SC, agro-based agencies eye alternative financing for agriculture sector

SC, agro-based agencies eye alternative financing for agriculture sector
-A +A

KUALA LUMPUR (Nov 2): The Securities Commission Malaysia (SC) and key agriculture agencies have called for greater ecosystem coordination to move the agriculture sector forward and strengthen the country’s food security.

While welcoming the development of more innovative financing instruments to cater to the diverse agro-business needs, the two parties also emphasised the need for greater awareness on the role of alternative financing for the agriculture sector.

In a statement on Wednesday (Nov 2), the capital markets regulator said these were among ways discussed with the agencies to address financing gaps faced by micro, small and medium-sized enterprises (MSMEs) involved in the agriculture sector, in a bid to boost the country’s food security.

Additionally, equity crowdfunding (ECF) and peer-to-peer (P2P) financing were among alternative financing mechanisms that were addressed during the GROW® workshop — a new collaborative programme under SC’s fintech flagship initiative, SCxSC, as potential ways to help fund the sector.

GROW® is a collaborative effort by the SC and ecosystem partners to harness the potential of alternative fund-raising digital platforms to meet the needs of underserved players in strategic sectors such as agriculture.

SC chairman Datuk Seri Dr Awang Adek Hussin stressed the importance of broadening access to the capital market for local businesses.

“We have seen how technology has democratised financing via digital platforms such as ECF and P2P financing.

“We believe these alternative financing avenues have the potential to address some of the funding needs of the MSMEs in the agriculture sector as well,” he told the workshop.

Some 40 senior official representatives from relevant ministries, agencies and key industry players in the agriculture ecosystem attended the one-day workshop, which included the Ministry of Agriculture and Food Industry, Federal Agricultural Marketing Authority (FAMA) and Agrobank.

Following the workshop, the SC said it plans to have greater industry engagements with key stakeholders next year, including organising a GROW® Fintech Conference, followed by a nationwide GROW® roadshow to raise awareness on ECF and P2P financing as viable funding options for agro-based MSMEs to grow their businesses.

The commission also noted that these programmes will complement ongoing efforts by the government to support alternative fundraising by agriculture businesses such as the Malaysia Co-investment Fund (MyCIF).

MyCIF, a public-private co-investment vehicle administered by the SC on behalf of the Ministry of Finance, has observed a greater uptake of ECF campaigns in the agriculture sector after implementing a special ratio of 1:2 in 2022 for this sector.

According to the SC, MyCIF invests RM1 for every RM2 raised from private investors on the participating platforms by eligible issuers. It has co-invested in a range of agriculture projects in upstream and downstream activities, including firms applying technology to improve agriculture yields and aquaculture production.