SHORAKA Digital Ventures (SDV), a private equity grouping with a focus on Islamic fintech start-ups, is all bullish about playing a pivotal role in Malaysia’s maiden digital marketplace in the cooperatives ecosystem.
This follows the inking of a memorandum of understanding (MoU) between the company’s outfit Shoraka Ventures Sdn Bhd with Federal Koperasi Perkhidmatan Kewangan Malaysia Bhd (FEDKEW) to develop Pasaran Antara Kooperasi (PAK or Inter-Cooperative Market) which is Malaysia’s first digital marketplace within the cooperatives ecosystem.
SDV which is part of the Shoraka Group was set up in July 2006 in Dubai with a focus to harness Islamic financial solutions to empower people.
PAK is a digital marketplace whereby cooperatives are able to match those in need of short-term funding with those who have excess short-term cash to enhance the latter’s liquidity management capabilities.
The signing ceremony which took place at the S-Track 2021 event was witnessed by Entrepreneur Development and Cooperative Minister Tan Sri Noh Omar.
An initiative by the Malaysian Co-operative Societies Commission, Koperasi Co-opbank Pertama Malaysia Bhd and FEDKEW, S-Track 2021 is set to be a catalyst for the growth of cooperatives in the financial industry.
“The cooperative ecosystem currently lacks a platform that helps to match those in need of short-term funding with cooperatives that have excess in short-term cash to enhance their liquidity management, a.k.a. interbank market,” commented SDV’s managing director Johar Amat at the MOU signing ceremony.
“Currently, most cooperatives tap on financial institutions such as banks for working capital financing and short-term deposit placement.”
According to Johar, the PAK ecosystem enhances access to funding for cooperatives at a lower cost and potential higher deposit returns for those with excess cash.
“It is a Koperasi-to-Koperasi platform where resources are kept within the cooperatives’ ecosystem. It empowers cooperatives to a balanced, inclusive, progressive and sustainable socio-economic growth,” he justified.
According to the Cooperative Sector Economic Report by the Malaysian Co-operative Societies Commission, there were about RM2.9 bil worth of cash and cash equivalents within the cooperatives’ ecosystem as of end-2019 whereby such amount could be utilised within the cooperatives ecosystem to strengthen cooperative movement in the country.
While fixed deposits with banks would generate an average return of around 1.9% per annum, cooperatives that require working capital funding from banks would need to pay an average interest cost of around 4.9% per annum.
“This differential of around 3.0% per annum is a leakage from the ecosystem which we believe can be reduced through PAK,” envisages Johar who foresees a vibrant marketplace where funds would be utilised within the ecosystem.
“This would further propel Malaysia’s cooperative movement to the next level. The eventual beneficiaries would be the more-than six million cooperative members throughout the country,” he further asserted.
“PAK is a disruptive fintech business model that will be a catalyst for funding sources and digital services for the cooperative movement in Malaysia.” – Nov 7, 2021
