SME digital finance platform Funding Societies has partnered with Malaysia’s Halal Development Corporation (HDC) to improve the Halal sector’s access to Shariah compliant digital financing facilities.
The MoU is expected to help boost trade and investment activities in the Halal economy as well as support market access for Halal MSMEs.
“Our goal is to empower MSMEs and to close the gaps for the underserved in the Halal economy so that we can create a more conducive environment that cultivates more Halal homegrown champions,” commented Hairol Ariffien Sahari, CEO of HDC.
Malaysia’s Halal industry is anticipated to contribute 8.1% to the nation’s GDP by 2025 and to hit US$113.2 billion in 2030, according to the Halal Industry Master Plan 2030. Total Halal export was valued at RM59.5 billion (US$12.85 billion) as at the end of 2022, with the industry contributing 7.4% to the national GDP.
As a federal agency under the Ministry of International Trade and Industry, HDC is tasked with enhancing the Halal ecosystem by supporting MSMEs in the Halal industry. The collaboration with Funding Societies is part of its mandate to drive economic growth in line with the 2024 budget. Afterall, MSMEs account for 97% of overall business establishments in Malaysia in 2022.
For Funding Societies, this is yet another move to deepen its Islamic finance foothold.
“Consequent to the introduction of our comprehensive Islamic financing solutions in May 2023, we are well positioned to serve the growing demand for Shairah complaint SME digital financing from Muslim entrepreneurs and those in the Halal economy,” explained Chai Kien Poon, the country head of Funding Societies Malaysia.
The conventional platform is now serving the Muslim market with a range of Islamic financial products including guaranteed Islamic investment note as well as micro financing and business-term financing instruments. Since its debut in the Islamic market in May, it has disbursed over RM100 million (US$21.46 million) through its Islamic portfolio.
Funding Societies has been actively forging new partnerships with government agencies in Malaysia on the Halal front. This partnership with HDC follows a collaboration with another government agency, Credit Guarantee Corporation Malaysia in August to work on a Shariah compliant proof-of-concept project. Earlier this month, it joined hands with SME Corporation Malaysia to allocate an initial RM6 million (US$1.29 million) for youth entrepreneurs under the newly launched Bumiputera MSMEs Financing Initiative for which Funding Societies is a financial partner extending digital financial solutions through an Islamic financing program.
Since its launch in Malaysia in 2017, Funding Societies has extended over RM2 billion (US$429.19 million) in financing in the country, while disbursing over RM15 billion (US$3.22 billion) across the Southeast Asian region. It intends have half of its disbursement from its Shariah compliant financing portfolio by 2025.