Malaysian Institute of Economic Research (MIER) Zakariah Abdul Rashid The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper/presentation and accepts no responsibility for any consequence of their use. Terminology used may not necessarily be consistent with ADB official terms.
SUPPORTING INNOVATION-LED GROWTH Why Innovate? To drive Malaysia towards achieving a high-income nation status by improving productivity By creating wealth through Knowledge and Technology. By generating additional revenue and contribute to Malaysia's s GDP. By providing additional jobs. By inspiring and producing a new generation of innovative entrepreneurs.
Innovation Across Countries The percentage of innovating companies was at 51.49% (quite high due to longer period of survey coverage). Innovation rate varied across industries wherein the highest was in manufacturing, namely in office accounting and computing machinery (78.95%) while the lowest in fabricated metal product except machinery and equipment industry (25.42%). across size of companies wherein that of large company was higher than the small company, 74.26% and 35.75%, respectively. across ownership wherein foreign company was more active than local company (probably the former is also bigger)
Business Firm Level Why Company Innovates? To improve product quality and extend the product range To reduce energy consumption and labour costs. Innovation activity may improve marketability of products, especially in the service sector. Sources of Information for Innovation. Where? Internal sources (company itself), market source groups (clients and customers) I tit ti l ( i iti th hi h i tit ti l d bli Institutional sources (universities or other higher institutional and public research institutes). But were considered less important.
Business Firm Level Who s the Collaborator? Other companies within the group clients or customers and suppliers. Higher education institutions and government research institutions. But were considered less important Research institutions and firms needs to interact effectively with each other and with the government. Innovation Improves Product Quality by capacity augmentation or services provided and provision of wider range of products, especially by large companies.
Business Firm Level Hampering Innovation activity is costly, Presence of dominant firm and Demand uncertainty for innovative products also hamper innovation. Regulatory environment does not represent a major hindrance to innovation. Government Support Less than one-quarter of the innovation active companies, especially large companies of manufacturing sector, received assistance or incentives, in the form of tax incentives and duty free importation of machinery or equipment.
Where s Malaysia now Globally far from satisfactory The Global Competitiveness Report 2009-2010: the followings are components of global competitiveness innovation competitiveness, ranked 24 th and capacity for innovation, ranked 25 th company spending on R&D, ranked 19 th. Innovation Capacity Index 2009-20102010 (European Business School) Malaysia, ranked 34th, behind Singapore, ranked 6 th. In term of the percentage of companies undertaking innovation, Malaysia was at par with other developed d countries at 51.00%. In terms of the number of global patent filings in 2009, Malaysia was at 30th place with 218 global patents filed. In comparison, Sweden at the 10th position filed 3,667 global patents while Singapore at the 22nd position filed 594 global patents.
What s Malaysia s Current Position: Overview Innovation rate: one innovation per firm per year Average innovation expenditure: RM700 thousand Innovation expenditure per million ringgit of sales, average RM35,000 Big and foreign firm is more active. Turnover, average RM20 million.
Strengthening Four Key Dimensions Shaping a supportive ecosystem for innovation; Creating innovation opportunities; Putting in place innovation enablers; and Funding innovation.
Shaping Supportive Ecosystem INCREASE HUMAN CAPITAL CAPACITY Malaysia needs to aggressively producing educated labour force, including top scientist and managers. Brilliant students should be sponsored to pursue post-graduate courses both domestically and abroad. This can be achieved by Embarking on a big scheme of sending students to study at the top notch universities to pursue post-graduate courses up to the doctorate level; Trainning enough personnel to work at the technical levels; and Encouraging intensively external talent to work in Malaysia as an interim measure.
Shaping Supportive Ecosystem STRENGTHENING THE INNOVATION INFRASTRUCTURE Government needs to provide innovation infrastructure (comprises physical facilities, ICT infrastructure and legal framework) to enable and facilitate innovation activities from ideation to the implementation stages of the innovation. This can be achieved by Supporting both public and private sectors to improve and expand their research facilities further; Trade and Investment Policy is tailored towards innovation Establishing more science, technology and innovation parks and incubators; and Reviewing the existing law with a view to encourage innovation.
Creating Innovation Opportunities PROMOTE INNOVATIVE CULTURE AMONG PUBLIC AND PRIVATE SECTORS Government should actively support the promotion of innovative culture by liberalizing the relevant regulations and taking up potential innovative projects until completion. This can be achieved by Appointing public relation consultants to promote the culture of innovation sustainably; Incorporating innovation element such as creative thinking in the educational system; Creating more awards for innovating companies and agencies; and Revising current regulations towards easier embarkation on innovation activities
Putting in Place Innovation Enablers COLLABORATION BETWEEN COMPANIES AND PUBLIC RESEARCH INSTITUTIONS Encourage collaboration in R&D between the business sector and public research institutions including universities, hoping wider range products that meet consumers requirements can be created and increase the successful commercialization rate of innovative products. This can be achieved by Making collaboration as a condition for granting research grants and aids; Creating special awards for collaborated research; Urging Public research institutions and universities to proactively seek collaboration with private sector; and Providing financial incentives including tax relief for companies involved in collaboration.
Putting in Place Innovation Enablers GATHER AND DISSEMINATE INFORMATION ON INNOVATION Easily available information paves the way into a myriad of new inventions and innovations. Dissemination i of vital knowledge is just as important t in catalyzing innovations as the initiative iti to follow through with the information made available. This can be achieved by Establishing a Central Innovation Data Bank; Coordinating data gathering and dissemination efforts; and Conducting S&T, R&D and NSI surveys on regularly
Putting in Place Innovation Enablers INNOVATING BY EXTERNAL SOURCES Government needs to make highly controlled, specialized yet pertinent and useful information, which are only available through formal means and restricted circulation available to researchers and market players. This can be achieved by the government agencies playing active role in identifying and providing access to external body of knowledge; providing the necessary facilities including financial aid for SME to acquire external scientific knowledge and technology; and further improving the ease of doing business in Malaysia to attract foreign firms to invest in R&D in Malaysia and to collaborate with local firms.
Funding Innovation INCREASES IN R&D FUND Increase R&D fund allocation. This can be achieved by Revising i upward R&D allocation under the Eleventh Malaysia Plan; Revising incentives for attracting large corporations to spend on R&D; Increasing grants and other financial aids to SMEs, encouraging them to undertake innovation activities such as R&D; and Make it is a conditional requirement for companies dealing with the government to spend on R&D and to innovate.
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