Bridging the Finance Gap for Women Entrepreneurs

22. Malaysia: Policy insights on how culture influences access to finance

Professor Ida Fatimawati Adi Badiozaman
Swinburne University of Technology

Dr. Voon Mung Ling
Swinburne University of Technology

Dr. Tze Yin Lim
Swinburne University of Technology

Background

The entrepreneurial scene in Malaysia is full of opportunities as well as hurdles. Social and cultural dynamics play a crucial role in shaping the journey of women entrepreneurs. Despite a growing acknowledgement of entrepreneurship as a key engine for economic growth and societal progress (OECD, 2022[1]), women entrepreneurs face a range of obstacles that impact on their active engagement and success in business ventures (OECD, 2020[2]). These challenges go beyond the economic sphere, rooted deeply in the societal and cultural fabric, influencing women’s access to essential resources, networks and opportunities needed to flourish as entrepreneurs. In Malaysia, women entrepreneurs, particularly those operating in the micro-environment, face significant barriers with the knowledge, skills and social networks needed to support their businesses (Basit, Hassan and Sethumadhavan, 2020[3]).

Since the rollout of the Sixth Malaysia Plan from 1990 to 1995 to enhance further the country's economic growth, there has been a remarkable uptick in the number of women entrepreneurs. This Plan highlighted the pivotal role women could play in eradicating poverty and fuelling economic growth. Despite women’s entrepreneurial participation lagging behind men’s participation (owning 79% of businesses), the 2016 Economic Census revealed a significant presence of women-owned enterprises, totalling 186 930 firms. These women-led businesses are predominantly small- to medium-enterprises in the services sector, with a smaller presence in manufacturing and even less in construction, agriculture, mining or quarrying (Hamid et al., 2020[4]).

In response to the COVID-19 pandemic, the Government of Malaysia provided support for women entrepreneurs, notably through the Women Entrepreneur Financing Programme and tailored training initiatives (The Star Online, 2023[5]). For instance, The Women Netpreneur programme aimed at empowering women entrepreneurs to harness technology, focusing on financial technology (fintech) and e-commerce (Hazim, 2021[6]). These efforts not only facilitate access to finance but also equip women with skills in business management and digital literacy, increasing their chances of success.

Policy issue: Social and cultural perspective navigating financial access

Women entrepreneurs in Malaysia are faced with very high barriers to accessing finance (Panda, 2018[7]). The societal expectations and perceptions of male and female behaviour significantly impact their ability to secure financial support or resources. Barriers to women entrepreneurs tend to be subtle, ranging from a bias in loan approval levels to elevated interest rates. This is compounded by a limited availability of entrepreneurship training aimed at the specific needs of women entrepreneurs.

Within the ASEAN countries, barriers to women entrepreneurship finance are often driven by the unconscious biases of staff and institutional policies that do not account for the specific needs and challenges of women in entrepreneurship. Such practices often lead to lending practices that favour male-owned enterprises and thus contributing to the access to finance gap between men and women entrepreneurs (OECD, 2017[8]). The biases can arise from the institutions themselves, the market, and specific traits of businesses owned by women, which are often smaller and operate in different industries compared to those owned by men (OECD, 2017[8]). In response, Malaysia has initiated a series of initiatives to promote entrepreneurial finance for women. For example, the BizWanita-i Financing Scheme (financial assistance which offers collateral-free Sharia-compliant loans) was offered to support women entrepreneurs.

While celebrated as a catalyst for economic and gender equality, women’s entrepreneurship faces constraints from cultural expectations that limit access to financial and networking opportunities. Notwithstanding that family dynamics and religious interpretations further intensify these hurdles, cultural norms that prioritise family roles for women can negatively impact their entrepreneurial ambitions. Women often encounter a bias that requires them to juggle family obligations alongside their business activities (Mashapure et al., 2022[9]; Özsungur, 2019[10]; Bazkiaei et al., 2021[11]; Islam, Thambiah and Ahmed, 2021[12]). Moreover, conventional norms and gender roles often exclude women from financial decision making (Ariffin, Baqutayan and Mahdzir, 2020[13]).

