KUALA LUMPUR (May 23): The Securities Commission (SC) has launched an ambitious plan that aims to help small- to mid-sized companies raise RM40 billion from the capital markets by 2028.
Small- to medium-sized companies including startups, raised just RM6.3 billion in 2023 from the equity market, venture capital, private equity and various other platforms, according to the SC. The sixfold jump is just a fraction of the potential financing gap of RM290 billion in 2022, the regulator said.
“One of the main challenges that small, medium and mid-tiered companies face is a simple lack of access to financing,” the SC said in the "Catalysing MSME and MTC Access to the Capital Market: A Five-Year Roadmap" report.
The five-year roadmap covers micro, small, and medium enterprises (MSME), as well as mid-tiered companies (MTC). The SC estimates that there are about 15,000 to 28,000 MSMEs and MTCs, generating annual sales of under RM500 million with the potential to tap the capital market.
There are nine strategies in the roadmap, including enhancing MSMEs and MTCs pathways to fundraising, revitalising the LEAP Market as an SME feeder market, and forging public-private partnerships for MSMEs and MTCs investments, among others.
The roadmap also outlined 36 initiatives, among which the SC has identified SME Corporation Malaysia as a potential key collaborator to establish a listing grant aimed at defraying the cost of listings for MSMEs seeking to list on the public market.
“We are also looking at boosting the capital market readiness of these companies, facilitating private market deals, and educating and increasing the awareness of investors and intermediaries about these companies,” said SC chairman Datuk Seri Awang Adek Hussin in the preface of the roadmap.
Another initiative put forward by the SC is to provide a pathway for MSMEs and MTCs that have utilised equity crowdfunding (ECF) fundraising to list on the public market, offering potential exit opportunities for their investors.
Furthermore, the SC aims to facilitate the usage of bonds as a fundraising instrument among MSMEs and MTCs by addressing the barriers of bond issuances, such as insufficient scale, high costs and disclosure requirements.
Such initiatives, according to the SC, have been introduced in other countries, including Indonesia, China and Italy.
In Indonesia, Blossom Finance introduced the SmartSukuk platform, which utilised blockchain technology to issue shariah-compliant financing for SMEs. Meanwhile, Italy introduced minibonds in 2012 to enable SMEs to access corporate bonds for funding their development plans, investments or refinancing.
“We need to nurture and support these promising and innovative companies, as they will drive transformation and become the backbone of Malaysia’s economy,” Awang Adek added.