The Islamic crowdfunding platform developer has gotten the ball rolling and anticipates going online in Jakarta first before Kuala Lumpur.
Ethis Ventures, the force behind EthisKapital – Malaysia’s first (and only) licensed Shariah compliant peer-to-peer (P2P) financier – is in the advanced stages of getting its Malaysian platform ready for market, and targets to go live by the end of the year.
EthisKapital was one of six P2P lenders which received in-principal licenses from Securities Commission Malaysia (SC) in November 2016: it is currently one of two which have yet to be fully operational.
“As we are the only Shariah compliant platform to receive the conditional license, we need to make sure the concept is well accepted from the Shariah perspective and to ensure we are fully compliant before launching,” explains Umar Munshi, the founder of Ethis Ventures, adding: “We’ve adjusted our product over time, and we need to go through the Shariah approval process again every time we want to implement a new product.” The operator is required to go through a two-level Shariah approval process: it needs to get the green light from its external Shariah advisor – International Shariah Research Academy for Islamic Finance – and also from the SC’s Shariah Advisory Council.
While the process to set up in Malaysia has taken almost a year, Ethis Ventures’s efforts to officially break into the Indonesian market is only taking half that time. It has been shortlisted by the Otoritas Jasa Keuangan for a fintech license (it applied in June), and although Umar anticipates receiving the full license from the Indonesian regulator by December, he expects to launch the platform next month.
Unlike in Malaysia, Indonesia’s regulator allows fintech firms to go to market before the final full license is granted.
“We are very bullish on Indonesia – there is certainly a lot more room for growth in the country. And we want to establish ourselves as a specialist in Indonesian real estate,” says Umar. In fact, the Singaporean entrepreneur’s first foray into Islamic crowdfunding three years ago – EthisCrowd – focused on Indonesian property investments.
But of course, Umar has a global vision for the company. Southeast Asia – particularly Indonesia and Malaysia – being one of the most important Islamic finance markets in the world is core to its strategy.
“For us, because we want to focus in this region, we have to adapt to the different countries,” Umar responds when asked if the perceived rigidity of the Malaysian regulatory ecosystem could hamper development, noting that there isn’t a perfect regulatory formula for fintech start-up development.
“It is a trade-off: the stricter you are, there’s the risk of less innovation and fewer entrants. But being less strict may not be sustainable in the long run if you get any random start-ups.”