to be looked upon,” he said, as the Securities Commission Malaysia announced the launch of the Alliance of FinTech Community or aFINity@SC to help drive a network of fintech stakeholders to accelerate growth and innovation.
Crowdo
Among the half-dozen out of 27 fintech companies so far approved after Malaysia became the first Asean country this year to legislate for equity crowdfunding is Crowdo.
“Crowdo will launch a peer to peer lending platform in Indonesia and an equity crowdfunding site for the Malaysian market, bringing investors and borrowers together in a more efficient and cost-saving manner,” Leo Shimada, chief executive of Crowdo, one of the six authorised operators, told FinanceAsia.
Shimada, a former McKinsey consultant, said the growth potential is huge in Southeast Asia but that the culture and barrier to entry remains high, in part due to the current low awareness in the region of the new ways of financing.
Like many other fintech firms, Crowdo charges a one-off administrative fee of 6% to 8% on the money raised by the borrower, according to Shimada. Small retailers, telecom firms, and software companies are its target customers.
John Goodall, chief executive of Landbay, a UK-based peer-to-peer lender, said the potential growth in Asian countries appeals to him as the levels of penetration remain fairly low at this stage compared with his homeland.
He, though, is looking away from Malaysia.
“I will stay away from the fierce competition in China but focus on developing my strategy in South Korea which looks interesting to me given its high level of saving,” said Goodall, who is looking to close on $10 million in series A funding at the end of October, valuing his company at $40 million.
Asked to comment on investor confidence after the recent political scandal surrounding the country’s prime minister, Singh -- who is also the chairman of the Securities Industry Development Corporation, the Malaysian Venture Capital Development Council, and the Capital Market Development Fund -- said that people recognised that the economic fundamentals remained intact given the capital inflows into the country’s mutual fund business.
“I believe the markets will correct themselves and pick up again,” Singh said.
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