Budget 2021 expected to drive investment in alternative funding platforms

Lockman says the operators welcomed the 50% tax exemption, as they have been asking for the incentive for the last three years. — SIA HONG KIAU/The Star

PETALING JAYA: The Budget 2021 matching investment fund for peer-to-peer (P2P) lending and equity crowdfunding (ECF) platforms will encourage the public to invest and help boost small and medium enterprises (SMEs), said industry players.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said an RM50mil matching investment fund will be made available to P2Ps and RM30mil to ECFs.

The budget also aimed to encourage investment in ECF by giving investors a 50% tax break for their investments, capped at RM50,000.

Registered Digital Market Association (RDMA) president and Ata Plus cofounder Elain Lockman said the operators welcomed the 50% tax exemption, as they have been asking for the incentive for the last three years.

She said this would encourage more individual investors to adopt the asset class, while the RM30mil co-investment fund signaled the government’s confidence in the potential of Malaysian SMEs and startups.

“These investments will be beneficial for the country as SMEs are the backbone of our economy. When SMEs raise funds, jobs are generated and ultimately these companies will contribute back to the national coffers, ” she said.

RDMA comprises members from ECF and P2P operators registered with the Securities Commission.

Funding Societies co-founder and CEO Wong Kah Meng said alternative funding options are important for SMEs, many of which needed support to tide over the MCO period.

During his budget speech, the minister said P2P funding had shown to be an innovative alternative funding source, generating more than RM900mil in funds for SMEs.

Asked about the budget’s focus on P2P platforms based on invoice financing, Wong said it is a key product, as the short tenure and low risk are attractive to investors.

Pitch Platforms Sdn Bhd co-founder and chief strategy officer Kashminder Singh expected the move to encourage more investors to adopt ECF platforms, even if they don’t invest large sums.

He noted that the RM50,000 cap reflected the guidelines set by the SC for retail investors.

Both platforms enable individuals to invest small sums to fund a company.

In return, an ECF investor will get a small stake in the company while a P2P lender will be paid back in instalments with interest.

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