MyCIF Unveils Incentives for MSMEs in Upstream Agriculture and Bio-economy Businesses

MEDIA RELEASE

Kuala Lumpur, 8 April 2024

The Malaysia Co-Investment Fund (MyCIF)¹ today announced two new incentives for micro, small and medium enterprises (MSMEs) in the upstream agriculture and bio-economy businesses to help boost national food security.

The new incentives are:

Investments at 0% financing rate in eligible peer-to-peer financing (P2P) campaigns; and
Foregoing dividend income from investments in eligible equity crowdfunding (ECF) campaigns.

The incentives, announced at the MyCIF Open Day held today, will apply to agriculture and bio-economy businesses that fall within the upstream segment of the value chain.

MyCIF, set up as part of Budget 2019 and administered by the Securities Commission Malaysia (SC), co-invests in MSMEs and social enterprises.

Finance Minister II YB Senator Datuk Seri Amir Hamzah Azizan emphasised the government’s unwavering commitment to support the growth of underserved and strategic sectors.

“Financing upstream businesses is crucial for driving innovation, maintaining supply chain stability, promoting economic development, and advancing sustainability in the agricultural and bioeconomy sectors,” he said at the MyCIF Open Day.

“By supporting these businesses, MyCIF can play a vital role in ensuring the stability and sustainability of the nation’s food security,” he said.

The SC Chairman Dato’ Seri Dr. Awang Adek Hussin said Malaysia was the first country in this region to adopt a co-investment model for alternative finance platforms.

“MyCIF has been a crucial catalyst of growth for the ECF and P2P segment. The industry has grown exponentially since 2018 and has cumulatively funded over 15,000 MSMEs,” he said.

“It supported business growth and enabled digitalisation by implementing a temporary relief co-investment ratio of 1:2 during the pandemic, resulting in its investment share of the total funds raised rising to 23% in 2020,” he added.

MyCIF, which is celebrating its five-year anniversary this year, has played a pivotal role in bolstering the alternative financing sector while fostering the growth of small businesses.

The success of its co-investment model lies in its crowding-in² effect achieved through the 1:4 co-investment ratio under the general scheme.

To encourage growth in strategic sectors of the economy, MyCIF implemented a special 1:2 co-investment ratio for agriculture and ESG businesses, as well as extending a special 1:1 co-investment ratio for social enterprises.

Some key highlights of MyCIF are:

As of December 2023, MyCIF has co-invested RM930 million in ECF and P2P campaigns, benefiting 6,328 MSMEs.
MyCIF has invested 3.7 times the total grant amount of RM250 million by reinvesting returns from repayments and dividends into additional ECF and P2P campaigns by MSMEs.
The crowding-in effect of MyCIF led to a 3.5-fold increase in private investment from 2020 to 2023.
MyCIF has fuelled the growth of 274 start-ups, accelerating their journey towards expansion, including securing follow-on funding from venture capitalists and expanding regionally.

Looking ahead, MyCIF remains committed to broadening its strategic allocations to support the national agenda by investing for impact in focused sectors such as environment, community, food security, education and healthcare.

Additionally, MyCIF will collaborate with various State Islamic Religious Councils (SIRCs) to help fund Waqf asset development in focused sectors.

Currently, only 12% of waqf land in Malaysia is developed. This initiative will help increase the use of Islamic Social Finance to address socio-economic welfare.

The MyCIF Open Day, titled “Genesis, Contribution and Future of MyCIF”, attracted over 200 representatives from government agencies, venture capital, private equity, ECF and P2P sectors, including the MSME community.

It featured digital boards on a gallery walk with curated speakers guiding attendees through MyCIF’s 5-year journey. The event also served as a platform for networking and interactive exchange among industry participants who were present.

SECURITIES COMMISSION MALAYSIA

¹MyCIF is Southeast Asia's first public-private co-investment model using alternative financing platforms. The scheme was established under Budget 2019 by the Ministry of Finance and administered by the SC.

² MyCIF as a last-mile funder encourages the participation of private investments.