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SC seeks to transform agri sector via fintech, alternative financing

Publish date: Wed, 31 May 2023, 06:44 PM

KUALA LUMPUR: The Securities Commission (SC) is encouraging wider adoption of financial technology (fintech) in agriculture in order to help in achieving the country's food security agenda.

The SC chairman Datuk Seri Dr. Awang Adek Hussin said access to finance was critical to agriculture's future.

This is especially important for smallholders and agritech-preneurs seeking to modernise agriculture and strengthen research and development, he said in his opening address at the SCxSC Grow Fintech Conference here today.

This marks the 10th iteration of the SCxSC conference that is held in-person after the Covid-19 pandemic.

SCxSC GROW, is a new collaborative programme, under the SC's fintech flagship initiative "Synergistic Collaboration by the SC" (SCxSC). 

The SCxSC GROW embodies a collaborative effort with partners in the fintech ecosystem to harness the potential of alternative financing digital platforms to meet the needs of micro, small, and medium enterprises (MSME) in strategic sectors.

Recognising the challenges faced MSMEs in the agriculture sector, Awang Adek said leveraging fintech solutions would help improve access to financing and increase efficiency in the sector.

To achieve the goal, the SC has been working closely with ecosystem players to develop innovative solutions that cater to the unique financing needs of farmers and agribusinesses. 

This is in tandem with the national agenda to support the agriculture sector's transition into a dynamic and progressive sector.

Awang Adek said the capital market can be an enabler and accelerator to help Malaysia achieve its food security agenda.

"Alternative financing avenues such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing allow investors with the right risk appetite to mobilise capital directly for agri-preneurs.

"This provides more options for younger and high-growth companies to access capital relevant to their business risk profiles," he added.

Over 7,000 MSMEs have benefited from SC-registered ECF and P2P financing since their introduction in 2015, raising more than RM4.4 billion, with only 600 agri-related MSMEs across the entire value chain raising close to RM300 million. 

This presents a significant opportunity for agricultural growth and investment.

Awang Adek said Malaysia was the first country in this region to adopt a co-investment model, MyCIF specifically for alternative finance platforms.

MyCIF was instrumental in providing MSMEs with financing during the Covid-19 pandemic.

"MyCIF implemented a special allocation ratio of 1:2 for the agriculture sector in 2022, which is more appealing than the normal ratio of 1:4. 

"We've seen increased interest as four times as many agri-businesses have raised funds through ECF and P2P platforms," he added.

The SCxSC GROW Fintech Conference, themed "Fostering Innovative Finance in Agriculture", aims to be a game-changer for the agriculture industry. 

With the world facing increasingly complex challenges, the conference brings together agriculture and fintech players to explore innovative solutions to food security, sustainability and supply chain resilience.

New cutting-edge solutions were showcased at the conference, highlighting the latest advancements in these fields. 

The conference also featured local fintech players in the agriculture sector.

These fintech solutions have the potential to revolutionise the way farmers access financing and manage their operations, enabling them to make better use of resources and increase yields.

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