Chairman of Securities Commission Malaysia
at the Synergistic Collaborations by SC (SCxSC) Fintech Conference 2019
in Kuala Lumpur on 22 October 2019
Members of the Board of the Securities Commission Malaysia (SC), Distinguished Guests, Ladies and gentlemen. |
|
| 1. | A very good morning to all. I am very pleased to see all of you here at the Securities Commission Malaysia’s “SCxSC FinTech Conference 2019”. |
| 2. | I would like to thank you for taking the time to be here today. For those who flew in from abroad, welcome to Kuala Lumpur. If you are here for the first time, I hope that you have some time to enjoy the sights and the wonderful cuisines that our city has to offer. |
| 3. | I would also like to thank our distinguished panel of speakers, who have kindly agreed to speak at this event. We have an excellent line-up of presenters over these next two days and I am sure you will find these discussions informative. |
| 4. | Our sincerest appreciation also goes to our partners: Rakuten Trade, MDEC, Permodalan Nasional Berhad (PNB), our exhibitors, as well as the media. Your continued support has been immensely valuable in buttressing the SC's industry digitisation programmes. |
Ladies and gentlemen, OVERVIEW OF CONFERENCE TOPICS |
|
| 5. | As many of you may know, “SCxSC” is an annual platform for discussions on FinTech developments which are relevant to the capital market and it also showcases a few of SC’s focus areas in this space. These may include innovative business models and emerging technology with potential scope for application within the Malaysian capital market. |
| 6. | A bit of history - the first “SCxSC” was held in 2014. Our initial objective was simply to build awareness on equity crowdfunding (ECF) and peer-to-peer financing (P2P) as alternative means of fundraising for start-ups and SMEs. At that point in time, the Malaysian FinTech industry was very much in its early stages with very few participants and relatively low awareness among investors. |
| 7. | Move the clock by 5 years to 2019, significant progress has been made. Early entrants have since expanded; with a corresponding increase in their client base and general public awareness. That is why one of the focus areas of this conference is Scaling Up, which addresses how FinTech platforms can break through to the next stage of their growth. |
| 8. | At the same time, Malaysia has also been long recognised as a global leader in Islamic finance – not only in terms of equities and sukuk, but also fund management. |
| 9. | Recognising the opportunities in the intersection between Islamic finance and FinTech, this year we are introducing the topic of Islamic Fintech in this conference. We believe this remains a largely untapped segment in our current ecosystem, and I look forward to discussions on how Malaysia's potential may be unlocked in this area. Already, we have seen early success in Wahed and Ethis Ventures. |
| 10. | Another topic for discussion – which, I may add, is particularly timely – is the issue of the Digital Divide. This is of particular relevance to emerging markets, including Malaysia. As we continue to embrace FinTech, it is important for innovations to be responsible and inclusive, to avoid excluding communities without access to infrastructure such as internet access and smart devices. Providing equitable access to the capital market is an area to which SC pays particular attention and I hope that our expert from the World Bank will be able to shed some light on this issue. |
Ladies & gentlemen, |
|
| 11. | Promoting capital market digitisation is an important priority for the SC. We believe that harnessing the full potential of technology is critical, as a well-functioning capital market is a key enabler for economic growth and transformation. |
| 12. | As Malaysia re-engineers the real economy to build competitiveness in the age of IR 4.0, so too must the capital market be modernised in tandem. |
| 13. | The SC's priorities in this area are articulated in our Digital Agenda for the Capital Market. The agenda introduced in 2016 has 4 objectives, namely:
We have made significant progress on various fronts in 2019, and I would like to take the next few minutes to share with you these updates. |
ENHANCING ACCESS TO FINANCING |
|
| 14. | In terms of enhancing access to financing, the Malaysian ECF and P2P markets have grown by leaps and bounds. Collectively, these platforms have raised more than RM580 million benefitting close to 1,600 micro, small and medium sized enterprises (MSMEs). |
| 15. | It should be noted that these platforms deploy financing to a diverse range of sectors, including high-tech, education, retail, F&B and consumer products. Moreover, they have also attracted many new investors into the capital market – particularly those below the age of 35, which incidentally accounts for more than 50% of the retail investors. |
| 16. | Building on this momentum, this year the SC has registered three new ECF and five new P2P financing platforms. The entry of these new operators will enable a wider range of products to be offered to meet issuers' more varied and specific needs. |
