Editor’s Choice: 13 December 2017

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  • Survey Shows SMEs Register Encouraging Growth
  • Government and private sector collaboration for innovation will be ‘the new normal’
  • Malaysia’s Long-Term Potential Growth To Stay Robust
  • PIDM Revises Risk Assessment Framework For Banks
  • Funding Societies Emerges as Market Leader of P2P Financing Industry in Malaysia

Survey Shows SMEs Register Encouraging Growth
Malaysia’s small and medium enterprises (SME) sector has registered an encouraging growth in 2017, with an average revenue increase of 14.54 per cent and a profit rise of 6.93 per cent, a survey shows. Conducted by SME Magazine, the SME100 survey found that local SMEs had been gaining valuable grounds despite the global headwinds, said Business Media International Managing Director Datuk William Ng in a statement today. Business Media International is the publisher of SME Magazine, and the organiser of the SME100 Awards, which ranks the top 100 fast-moving companies in selected countries in Asia. “Our SMEs are gaining grounds, and much of this was the result of pent-up demands following several years of economic uncertainty, and a renewed regional focus with the ASEAN Economic Community kicking in,” said Ng. He said this year, 19 per cent of the SME100 award recipients were from the information and communications technology and telecommunications sector, 11 percent from the transportation and logistics sector and nine per cent from the furniture and wood-based industry. (Bernama)

Government and private sector collaboration for innovation will be ‘the new normal’
Prime Minister Datuk Seri Najib Tun Razak said “The new normal will be about getting government institutions and regulators working together with corporates and startups in a collaborative environment.” Specifically he was referring to the Futurise Centre that was announced in the budget as a platform to accelerate innovation and commercialise products. He reaffirmed that this centre would be led by Cyberview and the Malaysian Global Innovation and Creativity Centre (MaGIC), and would be a test-bed and living lab for the development of national regulatory sandboxes. “We need to help entrepreneurs and scientists to better understand the regulatory framework. Admitting that although regulation can be a major obstacle, Datuk Seri Najib was optimistic that handled correctly, it would facilitate the creation of innovative solutions. “It is critical to get it right,” he stressed. Quoting American entrepreneur Steve Case, the Prime Minister said that Malaysia was now facing the Third Wave of technological innovation, which would begin to penetrate highly regulated sectors such as health, energy, transport and finance. “This is the world of the Internet of Things, and Big Data.” (DNA)

Malaysia’s Long-Term Potential Growth To Stay Robust
Malaysia will be able to maintain its strong growth trend with the economy’s long-term potential growth to stay robust at around five per cent, significantly stronger than most other A-rated sovereigns, says Moody’s Investors Service (Moody’s). In its recently-released report titled, ‘Government of Malaysia: FAQ On Credit Resilience To High Leverage and External Vulnerability Risks’, Moody’s said Malaysia’s highly diversified and competitive economic structure underpinned stable and relatively robust growth trends that have proven to be resilient to external headwinds. “Its (Malaysia) resilient economic growth, deep domestic capital markets, large international asset position and large export proceeds mitigate the sovereign’s vulnerability to sudden shocks,” the rating agency said. On whether household debt presented challenges to Malaysia’s macro-financial stability and growth, Moody’s said at 84.6 per cent of gross domestic product (GDP) at end-September 2017, the country’s household debt levels – while stable – posed downside risks to growth. Nevertheless, it said such debt did not pose material threats to financial stability. (Bernama)

PIDM Revises Risk Assessment Framework For Banks
Malaysia Deposit insurance Corporation (PIDM) is revising the Differential Premium Systems (DPS) for the Deposit Insurance System, effective the 2018 assessment year, to introduce a new indicator in the funding profile of member banks. Chief Executive Officer, Rafiz Azuan Abdullah said the new indicator took into account various instruments which are considered as stable funds, in line with the monitoring and funding development. “Member banks, which support their business with funds from deposits and debt instruments will benefit from the loans to existing funds ratio, aside from the core fund composition indicator, which provides incentives for them through a highly stable funding source composition,” he said in a statement today. Rafiz said the assessment indicators under the revised DPS framework would be based on a member bank’s position on December 31, 2017. (Bernama)

Funding Societies Emerges as Market Leader of P2P Financing Industry in Malaysia
Funding Societies, a Malaysian-founded peer-to-peer (P2P) financing platform, ends 2017 as the domestic market leader of the country’s rapidly growing P2P financing sector. Data compiled by all P2P financing operators in Malaysia from February 2017, when the first local P2P platform began operations, to November 2017, shows that domestic P2P platforms have raised a total of RM17 million for Malaysian SMEs. Of the RM 17 million, Funding Societies alone contributed to around RM10 million in financing or more than half of the total amount, while maintaining a default rate of 0%. As the Asian Institute of Finance expects crowdfunding to pick up pace in the near future as a critical source of alternative financing for micro, small, and medium enterprises (SMEs) in Malaysia, Funding Societies plans to accelerate total SME financing in 2018 to support even more Malaysian SMEs to grow their businesses whilst maintaining its strong risk management practices to ensure investor protection. P2P financing is a FinTech (financial technology) solution with enormous potential to address the lack of working capital for SMEs and also greater wealth creation opportunities for investors. Platforms connect SMEs with investors, both retail and institutional, through an online marketplace, thereby increasing access to financing for SMEs and alternative investment opportunities for investors. (MR)

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