MOVING FORWARD & CON- CLUSIONS
CHAPTER 8: WAY FORWARD AND CONCLUSIONS
8.2 Analysis of Critical Areas and Action Plan Based on Study Findings
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Key Items Findings
Funding of Innovation Activities Companies using ‘Public
Source’ to fund innovations based on Company Size
»» Large sized companies - process innovations.
»» Medium and small sized companies - marketing innovations.
»» Small sized companies – product innovations.
Companies using ‘Other Source’ to fund innovations based on Company Size
»» Large and medium sized companies - organisational innovations.
»» Small sized companies - product and organisational innovations.
Innovation Cooperation Innovation Cooperation and
Importance of the Partners based on Business Sectors
»» For both sectors – “client/ customers” and “suppliers of equipment, materials and components”.
Degree of Innovation
Cooperation and Importance of Partners based on Business Sectors and Company Size
»» For both sectors - “client/ customers” and “suppliers of equipment, materials and components”” except for large
services companies which has “other companies within company group”, “supplier of equipment, materials and components” and
“universities or other higher education institutes” as their main collaborators.
Intellectual Properties Rights Status Intellectual Properties
Applied and Granted based on Business Sectors
»» The majority of the companies in both sectors applied and granted with Trademarks and followed by Patents.
Relative Importance of IP Protection Methods based on Business Sectors
»» Manufacturing sector - Trademarks and Registration of design
»» Services sector - Confidentiality and Trade secret.
Innovation Barriers Factors Hampering
Innovation Activities in both Sectors
»» Cost and Knowledge Factor.
International Comparisons Community Innovation
Survey (CIS-8) »» Malaysia placed in the 31st position for innovative companies.
Ranking in the Global Competitiveness Report (GCR) 2015 - 2016
»» Malaysia’s current ranking for GCI is in the 18th position, which has improved from the 20th position in 2014-2015.
Ranking for Components of Innovation and Sophistication Factor
»» IF: Innovation Factor (20) , BS: Business Sophistication Factor (13), IBS: Innovation and Business Sophistication Factor (17) - Malaysia’s position is better than China, Thailand and Indonesia.
Comparison of Global Innovation Index (GII) for 2015 and 2014
»» Malaysia’s 2015 ranking for GII is in the 32nd, which is higher by 1 point than in the 2014 GII ranking.
Innovation Efficiency Index
Ranking »» Malaysia’s rank for Innovation Efficiency Index based on region group (SEAO) is in the 8th position, which is better than Thailand (10th position) and Indonesia (14th position).
Comparison of Global Patent
Applications in 2014 »» Malaysia’s rank for Global Patent Applications in 2014 based on Patent Applied is in the 14th position, which is better than Philippines (15th position).
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8.2.2 Degree of Importance of Objectives on Innovation Activities
The findings on the degree of importance of innovation activities uncovered that SMLs in both manufacturing and services sectors have a low perception level to conduct innovation activities which aim to reduce the environmental damage. In this respect, actions are proposed in Table 8.3 to encourage SMLs to develop more ideas to innovate their business products, processes or services which can help to address environmental issues and problems.
Table 8.3 Critical Areas in Objectives on Innovation Activities
Sector & Items Issues Actions Agencies
Services Sector:
To reduce environmental damage
(Mean score: 0.22)
The number of companies that rated “not relevant” to the item is high
i. Education
a. Seminar/ workshop on environmental awareness should be conducted.
b. Green energy should be part of innovation milestone.
ii. Green incentives
a. To increase the promotion of government fiscal incentives and efforts as published in KeTTHA’s website8.
b. The process for application of the incentives should be simplified.
Example: Currently the application has to go to MIDA whereas the responsible agency is KeTTHA.
i. KeTTHA ii. MOSTI
iii. NRE
iv. MPIC
v. HLIs
Manufacturing Sector:
To reduce environmental damage
(Mean score: 0.34)
The number of companies that rated “not relevant” to the item is high
8 http://www.kettha.gov.my/portal/index.php?r=kandungan/index&menu1_id=2&menu2_id=81&menu3_id=131 Date accessed: 21st February 2016.
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8.2.2 Degree of Importance of Objectives on Innovation Activities
The findings on the degree of importance of innovation activities uncovered that SMLs in both manufacturing and services sectors have a low perception level to conduct innovation activities which aim to reduce the environmental damage. In this respect, actions are proposed in Table 8.3 to encourage SMLs to develop more ideas to innovate their business products, processes or services which can help to address environmental issues and problems.
Table 8.3 Critical Areas in Objectives on Innovation Activities
Sector & Items Issues Actions Agencies
Services Sector:
To reduce environmental damage
(Mean score: 0.22)
The number of companies that rated “not relevant” to the item is high
i. Education
a. Seminar/ workshop on environmental awareness should be conducted.
b. Green energy should be part of innovation milestone.
ii. Green incentives
a. To increase the promotion of government fiscal incentives and efforts as published in KeTTHA’s website8.
b. The process for application of the incentives should be simplified.
