SC, Agro-based Agencies Eye Alternative Financing for Agriculture Sector

• Greater uptake of ECF campaigns in the agriculture sector
• Alternative financing to address financing needs in agriculture

The Securities Commission Malaysia (SC) and key agriculture agencies have discussed ways to address financing gaps faced by micro, small and medium-sized enterprises (MSMEs) involved in the agriculture sector in a bid to boost the country’s food security.

In a statement, the statutory body said some 40 representatives from agencies and industry players attended a workshop called GROW, a new collaborative programme under its fintech flagship initiative, SCxSC.

It added that GROW is a collaborative effort by the SC and ecosystem partners to harness the potential of alternative fund-raising digital platforms to meet the needs of underserved players in strategic sectors, such as agriculture.

Equity crowdfunding (ECF) and peer-to-peer (P2P) financing were among the alternative financing mechanisms that were addressed during the workshop as potential ways to help fund the sector, it said.

The SC chairman Awang Adek Hussin stressed on the importance of broadening access to the capital market for local businesses.

“We have seen how technology has democratised financing via digital platforms such as ECF and P2P financing.

"We believe these alternative financing avenues have the potential to address some of the funding needs of the MSMEs in the agriculture sector as well,” said Awang.

Senior officials from relevant ministries, agencies and key players in the agriculture ecosystem attended the one-day workshop.

They include the Ministry of Agriculture and Food Industry, Federal Agricultural Marketing Authority and Agrobank.

At the workshop, participants called for greater ecosystem coordination to move the agriculture sector forward and strengthen the country’s food security.

They also emphasised the need for greater awareness on the role of alternative financing for the agriculture sector, SC said.

Following the workshop, the SC said it plans to have greater industry engagements with key stakeholders next year including organising a GROW Fintech Conference. 

This will be followed by a nationwide GROW roadshow to raise awareness on ECF and P2P financing as viable funding options for agro-based MSMEs to grow their businesses, it added.

It said these programmes will complement ongoing efforts by the government to support alternative fundraising by agriculture businesses such as the Malaysia Co-investment Fund (MyCIF).

MyCIF, a public-private co-investment vehicle administered by the SC on behalf of the Ministry of Finance, has observed a greater uptake of ECF campaigns in the agriculture sector after implementing a special ratio of 1:2 in 2022 for this sector. 

It invests US$0.21 (RM1) for every US$0.42 (RM2) raised from private investors on the participating platforms by eligible issuers.

According to the SC, MyCIF has co-invested in a range of agriculture projects in upstream and downstream activities. 

This includes firms applying technology to improve agriculture yields and aquaculture production.