Adnan Zaylani Mohamad Zahid: Opening remarks – “4th Capital Connections Meeting” Opening remarks by Mr Adnan Zaylani Mohamad Zahid, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 4th Capital Connections Meeting, Asia School of Business, Kuala Lumpur, 11 March 2022. * * * Distinguished guests, ladies and gentlemen. Assalamualaikum w.b.t and a very good afternoon. I would like to express my thanks to Penjana Kapital Sdn. Bhd. for inviting me to deliver this opening for the 4th installation of Capital Connections. We have just had our second installation of MyFintech week held in end January. I hope you were all there or at least attended some of it. From our vantage point, one of the key objectives was to bring out discussions and focus on the issues and challenges that Fintech can and should take on. However, ideas and discussions alone may not move us far towards the practical solutions. Ideas need to be developed and executed with capital and entrepreneurship. Coming here today, for us, is then a natural follow-through in sustaining our momentum and supporting our overall Fintech journey. “Capital Connections” and “Fintech” are thus very timely. The last two years have been unprecedented. The world is still dealing with and recovering from the health and economic crises. However, every crisis presents opportunities. Navigating COVID-19 has accelerated the development of fintech and digital innovation. During the pandemic, we all witnessed the expansion of digital economy activities including e-commerce, digital sales and online delivery to overcome initial movement restrictions.
Some key examples already underway include recalibrated regimes for digital bank and digital insurers as well as our collaboration with the Securities Commission on digital assets. We have also collaborated with Malaysia Digital Economy Corporation on ‘fintech booster’, a programme that aims to provide capacity building resources for companies to develop fintech solutions, including legal and compliance support. These initiatives are in line with our regulatory efforts to remove undue barriers to competition and innovation, as well as address market failures. Third, alternate forms of capital will be key in supporting the holistic and broader growth of businesses, including start-ups. Specifically, alternative finance instruments, such as venture capital (or VCs) and peer-to-peer lending, can help fill the funding gap for early stage and growth stage firms, who typically possess risk profiles less suited for bank-based debt financing. Alternative finance instruments can also help crowd-in additional capital from other large private and public capital providers, enabling firms to support their subsequent stages of growth, as well as foster a greater culture of innovation, dynamism, and entrepreneurship in the Malaysian economy. At present, the domestic alternative finance industry is still nascent. According to our estimates, 3/4  BIS central bankers' speeches  Malaysia’s alternative finance market size constitutes only 0.2% of GDP, which is small when compared to developed and peer markets. Realising the need to accelerate growth of this area, we have identified several strategies to develop alternative finance under the Financial Sector Blueprint 2022–2026.