ECF FINANCING

PITCH Platforms Sdn Bhd (pitchin) co-founder and chief strategy officer Kashminder Singh:

ECF has become an important funding channel for small and medium enterprises (SMES) and start-ups. Over 60 companies have raised funds through ECF.

These companies will become the drivers of Malaysia’s economy as they grow.

While the ECF industry is growing well and investors have come in to invest into these companies, we are only touching the tip of the iceberg here. There are nearly one million SMES in Malaysia.

We are seeing a rapid increase in viable businesses seeking to raise capital for their next stage of growth. The number of investors needs to grow in tandem.

We believe the nation can benefit by giving tax incentives to Malaysians who put their money into companies at the time they need it most.

Hence, we would like to see tax incentives announced for all ECF investors.

As ECF investments are long-term investments, these tax incentives can kick in about two to three years after the investment date, and only if the investor has held on to the investment.

The benefits will be immense as more jobs will be created and the ECF issuers will also contribute to the country’s gross domestic product (GDP).

Also, last year the government announced Rm50mil co-investment fund (CIF) for ECF and peer-to-peer (P2P) lending. This was a very welcomed step, as it has helped get more companies reach their funding target.

However, Rm50mil will only go so far. We would like to see a larger allocation for Budget 2020, say, Rm100mil, for the CIF.

I must stress that this is not money that will go down the drain.

Over time, the government will also reap returns, as the companies it co-invests in will bring handsome returns in the mid to long-term period.