The Malaysian government is testing out thee-Tunai Rakyat system with e-wallet providers and government agencies to prepare for the RM30 one-off digital stimulus programme next year.
The nation’s Finance Minister stated that the sovereign wealth fund of the Government of Malaysia has been tasked to supervise its implementation and make an announcement on the participating e-wallet providers soon.
If it is well-received, the initiative can be repeated to involve more users, merchants and e-wallet providers, the Finance Minister stated that responding to an MP’s question on the implementation status of the RM30 one-off payment to Malaysians through an e-wallet service starting 1 January next year.
During the Budget 2020 announcement last October, the Finance Minister announced that Malaysians aged 18 years and above, earning RM100,000 and below a year, will be entitled to a one-off payment of RM30 that can be claimed from Jan 1 to Feb 29 next year.
The government had allocated RM450 million for the initiative which is expected to benefit 15 million Malaysians.
It is also to encourage the public, small businesses and retail stores to accept and use digital payments. The only thing that is required is an e-wallet account with a verified identification by selected service providers.
The initiative was part of an RM50.3 billion allocation to transform Malaysia into an entrepreneurial nation, which includes the transition to the digital economy.
Out of the RM50.3 billion, the government has allocated RM21.6 billion for the National Fiberisation and Connectivity Plan to upgrade and expand the Digital Malaysia infrastructure.
Meanwhile, RM28.7 billion is allocated for various digitalisation incentives such as the e-Tunai Rakyat, as well as guarantees and financing aids, including for entrepreneurs, small and medium businesses and Malaysian companies.
There is about 46 digital money (e-wallet) issuers comprising five banks and 41 non-bank firms; e-money transactions in the country are expected to cross RM12 billion this year.
Based on Bank Negara Malaysia’s electronic payment data, there were 1.92 billion transactions for e-money with a total value of RM11 billion. For the January-May 2019 period alone, 832 million e-money transactions were recorded with a total value of RM6.3 billion.
OpenGov Asia reported that the Securities Commission Malaysia (SC) recently hosted the sixth edition of the SCxSC Fintech Conference on 22 October 2019, an event aimed at helping to scale up the Malaysia Fintech industry.
Notably, Malaysia’s Fintech sector has seen several new players enter its ecosystem, following the regulatory agency’s move to provide more opportunities for under-served segments including micro, small and medium-sized enterprises (MSMEs) and a new generation of potential investors to raise funds or fulfil their financial goals.
For the past five years, the event has been providing a platform for local policymakers, entrepreneurs, investors and financial services firms to collaborate on innovative projects in finance through the adoption of the latest technologies.
The nation’s Fintech sector now includes alternative market-based financing platforms such as equity crowdfunding (ECF) and peer-to-peer financing (P2P).
Malaysia’s Fintech industry is also home to various Fintech start-ups such as digital investment consultants, crypto exchanges and real estate crowdfunding managers.
At present, the nation has 21 ECF and P2P platforms that are registered with the SC, and have raised a total of RM587 million (appr. $140.2 million) for over 1600 MSMEs.
Malaysia is ranked at number 31 out of 139 countries in terms of their readiness to transition to a digitised economy and society. Whilst Singapore is ranked at number 1, the rest of the ASEAN countries were ranked quite low in the NRI (with a ranking between 60 and 80).
This measure is important for businesses looking to enter new countries as it can easily determine if the country can support a business that relies on the Internet.
This, coupled with the support from the government, regulators and industry players, provide Malaysia with the opportunities and potential as an emerging market to catch up to Singapore and to be the preferred fintech home in ASEAN.