KUALA LUMPUR: The Securities Commission Malaysia (SC) aims to grow fundraising in the micro, small and medium-sized enterprises (MSME) and mid-tier companies (MTC) capital market by seven times to RM40 billion in 2028 through its five-year roadmap launched today.
The commission said the increase represents a 46 per cent compound annual growth rate (CAGR) over five years from RM6.3 billion in 2023.
The roadmap, called "Catalysing MSME and MTC Access to the Capital Market: Five-Year Roadmap (2024-2028)”, was launched to provide a five-year action plan with cross-cutting strategies in transforming the capital market to enhance access for MSME (including startups) and MTC.
SC chairman Datuk Seri Dr Awang Adek Hussin said it sets out the broad direction as well as the detailed actions to be taken over the short, medium and longer terms, to increase access for small and medium-sized issuers, as well as attract investors to these companies, as an asset class.
"We have adopted five guiding principles to address existing issues in the present ecosystem as well as capitalise on emerging opportunities.
"This translates into nine strategies and 36 initiatives, which include enhancing their fundraising pathways and providing tailored and innovative products aimed at MSME and MTC,” he said.
Awang Adek said the roadmap aligns perfectly with one of the underlying objectives of the SC’s Capital Market Masterplan 3 (CMP3), which is to deepen market-based financing avenues for firms within the category.
In addition, it also would complement and support existing national development policies, including the Madani economy framework, the 12th Malaysia Plan, the New Industrial Master Plan 2030, and the National Energy Transition Roadmap.
It is supported by four ministries, namely the Ministry of Finance, Ministry of Investment, Trade and Industry, Ministry of Economy, and Ministry of Entrepreneur and Cooperatives Development.
He said this roadmap, the result of much engagement with key stakeholders, is a clear action plan that is both practical and comprehensive.
Among the guiding principles are reducing cost of issuance and promoting facilitative fundraising requirements for MSME and MTC, promoting awareness and capacity building, and widening investor base and access to MSME and MTC.
Additionally, the roadmap aims to innovate and adapt instruments for inclusive access, as well as leverage technology for information provision and greater interconnectivity.
The roadmap's strategies include enhancing MSME and MTC pathways to fundraising, revitalising the LEAP Market as an SME feeder market, innovating and customising products for MSME and MTC, facilitating private market deals, and forging public-private partnership for MSME and MTC investments.
It also seeks to improve digitalisation and connectivity of MSME and MTC information and data, boost their readiness, enhance capital market referrals, and strengthen awareness and talent among investors and intermediaries.
In supporting the strategy, 36 initiatives have been identified with three approaches to strengthen the MSME and MTC capital market ecosystem.
The three approaches are product innovation, market infrastructure and capacity building.
"The implementation of these strategies and initiatives is guided by a whole-of-nation approach, emphasising the importance of collaboration and co-ordination.
"Key initiatives have been developed in collaboration with partners from government ministries, agencies, and the private sector. The combined effort of all stakeholders will promote greater synergy and co-ordination in achieving the outcomes of the roadmap,” the SC said.
According to the regulator, MSME contributed more than a third (38.4 per cent or RM580.4 billion) to Malaysia's gross domestic product (GDP) and employed almost half (48.2 per cent) of the workforce in 2022.
MSME GDP growth (11.6 per cent) also surpassed the overall domestic GDP growth, highlighting their importance in driving the nation's economy.
Malaysia's business landscape also consists of about 8,500 MTC, which contribute around 36 per cent to Malaysia's GDP and employ over 16 per cent of the workforce.
The SC said the capital market has been a growing source of financing for MSME and MTC, with RM25.3 billion in funds raised from 2017 to 2023 through the MSME and MTC capital market.
The capital market comprises venture capital (VC), private equity (PE), equity crowdfunding (ECF), peer-to-peer financing (P2P financing), the LEAP Market and the ACE Market, it said.
Between 2017 to 2023, the LEAP Market and ACE Market constitute the largest source of financing in the MSME and MTC capital market where RM12.8 billion was raised, accounting for more than half of the total capital raised.
VC and PE accounted for RM5.9 billion of the total funds raised via the MSME and MTC capital market, while ECF campaigns raised RM676.9 million and P2P financing campaigns raised RM5.97 billion.
Awang Adek said there were 178 companies listed on the ACE market, with a total market capitalisation of RM39.6 billion at the end of last month, and 48 companies listed on the LEAP market with a total market capitalisation of RM6.3 billion.
"These companies listed on the ACE and LEAP Markets have all started out as MSME. Many have succeeded to grow big and get listed.
"We are confident many more will follow in their footsteps if we have a more structured approach to assist them as envisaged in the roadmap,” said Awang Adek. - Bernama
