To escape the middle-income trap and achieve high-income status, Malaysia needs to embrace technological advancement, innovation and digitalisation. This need extends beyond large corporations to small and medium-sized enterprises, which are crucial for driving economic growth and job creation.
MBF refers to fundraising and financial services through market systems, for example, equity and debt markets; private funds, such as venture capital and private equity; and digital financing, for instance, peer-to-peer and equity crowdfunding ) to support the wider economy. This shift from cyclical issues to more longstanding structural issues in SME finance indicates that relying solely on straight debt is unsustainable and risky for businesses. SMEs should have a wider range of financing options tailored to their life cycle stages, risks, and business needs. This is reflected in ICMR’s findings, where 85% of SMEs familiar with MBF expressed the willingness to use MBF instruments to meet their future financing needs.
Even among SMEs that are aware of MBF, their willingness to consider it depends on addressing concerns related to lack of understanding, ownership control, and trust. For those unwilling to consider market-based financing, they attribute it to perceptions of complexity, high issuance costs, and the approachability of capital market intermediaries.
► Beyond capital: MBF extends beyond transactional capital raising to include business development support for business growth.