| 17. | I am also pleased to note that the ECF market has seen its first two exits. Skolafund is a social enterprise crowdfunding scholarships for university students. It initially fundraised on the Ata Plus platform in 2017, and was recently acquired by one of Asia's biggest donation crowdfunding platforms. |
| 18. | Another issuer, MyCash Online which caters to the needs of unbanked migrants, was also recently acquired after initial fundraising on PitchIn. Both of these deals not only provided ECF investors with a healthy return on their capital, but also facilitated the growth of businesses with social objectives. Both exits suggest that ECF could be a viable asset class for investors, and a medium to finance not only commercial but also social enterprises. |
Ladies and gentlemen, |
|
| 19. | As part of Belanjawan 2019, the government announced the Malaysia Co-Investment Fund or MyCIF with an allocation of RM50 million to co-invest on a one-to-four basis via our ECF and P2P financing platforms, which has been successfully operationalised this year. For Belanjawan 2020, I am pleased to note that an additional RM50 million has been allocated to this fund. |
| 20. | Recognising the importance of building financially sustainable social enterprises, an additional RM10 million was also allocated to MyCIF. This is specifically to co-invest on a one-to-one basis in social enterprises via P2P financing platforms. |
| 21. | We expect this injection of funds to further spur the growth of Malaysian MSMEs through our ECF and P2P platforms. |
| 22. | Finally, the SC has also introduced guidelines for property crowdfunding (PCF), which provides an alternative financing avenue for first-time homebuyers. Last month, we have registered the first PCF platform in Malaysia, which should commence its operations soon. |
INCREASING INVESTOR PARTICIPATION |
|
| 23. | At the same time, the SC also aims to boost investor participation by – among others – introducing new and easily accessible investment channels. In 2017, we introduced the regulatory framework for Digital Investment Management (DIM), which is more widely known as robo-advisors. |
| 24. | Today, Malaysia has three licensed and fully operational robo-advisors, namely StashAway, MyTHEO and Wahed. Another two parties have received approval-in-principle, and should be fully operational early next year. We continue to see strong interest in this space and will pursue to facilitate its growth. |
| 25. | We also have with us this year Mr Eli Broverman and Mr Jeff Cruttenden, the co-founders of two renowned robo-advisors to share the success of their experience in this area. |
| 26. | To further diversify Malaysia's digital capital market space, in January this year the SC had introduced the regulatory framework for Digital Asset Exchange (DAX). Three DAX operators have subsequently been registered in June this year. |
Ladies and gentlemen, |
|
| 27. | Underpinning these efforts is our commitment to develop synergistic ecosystems. In doing this, the SC and our regulated platform operators have actively conducted engagement and education programmes to raise awareness about the FinTech ecosystem in Malaysia. |
| 28. | At the same time, the SC also collaborates closely with regional and global peer regulators to share our knowledge and experience, while also learning from developments in other markets. |
| 29. | Such collaborations also allow us to participate and play an active role in jurisdictional benchmarking exercises. One such exercise is the Global Alternative Finance Regulation Survey. This was jointly conducted by the World Bank and the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School between April and June 2019. More than 110 jurisdictions responded to this survey, focusing on P2P financing, ECF and initial coin offerings (ICOs). |
| 30. | The final report will be launched by the World Bank this afternoon. During this session, the relevant experts and survey authors will be sharing some of the key findings arising from the study. I am pleased to note that Malaysia has been identified as one of the most benchmarked-against jurisdictions globally and stands out as a regional leader – particularly in equity crowdfunding. |
CONCLUSION |
|
| 31. | In conclusion I am happy to say that 2019 has been an extremely busy year, with multiple new ECF, P2P financing, and DAX operators as well as digital investment managers registered by the SC. We are encouraged by the rising level of interest, and we hope that the momentum will continue to accelerate in the coming years. |
| 32. | Looking ahead to 2020, we will continue to advance our Digital Agenda by building on the foundations laid over the last few years. There will be several exciting new initiatives coming your way in the coming year and I hope that I can count on your support. |
| 33. | With that, I would like to draw my opening remarks to a close. Thank you once again for being here and I look forward to the discussions at "SCxSC 2019". |
| THANK YOU | |
