Malaysia Explores IP-Backed Financing to Reduce Collateral Dependence

Shifting Away from Physical Assets

Malaysia is re-examining how it finances innovation. Deputy Finance Minister Liew Chin Tong confirmed that his ministry is in preliminary talks with Syarikat Jaminan Pembiayaan Perniagaan, Credit Guarantee Corporation, and Bank Negara Malaysia on developing credit frameworks that move beyond traditional collateral requirements.

The discussions remain at an early stage, Liew acknowledged, speaking at the National Economic Forum 2026 in Kuala Lumpur. But the intent is clear: to build financing pathways that recognize intellectual property and innovation as viable security, rather than demanding physical assets that many technology firms lack.

"We are looking at ways to improve alternative borrowing models and credit reporting," Liew said. The forum, organized by the National Chamber of Commerce and Industry of Malaysia, drew nearly 600 participants from business, policy, and investment circles.

The Collateral Problem

Malaysia's banking system has historically leaned on property and tangible assets when underwriting loans. That approach works for manufacturers and property developers. It fails startups building software, holding patents, or developing proprietary processes with minimal physical footprint.

Liew noted that industry proposals to strengthen non-traditional credit assessment would be welcomed. The ministry is actively working on this area and open to concrete suggestions, he said.

The pivot reflects a broader challenge across Southeast Asia. Venture capital remains thin compared to the United States or China, forcing early-stage companies to seek bank debt. But without collateral, those doors close. The result: promising firms either stall or relocate to markets with deeper risk capital.

Venture Capital Gap

Liew highlighted the need to strengthen Malaysia's private equity and venture capital ecosystem. In technologically advanced economies, he noted, venture capital plays a central role in financing innovation.

Malaysia's venture capital market has grown in recent years, but deal flow and fund sizes remain modest. According to data tracked by regional industry groups, Malaysia saw approximately 140 venture deals in 2025, a fraction of Singapore's volume and well below the scale needed to support the country's digital economy ambitions.

Without robust venture funding, the pressure on banks to innovate lending models intensifies. IP-backed financing, revenue-based lending, and credit guarantees tied to business performance rather than property titles are all on the table.

Policy Momentum

The forum's theme, "A World in Transition: Securing Malaysia's Economic Future in an Era of Disruption," underscored the urgency. Liew's keynote, titled "Securing Malaysia's Future in a World in Transition: Strengthening Resilience, Confidence and Competitiveness," set the agenda for three plenary sessions covering institutional resilience, workforce readiness, and investment competitiveness.

Professor Noor Azlan Ghazali, director of the Malaysian Inclusive Development and Advancement Institute, also delivered a keynote presentation, alongside panels featuring business leaders, diplomats, and economists.

The timing matters. Malaysia is positioning itself as a regional manufacturing and data center hub, drawing billions in semiconductor and cloud infrastructure investment. But sustaining that momentum requires a financial sector that can underwrite intangible assets, not just land and buildings.

What Comes Next

The discussions with SJPP, CGC, and Bank Negara are exploratory, but the direction is set. Malaysia is signaling a willingness to experiment with credit models that treat patents, trademarks, software, and proprietary data as legitimate collateral.

Implementation will require regulatory clarity, training for credit officers, and robust IP valuation frameworks. Other markets, including Singapore and South Korea, have built such systems over the past decade, offering templates Malaysia can adapt.

For now, the message to startups and investors is cautious optimism. The government recognizes the problem. Whether it can execute at the pace the market demands remains the open question.