Welcoming Remarks by
Datuk Ranjit Ajit Singh
Chairman of Securities Commission Malaysia
in Kuala Lumpur on 11 June 2015

Distinguished guests,
Members of the media,
Ladies and gentlemen, a very good morning to everyone.

1 Welcome to the second Synergy and Crowdfunding Forum by Securities Commission Malaysia – also known as SCxSC (“SC by SC”) and thank you for taking the time to be here this morning.
2 A special welcome and thank you to our distinguished panel of speakers – several of whom had flown in from abroad to be here – as well as our partners:

  • The Multimedia Development Corporation (MDEC)
  • The Malaysian Business Angels Network (MBAN)
  • #edGY and
  • Maybank

… for their contributions towards this forum.

3 I would also like to acknowledge my team, led by Goh Ching Yin, who have worked tirelessly behind the scenes in organising this event. My deepest appreciation goes out to all of you.
4 I am delighted to have the opportunity to be here this morning to address such a large and diverse audience, ranging from entrepreneurs to investors, corporate executives, financial services professionals and representatives from academia, among others.
5 This is an extremely encouraging figure, considering that we were in relatively uncharted waters when the first SCxSC forum was held in 2014. As it turns out, we were pleasantly surprised by the public’s very enthusiastic response for the inaugural forum, which attracted more than 500 participants, and it was on the strength of that response that we decided to organise the forum for the second time this year.
6 Over the next two days, we will be able to hear from a number of experts and pioneering individuals on a range of topics including crowdfunding as well as cybersecurity and financial innovation.
7 Budding entrepreneurs in the field of ICT will have the opportunity to participate in MDeC’s annual MSC Malaysia Innotech pitching session this afternoon, which brings together venture capital funds from across the region as well as high-potential tech start-ups. At the same time, MBAN will be holding a concurrent workshop to provide insights into angel investing and equip participants with practical strategies for investing in start-ups.
Ladies and gentlemen,
Broadening access to opportunities in the capital market
8 Many of you who have regularly dealt with the SC would have noticed that the audience today largely hails from a much younger demographic than we are accustomed to addressing. This is not a coincidence.
9 As an organisation tasked to regulate and develop the capital market, the SC puts a great deal of effort into promoting more informed and inclusive participation in the capital market.
10 In recent years, we have systematically expanded our outreach across various age groups, particularly the millennials – a generation which is larger than the Baby Boomers and Gen X – whose collective financial might will become an increasingly dominant influence in the near future.
11 The youthful turnout at this forum is therefore a very welcome development as it bodes well for our efforts to attract more millennials into the Malaysian capital market, which is one of the most well-developed in the region.
12 Today, the Malaysian capital market stands at RM2.8 trillion, which is approximately 2.5 times the size of the economy. It is the world’s largest hub in Islamic finance and global leader in sukuk origination, as well as a pioneer in innovative shariah-based financing structures such as Khazanah’s Sukuk Ihsan programme which was structured in accordance with the SC’s Sustainable and Responsible Investment (SRI) sukuk framework.
13 As home to the highest number of listed companies and largest unit trust industry in Southeast Asia, amounting to RM363 billion in net asset value, the Malaysian capital market offers diverse investment opportunities ranging from plain equities to retail bonds, real estate investment trusts (REITs) and Private Retirement Schemes (PRS), to name a few.
14 This wide range of investment channels provide multiple conduits for Malaysia’s large pools of capital to be mobilised into financing long-term investments in the economy. SC’s efforts to develop a corporate bond market over the last two decades, for example, have enabled the Malaysian bond market to surpass the one trillion-ringgit mark and it is now the third largest in Asia as a percentage of GDP.
However, ladies and gentlemen:
Harnessing the transformative forces of technology
15 For markets to support sustainable growth in an economy, they must also provide inclusive access not only for investors, but also the full spectrum of businesses ranging from large corporations to SMEs as well as start-ups. In other words, we must democratise market access for suppliers of capital as well as those who require it.
16 For this reason, the SC has also focused on introducing new pathways for capital-raising, particularly in underserved segments such as the unlisted space, to ensure that access to financing will no longer be a major constraint to entrepreneurs.
17 However, challenges remain. The costs associated with a traditional securities issuance, for example, remain prohibitive for small businesses. At the same time, financiers seeking to assess creditworthiness must grapple with information gaps and lack of comparable data, particularly for companies without a track record. It was clear that a game-changer was imperative.
18 Such a game-changing approach presented itself in the form of financial technology (FinTech), with nimble and innovative start-ups setting off a digital revolution in a market traditionally dominated by incumbents. From peer-to-peer lending to robo-advisors and mobile payments, the forces of technology and analytics have proven transformative in enabling businesses and investors to receive faster and cheaper financial services, while also dramatically expanding distribution channels and fulfilling existing pockets of unmet demand.
19 As capital markets seek to meet the needs of an increasingly mobile and “connected” generation across the region, with 60% of the ASEAN population under the age of 35, it is clear that the forces of the digital revolution in finance can and must be harnessed to transform markets for the better.
20 This is an important theme for the SC moving forward, and indeed will be the focus of our flagship World Capital Markets Symposium in September, which shall feature leading exponents in the field of FinTech, financial regulation and consumer innovation.
Adopting a facilitative regulatory approach for crowdfunding
21 From a regulatory standpoint, we believe that it is important for the SC to facilitate technological innovations in the capital market insofar as they are beneficial to the end-users, but at the same time introduce appropriate safeguards to ensure that risks are appropriately managed and investor protection remains sacrosanct.
22 This was the approach that we have taken for equity crowdfunding, a method of fundraising which enables businesses to obtain early-stage financing through small equity investments to a relatively large number of investors via online portals.
23 In addition to reducing search costs and information asymmetry, the ability for investors to make small-denomination investments through equity crowdfunding platforms also provides businesses with access to alternative sources of outside capital and enables retail investors to participate in deals that are ordinarily only available to institutions such as venture capital funds.
24 While relatively nascent compared to other segments of crowdfunding, such as peer-to-peer lending, equity crowdfunding is beginning to gain traction globally, with retail investors in Britain channelling £84m into crowdfunded ventures in 2014, which is significantly higher than £3.5m two years before.
25 Earlier this week, the world’s No. 3 player in tennis, Andy Murray, also announced that he will be joining the London-based crowdfunding firm Seedrs as an advisor and strategic investor, lending some star power to this growing industry with the company potentially benefiting from access to and greater awareness among Murray’s global fan base.
26 Closer to home, Malaysia has been an early mover in introducing a regulatory framework for equity crowdfunding. In February, the SC has released a set of Guidelines that establish a regulatory safe harbour for this class of fundraising activities, and specific requirements that must be fulfilled by the licensed operators as well as eligible issuers and different categories of investors.
27 Having pursued legislative reforms to bring this regulatory framework into effect, the SC is very much encouraged by the support which has been shown for this initiative by both sides of Parliament, with equity crowdfunding projected to complement existing avenues for early-stage financing such as venture capital and private equity (which come under the ambit of the Malaysian Venture Capital Development Council, MVCDC, chaired by the SC).
28 We are also very encouraged by the level of interest shown following our call for interested parties to submit an application to operate an equity crowdfunding platform in Malaysia back in April. Within a one-month period, the SC had received 27 applications – all of which were thoroughly assessed in line with our regulatory guidelines and expectations.
29 Following the extensive assessment process, I am very pleased to announce that six of the applicants have been approved as operators of the equity crowdfunding platform in Malaysia and they are expected to be operational by the end of this year.
30 They are (in alphabetical order):

