KUALA LUMPUR (Jan 3): Khazanah Nasional Bhd (Khazanah) and CGC Digital Sdn Bhd (CGC Digital), a financial technology (fintech) subsidiary of Credit Guarantee Corporation Malaysia Bhd (CGC), have jointly invested in Funding Societies, a unified small and medium enterprises (MSMEs) digital finance platform in Southeast Asia.
This confirms a report by The Edge in November 2023 that Khazanah was looking to invest in the platform.
In a statement on Wednesday, Khazanah said the investment aims to address the RM90 billion funding gap for MSMEs in Malaysia and the region. The investment falls under Khazanah’s Dana Impak mandate, which supports investments that create long-term societal value for Malaysians.
In addition, the investment in Funding Societies also aims to have more than 50% of its annual loan disbursements from Shariah-compliant financing by 2025 — in line with the aspiration to support the growth of Bumiputera MSMEs.
Khazanah managing director Amirul Feisal Wan Zahir said that the initiative is part of its commitment to fostering financial inclusion and bridging the funding gap, especially within the MSME community.
“By supporting innovative platforms like Funding Societies together with CGC Digital, Khazanah aims to empower the MSME community, unlocking new opportunities to propel the nation in line with the Madani Economy vision of improving socioeconomic outcomes for all,” Feisal added.
Meanwhile, CGC Digital chief executive officer (CEO) Yushida Husin said the investment is a strategic win for Malaysian MSMEs, and by working together with Khazanah, the group can advance financial inclusion among underserved and unserved MSMEs in the digital ecosystem.
According to Khazanah, Funding Societies is a regional fintech company that provides financing to MSMEs, especially micro and small businesses currently unserved by existing financial institutions.
“Since its inception, Funding Societies has disbursed over US$3.5 billion (RM16 billion) in business financing through five million transactions, positively impacting over 100,000 businesses across its five markets in Southeast Asia, namely Malaysia, Singapore, Indonesia, Thailand and Vietnam,” Khazanah said.
Prior to the investment, the digital finance platform aimed to expand its Malaysian coverage to areas beyond Kuala Lumpur, Selangor, Penang, and Johor and targets to serve more than 25,000 MSMEs across Malaysia, thereby improving MSMEs’ access to financing, growth and scalability while fostering job creation and income development for those employed by these businesses.
Its co-founder and group CEO Kelvin Teo said that while MSMEs represent 97% of business establishments in Malaysia and contribute 38% to the gross domestic product (GDP), this group still faces significant challenges in obtaining credit, as evidenced by the RM90 billion financing gap in Malaysia.
“This is where Funding Societies seeks to step in by serving the region’s MSMEs’ cash management challenges and needs with our extensive reach and broad range of short-term financing solutions,” Teo added.