Khazanah, CGC Digital to invest in funding societies

KUALA LUMPUR: Khazanah Nasional Bhd and CGC Digital Sdn Bhd are investing in Southeast Asia’s largest unified small and medium enterprise digital finance platform, Funding Societies | Modalku, to broaden financing access for micro, small and medium enterprises (MSMEs).

In a joint statement today, the companies said that following the investment, Funding Societies would aim to expand its Malaysian coverage to areas beyond Kuala Lumpur, Selangor, Penang and Johor, with the target to serve more than 25,000 MSMEs nationwide by the end of 2025.

“Moreover, the platform intends to widen the reach of its Islamic financing solutions introduced in Malaysia earlier this year,” they said.

Since its launch in May 2023, Funding Societies has disbursed over RM100 million in Shariah-compliant financing in Malaysia.

In total, the digital finance platform has disbursed over US$3.5 billion (RM16 billion) in business financing through five million transactions, positively impacting over 100,000 businesses across its five markets in Southeast Asia, namely Malaysia, Singapore, Indonesia, Thailand and Vietnam.

“In the context of Malaysia, Funding Societies aims to address the RM90 billion (US$19 billion) funding gap for MSMEs,” they said.

Khazanah managing director Datuk Amirul Feisal Wan Zahir said that being the backbone of Malaysia’s economy and contributing nearly half of the nation’s employment, MSMEs are both critical and critically underserved.

“Hence, this investment aligns with our mission of contributing to nation-building and socioeconomic growth,” he said.

Khazanah’s investment would fall under its Dana Impak (impact fund) mandate, a fundamental pillar under the sovereign wealth fund’s Advancing Malaysia strategy.

With Dana Impak’s investment, Funding Societies would target to have more than 50 per cent of its annual loan disbursements from Shariah-compliant financing by 2025, in line with the aspiration to support the growth of Bumiputera MSMEs, he added.

CGC Digital chief executive officer (CEO) Yushida Husin said the company seeks to push the envelope by developing a suite of innovative digital guarantee products for thin-file MSMEs that can be offered together with Funding Societies’ financing products to increase their chance of obtaining much-needed financing.

The investment also follows the success of CGC Digital’s partnership with Funding Societies

earlier this year, whereby a new guarantee product was developed via a pilot programme.

The product provides Credit Guarantee Corporation Malaysia Bhd’s guarantee at the transactional level of Funding Societies’ digital supply chain financing, thereby directly supporting the business activities of MSMEs and advancing financial inclusion.

Funding Societies co-founder and group CEO Kelvin Teo said that although the MSMEs represent 97 per cent of business establishments in Malaysia and contribute 38 per cent to the gross domestic product, this group still faces significant challenges in obtaining credit.

“This is where Funding Societies seek to step in by serving the region’s MSMEs’ cash management challenges and needs with our extensive reach and broad range of short-term financing solutions,” Teo noted. – BK