Wednesday, October 20

Malaysia’s P2P financing to reach RM1 billion in 2020


Wong expects greater interest in P2P financing in 2020 from institutional investors as the awareness and maturity of the P2P financing industry grows.

KUALA LUMPUR: Malaysia’s peer-to-peer (P2P) financing industry is expected to continue to thrive in 2020, Funding Societies Malaysia says.

In a statement, it highlighted that 2019 was a strong year for Malaysia’s P2P financing industry as total financing increased to RM521 million cumulatively and is expected to continue to thrive in 2020 with RM 1 billion in total financing, according to Funding Societies Malaysia.

Funding Societies Malaysia co-founder and chief executive officer Wong Kah Meng said, “2019 was a strong year for us as we grew steadily and safely to support SMEs and investors. We also successfully launched a number of notable partnerships with Lazada, Fave, MyTukar, MUV, CarList, Carsome and Slurp.

“These collaborations have enabled us to reach out to more creditworthy but unbankable micro, small and medium enterprises (MSMEs), by leveraging on our partners’ MSME network and alternative data, with consent, and offering them tailored financing solutions.

“As one of the key pillars of the fintech industry, P2P financing is a key ingredient for enabling inclusive growth for digitally-inclined MSMEs.”

In 2019, Funding Societies disbursed RM 400 million in financing to SMEs, an almost 250 per cent increase from the year prior of RM 114 million. This strong growth has benefited over 1,000 MSMEs in Malaysia.

On the investor front, Funding Societies Malaysia has onboarded more than 40,000 investors to-date. Whilst 2019 has seen an increase in the number of defaults, Funding Societies has maintained a two per cent default rate.

“Whilst the risk of default is natural for all businesses, we have successfully maintained a 2 per cent default rate through our robust risk management, due diligence and collections processes. We have also been proactively and regularly updating our investors to ensure them a peace of mind whilst investing. To that end, we have successfully recovered or restructured more than RM10 million, benefitting investors, after thorough negotiations and disciplined follow-ups with SMEs,” Wong commented.

Securities Commission recently standardised the default rate definition for P2P financing to ensure better consistency and transparency across platforms to enable investors to make better-informed decisions.

As the Malaysian government seeks to boost MSMEs’ GDP contribution from 38 per cent to 50 per cent by 2030, MSMEs are being supported through various incentives announced during Budget 2020, with more than RM1 billion in budget allocation to drive SME growth and activities.

“In addition to the RM100 million in government financing through the My Co-Investment Fund (MyCIF) Scheme to support start-ups and SMEs, we expect greater interest in P2P financing in 2020 from institutional investors as the awareness and maturity of the P2P financing industry grows,” remarked Wong.

“Based on our recent growth and outlook for 2020, we expect to disburse RM500 million in financing this year, supported by robust demand from MSMEs and investors.

“With greater awareness and on-going education and engagement efforts, we anticipate P2P financing to play a more proactive role in helping to address the SME financing gap in Malaysia,” he concluded.