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Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic

Equity crowdfunding (ECF), also known as crowd-investing or investment crowdfunding, is a way of boosting capital used by start-ups and early-stage companies. Fundamentally, ECF offers the company’s securities to potential investors in exchange for their investment. As a result, each investor is aut...

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Main Authors: Yeon, Asmah Laili, Putri, Uni Tsulasi
Format: Article
Language:English
Published: Universiti Utara Malaysia Press 2022
Subjects:
JA Political science (General)
Online Access:https://repo.uum.edu.my/id/eprint/29013/1/JIS%2018%202022%2031-62.pdf
https://doi.org/10.32890/jis2022.18.2
https://repo.uum.edu.my/id/eprint/29013/
https://doi.org/10.32890/jis2022.18.2
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spelling my.uum.repo.290132023-04-04T09:48:08Z https://repo.uum.edu.my/id/eprint/29013/ Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic Yeon, Asmah Laili Putri, Uni Tsulasi JA Political science (General) Equity crowdfunding (ECF), also known as crowd-investing or investment crowdfunding, is a way of boosting capital used by start-ups and early-stage companies. Fundamentally, ECF offers the company’s securities to potential investors in exchange for their investment. As a result, each investor is authorized to a share in the company proportionate to their financing. This paper discusses the ECF industry regulations in Malaysia and Indonesia in terms of its prospects and challenges during the COVID-19 pandemic through doctrinal research using the conventional legal method. Critical and analytical approaches were used to achieve its objectives. The findings showed that ECF has seen a growth of over 170% in new accounts registered in Malaysia, with 65% of them being retail investors. There is a great demand from individual and retail investors who are looking to invest in various investment products and services made accessible to them. The Capital Markets and Services Act 2007 plays an important role to provide good governance of ECF business in Malaysia. Further, the Guidelines on Recognized Markets (GRM 2020) (Item 1.01 GRM) and section 15 (g) of the Securities Commission Act 1993 clarifies the function of the Securities Commission to regulate ECF activities and protect the interests of the parties involved, especially investors. In Indonesia, the main regulator of ECF is the Financial Services Authority and the new ECF law is the Financial Services Authority Regulation Number 57/POJK.04/2020 concerning Securities Crowdfunding. The regulation aims to extend the scope of the crowdfunding which includes debt-based securities and sukuk. The prospects of ECF business in both countries are great especially in the era of the pandemic because the fintech, which has led to new investment products and services, is a vital force that helps democratize investments and will continue to increase as investors become more educated and informed. In terms of the ECF law, comparatively, it is different in terms of the governance, process and procedure, types of investors, etc. which are applicable in both Malaysia and Indonesia. Universiti Utara Malaysia Press 2022 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/29013/1/JIS%2018%202022%2031-62.pdf Yeon, Asmah Laili and Putri, Uni Tsulasi (2022) Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic. Journal of International Studies (JIS), 18. pp. 31-62. ISSN 1823-691X https://doi.org/10.32890/jis2022.18.2 https://doi.org/10.32890/jis2022.18.2
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic JA Political science (General)
spellingShingle JA Political science (General)
Yeon, Asmah Laili
Putri, Uni Tsulasi
Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
description Equity crowdfunding (ECF), also known as crowd-investing or investment crowdfunding, is a way of boosting capital used by start-ups and early-stage companies. Fundamentally, ECF offers the company’s securities to potential investors in exchange for their investment. As a result, each investor is authorized to a share in the company proportionate to their financing. This paper discusses the ECF industry regulations in Malaysia and Indonesia in terms of its prospects and challenges during the COVID-19 pandemic through doctrinal research using the conventional legal method. Critical and analytical approaches were used to achieve its objectives. The findings showed that ECF has seen a growth of over 170% in new accounts registered in Malaysia, with 65% of them being retail investors. There is a great demand from individual and retail investors who are looking to invest in various investment products and services made accessible to them. The Capital Markets and Services Act 2007 plays an important role to provide good governance of ECF business in Malaysia. Further, the Guidelines on Recognized Markets (GRM 2020) (Item 1.01 GRM) and section 15 (g) of the Securities Commission Act 1993 clarifies the function of the Securities Commission to regulate ECF activities and protect the interests of the parties involved, especially investors. In Indonesia, the main regulator of ECF is the Financial Services Authority and the new ECF law is the Financial Services Authority Regulation Number 57/POJK.04/2020 concerning Securities Crowdfunding. The regulation aims to extend the scope of the crowdfunding which includes debt-based securities and sukuk. The prospects of ECF business in both countries are great especially in the era of the pandemic because the fintech, which has led to new investment products and services, is a vital force that helps democratize investments and will continue to increase as investors become more educated and informed. In terms of the ECF law, comparatively, it is different in terms of the governance, process and procedure, types of investors, etc. which are applicable in both Malaysia and Indonesia.
format Article
author Yeon, Asmah Laili
Putri, Uni Tsulasi
author_facet Yeon, Asmah Laili
Putri, Uni Tsulasi
author_sort Yeon, Asmah Laili
title Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
title_short Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
title_full Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
title_fullStr Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
title_full_unstemmed Equity crowdfunding industry regulations in Malaysia and Indonesia: Prospects and challenges during the Covid-19 pandemic
title_sort equity crowdfunding industry regulations in malaysia and indonesia: prospects and challenges during the covid-19 pandemic
publisher Universiti Utara Malaysia Press
publishDate 2022
url https://repo.uum.edu.my/id/eprint/29013/1/JIS%2018%202022%2031-62.pdf
https://doi.org/10.32890/jis2022.18.2
https://repo.uum.edu.my/id/eprint/29013/
https://doi.org/10.32890/jis2022.18.2
_version_ 1762395472375316480
score 13.211869

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