KUALA LUMPUR: The Securities Commission Malaysia (SC) is encouraging wider adoption of financial technology (fintech) in agriculture to help in achieving the country’s food security agenda.
SC chairman Datuk Seri Dr Awang Adek Hussin said access to finance is critical to agriculture’s future and this is especially important for smallholders and agritechpreneurs seeking to modernise agriculture and strengthen research and development.
Recognising the challenges faced by MSMEs – micro, small and medium enterprises – in the agriculture sector, he said that leveraging fintech solutions will help improve access to financing and increase efficiency in the sector.
To achieve this goal, the SC has been working closely with ecosystem players to develop innovative solutions that cater to the unique financing needs of farmers and agribusinesses, which is in tandem with the national agenda to support the agriculture sector’s transition into a dynamic and progressive sector.
In addition, he remarked that the capital market can be an enabler and accelerator to help Malaysia achieve its food security agenda.
“Alternative financing avenues such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing allow investors with the right risk appetite to mobilise capital directly for agripreneurs.
“This provides more options for younger and high-growth companies to access capital relevant to their business risk profiles,” Awang Adek said in his opening address at the SCxSC Grow Fintech Conference today.
Over 7,000 MSMEs have benefited from SC-registered ECF and P2P financing since their introduction in 2015, raising more than RM4.4 billion, with only 600 agri-related MSMEs across the entire value chain raising close to RM300 million. This presents a significant opportunity for agricultural growth and investment.
“Malaysia was also the first country in this region to adopt a co-investment model, MyCIF specifically for alternative finance platforms,” Awang Adek said, adding that MyCIF implemented a special allocation ratio of 1:2 for the agriculture sector in 2022, which is more appealing than the normal ratio of 1:4.
“We’ve seen increased interest as four times as many agri-businesses have raised funds through ECF and P2P platforms,” he said.
Meanwhile, Agriculture and Food Security Ministry deputy secretary-general (policy) Datuk Azah Hanim Ahmad said that investing in the industry can be a wise long-term strategy, as the global population grows, the demand for food will increase and the industry will play a critical role in providing sustenance for people around the world.
She explained that moving forward, focus would be given on continuous innovation in the agriculture industry, including boosting sustainable practices in agriculture and forming an effective collaboration with the private sector.
“Increasing technology adoption by promoting modern agriculture methods and smart farming technologies such as digital agriculture and the introduction of new technologies along the entire agrofood value chain will increase productivity, said Azah.
SCxSC Grow is a new collaborative programme under the SC’s fintech flagship initiative “Synergistic Collaboration by the SC” (SCxSC). It embodies a collaborative effort with partners in the fintech ecosystem to harness the potential of alternative financing digital platforms to meet the needs of MSMEs in strategic sectors.”