Funding Societies Now Offers Shariah-Compliant Financing Solutions

Funding Societies, one of the largest SME digital financing platforms in Malaysia and Southeast Asia, has recently introduced its Shariah-compliant trade financing solutions based on Commodity Murabahah (Tawarruq).

These financing solutions are ideal for creditworthy and underserved Malaysian micro, small, and medium enterprises (MSMEs) who are looking to grow their business or expand their working capital.

Wong Kah Meng, Co-Founder and Chief Executive Officer of Funding Societies Malaysia, said in a statement that despite their encouraging business performance, access to financing remains limited to many MSMEs. Some of the main factors causing this issue include low to zero credit track record, lack of assets to pledge, and lack of financial documents for credit assessment.

According to Wong, this trend became even more severe during the COVID-19 pandemic. He also mentioned that during the pandemic, Funding Societies observed that many Malaysian entrepreneurs have looked to digital platforms and marketplaces in order to start, sustain, and in some cases even expand their businesses.

“This can be seen from the increase in search traffic and number of SMEs we have onboarded through digital channels across both digital and offline economies,” Wong added.

The past few years have certainly shown MSMEs the importance of utilising fintech and Islamic fintech (ifintech) to gain access to capital to ensure continuous operationalisation and expansion of their business activities. The introduction of Shariah-compliant financing complements Funding Societies’ existing broad range of financing products to serve creditworthy SMEs of all segments, vintages, and sizes, including those operating in the halal industry.

In addition, ifintech has been growing at a rapid pace amidst growing concerns of global economic slowdown caused by sluggish markets and cautious consumer sentiments in the United States as well as Southeast Asian economies like Malaysia and Singapore. In 2021, the Malaysian ifintech market was estimated to be valued at USD3.0 billion (RM13.18 bilion). Malaysia is categorized as a ‘market leader’ on the ifintech Hubs Maturity Matrix with high growth and a high conduciveness. The country comes first on the Global Islamic FinTech (GIFT) Index.

“This represents an encouraging opportunity for both SMEs and investors. The gradual pick-up in economic activities and reopened borders coupled with anticipated elevated consumer confidence would translate into a more optimistic outlook as a whole. However, we need to maintain a cautious approach as various markets have raised interest rates in an attempt to rein in inflationary pressures, risking an economic slowdown,” Wong concluded.

In order to ensure compliance with Shariah principles, Funding Societies partners with Masryef Advisory, a registered Shariah advisory company with the Securities Commission as its Shariah advisor.

“Funding Societies took a great step to also offer Shariah-compliant products that benefit both Muslims and non-Muslims investors to invest in its platform. In addition, the underserved MSMEs can now have greater access to Islamic financing through the platform. We are proud to be part of Funding Societies’ journey into Islamic financing. Funding Societies has obtained Shariah-compliant certificate from Masryef which would enable them to also offer Islamic financing solutions to the users,” said Khairil Anuar Mohd Noor, Principal at Masryef Advisory.

Funding Societies’ Shariah-compliant trade financing solutions enable Malaysian MSMEs who have been operating for at least a year to access zero collateral financing and a credit line of up to RM1 million. For more information on Funding Societies Malaysia’s Islamic Financing, please visit https://fundingsocieties.com.my/islamic-financing.