P2P LENDING
Peoplender Sdn Bhd (Fundaztic) CEO Kristine Ng:
In a short two years since going live, the P2P industry has proven to be a very strong alternative to funding for micro SMES (MSMES), with a cumulative funding of Rm377.2mil being disbursed to 1,139 businesses.
Based on this run-rate, cumulative funding by P2P could easily hit Rm700mil by the end of 2019.
Nevertheless, the industry’s growth can be further accelerated through strategic incentives and expansion of co-investment fund as part of Budget 2020.
Under Budget 2019, the government allocated Rm50mil into the fund for investing into both P2P and ECF projects.
We hope that the fund will continue for Budget 2020, and the allocation will be increased to Rm100mil, given the fact that there is an increasing number of platforms joining the industry to serve different segments of MSMES.
We hope the government could introduce measures to lower the borrowing costs for MSMES seeking P2P financing.
In this aspect, I am referring to the waiver of stamp duty, which will greatly assist the MSMES, as this potentially mean up to one month of savings on interest cost.
Access to funding via P2P is facilitated only by the platforms.
The real party driving the access are investors, 90% of whom are retail investors.
To further encourage and inculcate the behaviour of continuous investments into MSMES, which form the backbone of the country’s economy, we hope that the current tax deduction scheme for donations to approved bodies (where individuals can claim a tax deduction of up to 7%, while companies can claim up to 10% of tax deduction) can be widened to include P2P investments.
This is because P2P is an altruistic form of investment as part of joint-social responsibility.
The allocated relief can be expanded to cover interest earned during the tax period up to the limit presently set.
Presently, when MSMES need funds, they would still first approach traditional lenders such as banks.
So, we hope some simple policy to be introduced, whereby all rejected applicants of business financing will include alternative platforms for the unsuccessful applicants to consider before they think about seeking funds from “shadow-bankers” out of not being aware or knowing of alternative avenues.