Capital Market Can Bridge SME Financing Gap For R&D, Expansion -- Bursa Malaysia

GEORGE TOWN, June 18 (Bernama) -- Small and medium enterprises (SMEs) should consider tapping the capital market to finance research and development (R&D) and business expansion that may not be fully supported through conventional bank financing, said Bursa Malaysia Bhd.

Its head of emerging markets development, Muhd Farrish Ishak, said bank financing remained important for companies during their early stages, but the capital market could complement it once businesses reached a certain level of growth.

He cited semiconductor design company SkyeChip as an example, saying the company raised more than RM350 million through its initial public offering, with about RM210 million allocated to R&D.

“Which bank would finance RM210 million for R&D? That would be very difficult. This is where the capital market comes in to bridge the financing gap.

“Companies need to understand when it is the right time to tap the market and raise funds to take their businesses to the next level,” he said during a panel session at the Penang Economic Forum 2026 here today.

He said companies such as SkyeChip had shown that investors were receptive to businesses with strong technological capabilities, intellectual property and recurring income potential, even if they were not directly involved in manufacturing chips.

However, Farrish said SMEs seeking capital must strengthen their governance, internal controls, documentation and accounting systems to improve their fundraising readiness.

He said many SMEs remained heavily dependent on their founders, creating business continuity risks when decision-making and operations were concentrated in a single individual.

“Governance is one of the main issues we raise when speaking to business owners. Companies must build proper structures so that the business does not depend entirely on the founder.

“These weaknesses can be addressed. They do not mean a company cannot raise funds, but businesses must recognise and improve them as they grow,” he said.

Jointly organised by RHB Banking Group, Penang Institute and the Ministry of Entrepreneur Development and Cooperatives, the forum was held with a focus on advancing Penang’s next growth story.

Over 300 participants engaged in discussions on emerging economic opportunities, sustainable financing solutions, talent and scaling strategies, as well as pathways to access the capital markets.

-- BERNAMA