21% of GDP expected to be digitised by 2022, says Guan Eng

Finance Minister Lim Guan Eng.

PETALING JAYA: Finance Minister Lim Guan Eng says the digital economy grew 9% annually in value-added terms between 2010 and 2016, outstripping the overall growth of Malaysia’s gross domestic product (GDP).

He added that the International Data Corporation had projected that the digital economy would contribute 21% to GDP by 2022, compared to 18% now.

“Given its prominent role as a source of expansion, the government is committed to driving Malaysia’s digital economy agenda in an inclusive and sustainable manner that benefits the people,” he said in his speech at the Securities Commission’s (SC) Fintech Roundtable 2019 today.

He said the SC had been leading the development of facilitative frameworks since 2014, to introduce innovative market-based financing avenues such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing to cater to the growing financial needs of micro, small and medium enterprises (micro-SMEs).

This in turn gave rise to more digital innovations making inroads into the capital market domain, leading to the emergence of new digital players such as digital investment managers, digital-only brokers and digital distribution platforms, he said.

Lim added that micro-SMEs contributed 37% of GDP in 2018, a figure projected to rise to 41% by 2020.

They also comprise some 98.5% of total business establishments in the country and employ two-thirds of all workers in Malaysia.

For ECF financing, the range of funding obtained was between RM130,000 and RM3 million, with the median being RM750,000.

The range of funding for P2P financing was wider, at between RM1,000 and RM1 million, with the median being RM14,000.

With the potential to source such a wide range of funding, Lim said, ECF and P2P financing have the potential to be a fundraising platform for all manner of businesses.

He added that crowdfunding is a tremendous asset for businesses and entrepreneurs, generating revenue and increasing customer base while aiding the country’s economy.

He also said the government has committed a RM50 million co-investment fund for ECF and P2P investments, which will match investments from private investors on a one-to-four basis, i.e. RM1 from the government to RM4 from investors.