- Partners with Masryef Advisory, a Shariah advisor to ensure compliance
- Shariah Compliant Trade Finance Based on Commodity Murabaha
Funding Societies, the digital finance platform for SMEs in Malaysia and Southeast Asia, showcased its Shariah-compliant trade finance solutions based on Commodity Murabahah (Tawarruq) for micro, small and medium enterprises ( MSMEs) creditworthy and underserved Malaysian companies.
Wong Kah Meng (picture below)co-founder and managing director of Funding Societies Malaysia, said: “Despite their encouraging business performance, MSMEs have limited access to finance and are underserved for a variety of reasons, some of which include poor to no credit history, lack of assets for collateral and lack of financial documents for credit assessment.
“This trend has been further exacerbated during Covid-19 as social distancing norms and limits on meeting customers face to face have made it difficult for traditional financial institutions to provide loans to SMEs, despite strict requirements. more stringent in certain sectors or products due to increased risk,” he said.
Sharifatul Hanizah Said Ali, Executive Director of Islamic Capital Market Development at the Securities Commission, said: “These digital solutions would facilitate connectivity by enabling issuers, investors and intermediaries to access existing and new markets in a more efficient and more profitable.
MSMEs are increasingly recognizing the importance of using fintech and Islamic fintech (iFintech) to access capital to ensure the continued operationalization and expansion of their business activities, finance companies said .
The introduction of Shariah-compliant financing complements finance companies’ existing wide range of financing products to serve creditworthy SMEs of all segments, vintages and sizes, including those operating in the halal industry, it said. the society.
Finance companies said that in 2021, the Malaysian iFinTech market was estimated at US$3 billion (RM13.18 billion).
Malaysia is ranked as a “market leader” on the iFinTech Hubs Maturity Matrix with high growth and strong conductivity, he said, adding that the country tops the Global Islamic FinTech Index ( GIFT).
“This represents an encouraging opportunity for both SMEs and investors. The gradual resumption of economic activities and the reopening of borders, coupled with the anticipated increased consumer confidence, would result in a more optimistic outlook overall,” Wong said.
To ensure adherence to Shariah principles, finance companies partner with Masryef Advisory, a Shariah advisory firm registered with the Securities Commission as a Shariah advisor.
Khairil Anuar Mohd Noor, Director of Masryef Advisory, said, “Underserved MSMEs can now have better access to Islamic finance through the platform.
“We are proud to be part of the finance companies’ journey towards Islamic financing. The finance companies have obtained a Shariah-compliant certificate from Masryef, which would also allow them to offer Islamic finance solutions to users,” he said.
Shariah-compliant trade finance solutions from finance companies allow Malaysian MSMEs that have been in operation for at least one year to access collateral-free financing and a line of credit of up to USD 227,500 (RM 1 million) .
Click here for more information on Islamic finance from finance companies in Malaysia.