KUALA LUMPUR: More syariah-compliant fundraising activities are expected to take place through equity crowdfunding (ECF) and peer-to-peer (P2P) financing following the introduction of syariah screening assessment toolkit for unlisted micro, small and medium enterprises (MSMEs).
The Securities Commission (SC) has launched a toolkit to provide guidance on screening the syariah status of unlisted MSMEs for ECF and P2P financing platform operators and syariah advisers.
According to pitchIN chief executive officer Sam Shafie, (pic) there is a huge demand for companies to be syariah-compliant as investors are “sensitive” about how they spend their money and are seeking for syariah-compliant companies.
“I am very bullish about this toolkit as there is a huge potential to get investors who are more sensitive in terms of how they represent themselves and also companies that are seeking to be syariah-compliant,” he said during the inaugural SC-HDC Forum 2021, themed Enabling growth through the Islamic capital market.
He said pitchIN, the equity crowdfunding platform, planned to raise about RM10mil for syariah-compliant companies within the first one year after the introduction of the toolkit by the SC.
“We expect RM10mil to be raised through ECF by five to 10 syariah-compliant companies, which is not big compared with how much we raise yearly. But the first three to six months would be to educate companies on how to become syariah-compliant using the toolkit.
“This is an untap market, companies are keen to be syariah-compliant, and they may appeal to certain investors that are keen to invest in syariah-compliant companies,” he pointed out.
In the first eight months this year, pitchIN has raised about RM73mil on its platform, compared with RM59mil last year.
The platform can potentially raise up to RM85mil via ECF this year, according to Sam.
“The Covid-19 period has been the best. Surprisingly, investors have extra cash. In the last 18 months, we have raised RM135mil for 71 companies,” he said.
Despite the uncertainties brought on by the Covid-19 pandemic last year, SC chairman Datuk Syed Zaid Albar said the total amount raised by investors was more than 5.5 times for ECF and 1.2 times for P2P platforms compared with the previous year.
He expected greater interest and participation from MSMEs in the Islamic capital market, given the robust framework for syariah-compliant fundraising activities.
According to the SC, ECF and P2P financing raised about RM1.34bil last year.
“More than RM1.6mil has also been successfully raised using Islamic investment notes on P2P platforms.
“We expect this rising trend to continue with increased interest in syariah-compliant offerings from potential issuers, as well as investors.
“Therefore, the SC is fully committed towards facilitating a conducive funding ecosystem for the development of the halal economy,” said Syed Zaid.
Given that Malaysia’s halal economy is projected to grow to US$113.2bil (RM477bil) in 2030, Syed Zaid added that better funding access would assist halal industry players to capitalise on opportunities for expansion.