The Association of South-East Asian Nations (ASEAN) is considering creating a crowd-funding platform for Micro, Small and Medium Sized Enterprises (MSMEs). Htet Tayza considers what this suggests about how financial technology (fintech) is changing the way the world does business.
Crowd funding platform
This revelation was made by Datuk Seri Ranjit Ajit Singh, the Chairman of ASEAN’s Securities Commission (SC), according to The Star Online. This digital platform would be designed to allow ASEAN MSMEs to access vital financing from a range of investors, in order to promote more inclusive growth. Speaking recently at an event in Kuala Lumpur, the SC Chairman said:
“We are looking at many solutions. For instance, we are looking at the less developed countries (Cambodia, Laos and Myanmar) in ASEAN for which MSME financing is very important. So, (we are looking at) how we can use digital platforms today. [We are considering] a pan-ASEAN crowd funding, peer to peer framework. [We are asking] how do we use those digital platforms to provide solutions for more inclusive participation and financing for the SMEs?”
Aiding economic integration
Ranjit was speaking at from the World Economic Forum on ASEAN 2016, which was recently held in Kuala Lumpur. He noted that there is strong commitment in ASEAN countries for deepening economic integration, following the establishment of the ASEAN Economic Community in 2015. The SC Chairman also said that there are plans to create more opportunities for trading in ASEAN members states.
The inter-governmental body will also develop a list of top firms on every single exchange within the area, showing investors which ASEAN companies they can invest in and receive healthy returns. Commenting, he said: “These are aspects of ASEAN integration that are being discussed and are being reinforced here which we will take up at the ASEAN Capital Market Forum.” In order to aid integration, ASEAN will standardise regulations across member states.
Once this happens, he continued, ASEAN will consist of 10 nations with a diverse capital market, although not all will be fully developed. Explaining, the Chairman said: “For instance, Malaysia has one of the highest benchmarks against global standards among ASEAN countries as well. The others are coming up, Indonesia and the Philippines are being signatories of international standards. Some of the other countries are taking steps to come in. So, you cannot harmonise all 10 simultaneously.”
Sparking economic progress
Ong Ka Chuan, the Malaysian Second Minister of International Trade and Industry, recently said that following economic integration, ASEAN could be the fourth largest economy on earth by 2030. ASEAN is doing everything it can, from standardising regulations to developing capital markets, to make this goal attainable. MSMES comprise between 88.8% and 99.9% of companies throughout ASEAN member territories, official data states, so the body needs to help these businesses grow.
ASEAN is implementing a range of measures to aid MSME expansion. The organisation recently announced that it would create an online academy which would provide MSMEs with the information and education required to maximise profit. But before any business can get off the ground it needs start-up capital, which cannot always be accessed from traditional banks. If ASEAN goes ahead with this proposal, MSMEs in the region will be able to seek alternative sources of funding by pitching to a broad base of investors worldwide. By providing MSMES with more start-up capital sources, ASEAN could allow them to grow and contribute more to the region’s economy.
This illustrates how financial fintech is changing the global financial landscape. With technologies like Blockchain, which the global financial services industry recently called the biggest innovation since the internet and peer-2-peer lending, consumers can access more secure, comprehensive financial services at their own convenience. This allows for the development of new solutions, such as a crowd-funding platform, which provides businesses with the tools needed to increase profitability at minimum cost. Fintech is making it easier than ever to do business, especially in developing parts of the world such as ASEAN, which have large unbanked populations, but a lot of potential.