In tandem with the objective of the Ekonomi MADANI Framework (Ekonomi MADANI) to promote greater economic growth, inclusion and sustainability, ECF and P2P financing continue to play a vital role in supporting the financing needs of businesses in Malaysia by providing enhanced access to alternative financing. This access is essential for fostering resilience and growth of businesses, given their importance to the national economy.
As of December 2024, both ECF and P2P financing have facilitated over RM9 billion in funding, benefiting over 20,000 businesses across various business activities. In 2024, total funds raised grew by 18% reaching RM2.6 billion (2023: RM2.2 billion).
The contribution of Shariah-compliant ECF and P2P financing to the total funds raised continued to increase, reflecting a rising demand for Islamic financing options. In 2024, Shariah-compliant financing accounted for 30% of the total funds raised amounting to RM787.6 million, compared to 24% (RM524.8 million) in 2023. This growth was predominantly driven by the P2P financing market.
Businesses located outside the Klang Valley have consistently leveraged ECF and P2P financing to meet their funding requirements. In 2024, 33% of businesses that have fundraised through ECF and P2P financing platforms are located outside Klang Valley (2023: 36%), collectively securing RM856.6 million in funding. This highlights the role of alternative financing in promoting financial inclusivity and supporting economic growth beyond the Klang Valley.
The agriculture sector in particular has witnessed substantial growth in the total amount raised through ECF and P2P financing. This growth aligns with efforts to support the national food security agenda by channelling critical funding to agricultural businesses. In 2024, the sector raised RM24.2 million, doubling from RM12.6 million in 2023, indicating a rising interest in agricultural investment as a national priority.
In 2024, a 5% decline was recorded in overall investor participation volume compared to 2023. Despite this trend, institutional investment has shown resilience, increasing by 23% to reach RM1.6 billion. This indicates that institutional investors are increasingly recognising the potential of alternative financing in offering diversification of investment portfolios. Fostering greater institutional investor participation can make a difference to the ECF and P2P financing market. Despite comprising only 2% of ECP and P2P investors, institutional investors accounted for 60% of the total investment value in the ECF and P2P markets in 2024.
As part of the ongoing evolution of the alternative financing landscape, efforts in 2024 were focused on expanding into new market segments and enhancing investor participation, in alignment with the SC’s MSME and MTC 5-Year Roadmap.
Mitigating Systemic Risks And Promoting Financial Stability
Enhanced Risk Governance Framework
In 2021, the SC-wide risk governance framework was enhanced as part of an overall initiative to have an effective integrated and predictive risk surveillance to maintain regulatory agility.
The structured risk governance framework integrated the wider spectrum of risks such as technology, cyber and conduct risk at the SC’s Systemic Risk Oversight Committee (SROC) and Accounting, Market and Corporate Surveillance Committee (ACMS).
Intensified surveillance
The SC continued to intensify its surveillance of systemic risk to maintain market resilience and stability. Regular SROC engagements were held to deliberate concerns emanating from various segments across the capital market. Domestic equity and bond market, foreign fund flows and trade participation continued to be monitored closely for potential stress points.
In addition, measures and economic stimulus packages introduced by the government to weather the impact of COVID-19, market trading conduct and the financial position of listed companies were among the focus areas for discussion.
Thematic assessments
The SC also conducted thematic assessments covering investors’ fund flows, the position of firms, and policy decisions to ascertain the possible impact on the capital market. In 2021, the SC reviewed and enhanced its crisis indicators on potential emerging risks in the
capital market.
The enhanced crisis indicators provided a reference point for escalation to SROC when the identified indicators and triggers materialised and ensured prompt response to manage and prevent any issues of concern that might lead to a systemic crisis.
Joint regulatory discussions
In 2021, the SC conducted frequent joint regulatory discussions with other authorities such as Bank Negara Malaysia (BNM) and Labuan Financial Services Authority (Labuan FSA) to identify systemic risk concern areas within the financial and capital markets in Malaysia.
Monitoring of various components of the capital market
The SC continued its efforts to undertake a methodological and integrated approach to ensure any potential systemic risk was being monitored, mitigated, or managed. Figure 1 highlights the findings from the following risk assessments on the various components of the capital market.
