Abstract
While Malaysia is set to become the global halal hub by 2020, there is still the challenge of product differentiation that meets customers' needs and more importantly, access to credit facilities for halal start-up small and medium sized enterprises (SMEs). In order to increase the competitiveness of the Malaysian economy, and while relying on a combination of qualitative methods of surveycum-interview and legal analysis of relevant laws and policies, this study examines the need for an effective Shari' ah-compliant financing platform for the halal firms based on the Guidelines issued by the Securities Commission Malaysia that provide the requirements for the registration of equity crowdfunding platform and an effective governance arrangement for such platform. Nevertheless, the guidelines have not specified the type of Shari' ah-compliant equity crowdfunding platform that can be utilized by halal SMEs who need to raise start-up capital through Shari' ah-compliant means. With the increasing need to provide such an alternative financing source to the budding SMEs in the halal sector, this study explores the relevance of crowdfunding to SME financing, examines the specific financing needs of such SME halal firms, analyze the new legal framework for equity crowdfunding, and propose potential Shari' ah-compliant equity crowdfunding model based on existing modes of financing commonly used in the Islamic financial services industry. The study concludes that though it is often argued that equity crowdfunding is generically Shari' ahcompliant, a closer look at the models reveal the importance of coming up with unique Shari' ahcompliant equity crowdfunding for a sustainable halal industry.