KUALA LUMPUR, May 17 ― Malaysia finally gained the “tolerance” element needed for digital innovation when Pakatan Harapan (PH) became the federal government, said Finance Minister Lim Guan Eng.

Speaking at the Securities Commission (SC) Fintech Roundtable 2019 today, Lim said this was the missing element in the 3T’s of “Talent, Technology, Tolerance” necessary for the creation of a digital innovation cluster.

In his speech, the minister also cited a 2018 World Bank report that described Malaysia as  having produced some of Southeast Asia’s most successful digital startups.

“Only under this new government that respects the freedom of expression, do we have the critical third ‘T’ of 'Tolerance', essential towards nurturing new and creative ideas,” Lim said in his speech.

He also pointed out that the PH administration has been supportive of innovations in the financial sector such as equity crowdfunding (ECF) and peer-to-peer (P2P) financing.

Such measures were critical in the incubation of new generation of businesses, micro-SMEs, that he said were increasingly becoming the backbone of the local economy and which are expected to make up 41 per cent of the country’s economic output by next year.

“To boost the development of market-based financing which has shown great success in funding micro-SMEs, the government has also committed RM50 million towards a co-investment fund (CIF) for ECF and P2P investments,” he said.

ECF and P2P are two relatively recent developments in Malaysia that have opened up additional avenues of funding for microbusinesses and startups that may not yet qualify for traditional loans from commercial banks.

In Budget 2019, Lim also provided a fillip for P2P financing when he announced that the government was considering the method for property purchases, in a bid to address perennial complaints of failed mortgage applications due to Bank Negara Malaysia’s lending guidelines.