  • Alix Global, based in Penang and in partnership with FundedByMe, a Swedish crowdfunding platform with a Scandinavian nexus of investors, which will provide substantial opportunities for Malaysian companies to attract funds from Europe, as well as opportunities to access these markets.
  • Ata Plus, an equity crowdfunding platform offering shariah-compliant issuers which will operate with a local focus on SMEs and startups with a social impact dimension.
  • Crowdonomic, with strength in financial metrics and the backing of US and Japanese investors as well as a presence in Singapore, which will offer numerous opportunities for Malaysian businesses to tap into capital from these respective markets.
  • Eureeca, a UK Financial Conduct Authority regulated entity and reputable equity crowdfunding operator from Dubai which will offer access to capital from the Gulf region and provide Malaysian companies with guidance on raising funds based on their excellent track record in the Middle East.
  • pitchIN, a rewards-based crowdfunding platform with excellent tie-ups and partnerships with government agencies as well as angel investor networks that will connect local young entrepreneurs to mentors and early-stage investors…. and
  • Propellar Crowd+ which exhibits a clear venture capital linkage and advantage in terms of sourcing quality deal flow through Netrove, and would draw in global investors from their partners’ presence in both North Asian and Oceania markets such as Hong Kong, China, Taiwan as well as New Zealand.
Ladies and gentlemen,
31 The establishment of the equity crowdfunding segment marks an important first step in our efforts to catalyse a digital revolution in the Malaysian capital market. We need not look no further than around this very room to appreciate the growing appetite for innovative and technology-driven financial solutions, which is the way of the future.
32 The SC, on our part, will continue to leverage on the synergies between markets and technology to promote more inclusive access to opportunities in the capital market, particularly for underserved segments, for it is only when businesses are able to obtain the financing necessary for them to flourish that we can fully unleash Malaysia’s dynamism and entrepreneurial spirit.
Thank you.