KUALA LUMPUR: Malaysia’s peer-to-peer (P2P) financing sector has grown steadily since 2016 and is likely to continue its strong growth trajectory, driven by supportive government policies and an increasingly robust investor ecosystem.
Funding Societies Malaysia country head Chai Kien Poon said the government prioritises micro, small and medium enterprises and mid-tier companies, recognising their key role in the country’s gross domestic product growth and employment.
“This national focus is reflected in various strategic initiatives aimed at improving access to financing for these businesses,” he told SunBiz.
Chai said that to enhance financing access, the Securities Commission Malaysia (SC) launched the MSME and MTC Roadmap (2024-2028), which focuses on expanding market-based funding options, with P2P financing playing a central role.
Additionally, the Strategic Co-Investment Fund (CoSIF) under the New Industrial Master Plan 2030 (NIMP 2030), alongside MyCIF, forms Asean’s first blended financing framework to support high-growth MSMEs.
Another key initiative is Skim Sarana, a collaboration between the SC and the Government Procurement Division (GPD).
This programme enables P2P platforms to help MSMEs and small contractors secure working capital for government contracts, improving cash flow management and procurement efficiency.
Chai said these initiatives create a more conducive financing environment for business growth.
By December 2023, P2P financing had raised RM5.96 billion through 85,793 campaigns, benefitting 14,715 MSMEs.
In 2023, funds raised surged 32% to RM2.09 billion, with projections exceeding RM2.4 billion in 2024, up from RM1.58 billion in 2022. Campaigns increased to 31,002 in 2023 from 24,455 in 2022.
Key institutional investors back Funding Societies Malaysia, reinforcing their confidence in the P2P financing model, Chai pointed out.
Its equity shareholders include Maybank Group, Khazanah Nasional Bhd and CGC Digital, while Bank Pembangunan Malaysia, Malaysia Debt Ventures, SME Corp and Teraju have actively participated as institutional investors and capital providers.
Chai said the involvement of these agencies supports SME growth through P2P financing initiatives.
“With a growing ecosystem of both public and private stakeholders supporting P2P financing, the sector in Malaysia is well-positioned to continue its strong growth trajectory within the Asia-Pacific market. As digital financing solutions become more widely adopted, P2P platforms like Funding Societies will play an increasingly pivotal role in ensuring SMEs have the capital they need to thrive.”
Chai said Malaysia’s P2P financing regulatory framework is designed specifically to serve businesses, focusing on productive financing that drives economic growth, creates employment opportunities and ultimately enhances the standard of living for Malaysians.
“Unlike other markets where consumer lending dominates the P2P landscape, Malaysia’s framework ensures that P2P financing remains a key enabler for MSMEs by providing them with much-needed working capital and financing.
“While other licences in Malaysia and across the region allow us to serve consumers through consumptive loans, Funding Societies Malaysia remains focused on MSMEs.
“This is fully aligned with our vision, contributing to Southeast Asia’s economic growth and increasing financial inclusion by supporting the underserved and underbanked, closing the financing gap for SMEs that often face challenges in securing funding from traditional financial institutions but are yet creditworthy,” he added.
Chai said Malaysian SMEs face persistent financing challenges due to stringent collateral requirements, lengthy approval processes and financial products that often do not meet their needs.
Funding Societies Malaysia addresses this gap by providing fast, flexible and collateral-free financing solutions, with syariah-compliant and conventional offerings.
The platform’s key products include term financing for business expansion and working capital, payables financing to manage supplier payments, receivables financing to unlock cash flow through invoice advances, and revolver financing, a flexible credit line for ongoing business needs.
“To strengthen our services, we have acquired CardUp, a payments company that enables SMEs to make and collect payments digitally via credit cards, bank transfers and other non-traditional methods. Beyond financing, SMEs require efficient payment and cash flow management solutions, and CardUp enhances our ability to serve MSMEs holistically by improving their liquidity and operational efficiency,” Chai said.
He disclosed that MSMEs that secured financing from Funding Societies experienced an average revenue growth of 13% and added new jobs to their businesses. Notably, more than 50% of MSMEs served by Funding Societies in Malaysia obtained their first business financing through the platform.
“As our disbursements have grown manyfold since 2020, we are currently refreshing this study to capture the continued impact of our financing solutions on SME growth.
“By addressing financing challenges with speed, accessibility and innovation, Funding Societies remains a key enabler of SME success, helping businesses scale, supporting job creation and contributing to Malaysia’s overall economic growth.”
Looking ahead, Chai said Funding Societies’ key growth priorities in Malaysia revolve around deepening SME financing solutions, expanding non-financing services such as payments, integrating advanced digital capabilities and driving impact and sustainability financing for future-proof MSMEs.
“Funding Societies Malaysia helps MSMEs grow while enabling them to adopt ESG-friendly practices through its Environmental and Social Management System.
“If MSMEs fail to comply with tightening sustainability regulations, they risk exclusion from key supply chains. To support this transition, Funding Societies Malaysia collaborates with government agencies, industry partners, and investors to develop financing solutions for sustainable business practices,” Chai said.
He added that Funding Societies Malaysia improves underwriting accuracy and expands financing access for underserved, creditworthy businesses by leveraging artificial intelligence-driven onboarding, credit risk assessment and collections.
Automated collections and repayment tracking help reduce defaults and enhance SME financial discipline.
Aligned with NIMP 2030, Chai said, Funding Societies focuses on financing high-growth and strategic sectors, including electric vehicles, renewable energy, high-value manufacturing, supply chain financing, digital economy and technology startups.
“By prioritising these key areas, Funding Societies aims to remain at the forefront of Malaysia’s rapidly evolving economic landscape and fintech ecosystem, ensuring we continue empowering MSMEs with accessible, technology-driven financing solutions while contributing to the country’s economic and industrial growth,” he said.
Regionally, he explained, as Funding Societies expands its presence across Southeast Asia, Malaysia remains a key strategic market due to its large SME base, progressive regulatory landscape, and strong government support for SME financing initiatives.
“Currently, our focus is on strengthening operations in our existing markets – Malaysia, Indonesia, Singapore, Thailand and Vietnam – while remaining open to exploring new opportunities in other Asean economies, particularly through strong local partnerships.”
Chai said Malaysia plays a vital role as a centre of excellence within the group, driving key innovations and capabilities that can be scaled regionally when relevant. It leads in areas such as instant approval and acceptance financing, which leverages alternative data and AI-powered underwriting to provide faster, digital-first solutions for MSMEs.
“Additionally, Malaysia is at the forefront of expanding syariah-compliant digital financing to cater to its large Islamic finance market and beyond. The country also plays a key role in strengthening supply chain financing for SMEs through strategic collaborations with key ecosystem players in target industries,” Chai said.
Source:
The Sun Daily
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