Malaysian regulator the Securities Commission Malaysia (SC) is encouraging wider adoption of financial technology (fintech) in agriculture in order to help in achieving the country’s food security agenda.
The SC said in a statement on Wednesday that the regulator is encouraging wider adoption of financial technology (fintech) in agriculture in order to help in achieving the country’s food security agenda.
Its Chairman Awang Adek Hussin said access to finance is critical to agriculture’s future.
This is especially important for smallholders and agritech-preneurs seeking to modernize agriculture and strengthen research and development, he said in his opening address at the SCxSC Grow Fintech Conference.
This marks the 10th iteration of the SCxSC conference that is held in-person after the Covid-19 pandemic.
SCxSC GROW, is a new collaborative program, under the SC’s fintech flagship initiative “Synergistic Collaboration by the SC” (SCxSC).
The SCxSC GROW embodies a collaborative effort with partners in the fintech ecosystem to harness the potential of alternative financing digital platforms to meet the needs of micro, small, and medium-sized enterprises (MSME) in strategic sectors.
Recognizing the challenges faced MSMEs in the agriculture sector, Adek said that leveraging fintech solutions will help improve access to financing and increase efficiency in the sector.
To achieve this goal, he said the SC has been working closely with ecosystem players to develop innovative solutions that cater to the unique financing needs of farmers and agribusinesses.
This is in tandem with the national agenda to support the agriculture sector’s transition into a dynamic and progressive sector.
Adek also said 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 mobilize capital directly for agri-preneurs,” he said.
He added that this provides more options for younger and high-growth companies to access capital relevant to their business risk profiles.
According to the statement, over 7,000 MSMEs have benefited from SC-registered ECF and P2P financing since their introduction in 2015, raising more than MYR 4.4 billion ($954 milion), with only 600 agri-related MSMEs across the entire value chain raising close to MYR 300 million ($65.04 million).
This presents a significant opportunity for agricultural growth and investment.
According to Adek, Malaysia was also the first country in this region to adopt a co-investment model, MyCIF specifically for alternative finance platforms.
MyCIF was instrumental in providing MSMEs with financing during the Covid-19 pandemic.
“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.
The SCxSC GROW Fintech Conference, themed “Fostering Innovative Finance in Agriculture”, aims to be a game-changer for the agriculture industry.
With the world facing increasingly complex challenges, the conference brings together agriculture and fintech players to explore innovative solutions to food security, sustainability and supply chain resilience.
New cutting-edge solutions were showcased at the conference, highlighting the latest advancements in these fields. The conference also featured local fintech players in the agriculture sector.
These fintech solutions have the potential to revolutionize the way farmers access financing and manage their operations, enabling them to make better use of resources and increase yields, said the statement.
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