Malaysia has the potential to challenge these traditional expectations and create an environment that supports women entrepreneurs by adopting gender-sensitive policies and measures. By addressing the barriers created by traditional gender roles and stereotypes, Malaysia can establish a foundation for women to flourish as financially independent business owners.

Conclusions

Improving access to finance for women entrepreneurs will require addressing multiple societal issues including gender roles in the household, perceptions in the business environment and traditional views towards women’s economic participation. This can be addressed by a multi-stakeholder effort to raise awareness about the potential of entrepreneurship for women across society, showcasing successful women role models, and to make some adjustments to property rights.

References

[13] Ariffin, A., S. Baqutayan and A. Mahdzir (2020), “Enhancing women entrepreneurship development framework: Policy & institution gap and challenges in the case of Malaysia”, Journal of Science, Technology and Innovation Policy, Vol. 6/2, pp. 22-33, https://jostip.utm.my/index.php/jostip/article/view/58/54 (accessed on 30 September 2024).

[3] Basit, A., Z. Hassan and S. Sethumadhavan (2020), “Entrepreneurial Success: Key Challenges Faced by Malaysian Women Entrepreneurs in 21st Century”, International Journal of Business and Management, Vol. 15/9, p. 122, https://doi.org/10.5539/ijbm.v15n9p122.

[11] Bazkiaei, H. et al. (2021), “Pathways toward entrepreneurial intention among Malaysian universities’ students”, Business Process Management Journal, Vol. 27/4, pp. 1009-1032, https://doi.org/10.1108/BPMJ-01-2021-0021.

[4] Hamid, R. et al. (2020), “Digital literacy among women entrepreneurs in rural areas”, Journal of Contemporary Social Science Research, Vol. 4/1, https://core.ac.uk/download/pdf/335058657.pdf (accessed on 30 September 2024).

[6] Hazim, A. (2021), Women Netpreneur programme for women in e-commerce, The Malaysian Reserve, https://themalaysianreserve.com/2021/08/13/women-netpreneur-programme-for-women-in-e-commerce/ (accessed on 30 September 2024).

[12] Islam, M., S. Thambiah and E. Ahmed (2021), “The Relationship Between Islamic Microfinance and Women Entrepreneurship: A Case Study in Malaysia”, The Journal of Asian Finance, Economics and Business, Vol. 8/5, pp. 817-828, https://www.academia.edu/78693782/The_Relationship_Between_Islamic_Microfinance_and_Women_Entrepreneurship_A_Case_Study_in_Malaysia (accessed on 30 September 2024).

[9] Mashapure, R. et al. (2022), “Challenges hindering women entrepreneurship sustainability in rural livelihoods: Case of Manicaland province”, Cogent Social Sciences, Vol. 8/1, https://doi.org/10.1080/23311886.2022.2132675.

[1] OECD (2022), Financing SMEs and Entrepreneurs 2022: An OECD Scoreboard, OECD Publishing, Paris, https://doi.org/10.1787/e9073a0f-en.

[2] OECD (2020), Women’s Entrepreneurship and Covid-19 Webinar, OECD.

[8] OECD (2017), The Pursuit of Gender Equality: An Uphill Battle, OECD Publishing, Paris, https://doi.org/10.1787/9789264281318-en.

[10] Özsungur, F. (2019), “A research on women’s entrepreneurship motivation: Sample of Adana Province”, Women’s Studies International Forum, Vol. 74, pp. 114-126, https://doi.org/10.1016/j.wsif.2019.03.006.

[7] Panda, S. (2018), “Constraints faced by women entrepreneurs in developing countries: review and ranking”, Gender in Management: An International Journal, Vol. 33/4, pp. 315-331, https://doi.org/10.1108/GM-01-2017-0003.

[5] The Star Online (2023), “Budget 2024: Boost for women to rejoin workforce”, https://www.thestar.com.my/news/nation/2023/10/13/budget-2024-boost-for-women-to-rejoin-workforce (accessed on 30 September 2024).