Example: Currently the application has to go to MIDA whereas the responsible agency is KeTTHA.
i. KeTTHA ii. MOSTI
iii. NRE
iv. MPIC
v. HLIs
Manufacturing Sector:
To reduce environmental damage
(Mean score: 0.34)
The number of companies that rated “not relevant” to the item is high
8 http://www.kettha.gov.my/portal/index.php?r=kandungan/index&menu1_id=2&menu2_id=81&menu3_id=131 Date accessed: 21st February 2016.
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8.2.3 Government Support for Innovation
With regard to the support and assistance provided by the government to SMLs in innovation activities, two main critical results emerged from the findings. First, the percentage of companies in the manufacturing sector receiving government grants is very low, which is less than 10 percent of the respondents for each identified grant (i.e. innovation grant and R&D grant).
Second, this situation might be explained from the level of awareness of SMLs’ owners on the availability of government support for innovation, especially in terms of financial assistance or grants. This is because majority of the SMLs in this study claimed that they are not aware or have minimal knowledge on the availability of government support in innovation activities. Hence, Table 8.4 proposed several actions to be taken by the respected government agencies to scale up the coverage and accessibility of their support, especially in terms of financial assistance to SMLs. For example, the government agencies should increase the number of both educational and promotional programs to disseminate the information about the available support as well as revise the current procedure to apply financial grants.
Table 8.4 Critical Areas in Government Support for Innovation Activities
Sector & Items Issues Actions Agencies
Manufacturing Sector:
Duty free to import machinery or equipment (10.23%),
Innovation grant (10.45%),
Commercialisation of R&D fund (11.30%) Services Sector:
Duty free to import machinery or equipment (3.76%),
Innovation grant (3.06%), Commercialisation of R&D fund (3.09%)
The percentage of companies receiving government support is very low
i. Education
a. Radical innovation should be increased in the manufacturing sector.
ii. Revise the funding application procedure
a. Relevant government agencies should ease the procedure of applying grant.
b. The government should also extend the current types of grant which not only focus on product innovation, but also other types of innovation (such as marketing
innovation).
i. MOSTI
ii. MTDC
iii. MDEC
iv. SME
Corp.
v. HLIs
vi. RIs
vii. MOHE
All Sectors:
Many companies are not aware about the incentives available (51.25%)
The percentage of companies unaware about government incentive is high
iii. Promotion
a. The government should strengthen the awareness and promotion effort among industries.
b. This can be done through one-stop center (e.g. at UTC/ RTC/ SSM), consist of innovation grant/ activities and related incentives by government agencies (e.g.
MOSTI, MTDC, MDEC, MOHE).
i. MOSTI
ii. MTDC
iii. MDEC
iv. SME
Corp.
v. HLIs
vi. RIs
vii. MOHE
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8.2.4 Cooperation for Innovation Activities
Findings in Section 5.10 showed that many SMLs in both manufacturing and services sectors perceived collaboration with government or public research institutes (GRIs) as the least important collaboration for innovation activities. Based on the findings, several actions can be initiated in order to strengthen the collaboration between SMLs and GRIs as shown in Table 8.5 below.
Table 8.5 Critical Areas in Innovation Cooperation
Items Issues Actions Agencies
Manufacturing Sector:
Level of Innovation Collaboration with Government / Public Research Institutes: Very low (Mean score:
1.33)
The government as a
partner or collaborators rated lowest by the respondents among other collaborators.
i. Promotion
a. Promotion activities should be strengthened by the government agencies to ensure the industry is aware of the services provided such as technical consultancy services (provided by MIDA).
b. This can be done through one-stop center (e.g. at UTC/ RTC/ SSM)/ Mass Media/ Social Media (MIDA, SIRIM, RIs).
ii. Business Matching for Innovation Collaboration Program
a. The government should escalate the innovation collaboration between SMLs and GRIs through business matching program.
b. The government may also provide some incentives for the SMLs to collaborate with GRIs such as in terms of grant allocation and project recognition.
i. MIDA
ii. SIRIM
iii. SME Corp.
iv. RIs
Services Sector:
Level of Innovation Collaboration with Government / Public Research Institutes: Very Low (Mean score:
1.13)
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8.2.4 Cooperation for Innovation Activities
Findings in Section 5.10 showed that many SMLs in both manufacturing and services sectors perceived collaboration with government or public research institutes (GRIs) as the least important collaboration for innovation activities. Based on the findings, several actions can be initiated in order to strengthen the collaboration between SMLs and GRIs as shown in Table 8.5 below.
Table 8.5 Critical Areas in Innovation Cooperation
Items Issues Actions Agencies
Manufacturing Sector:
Level of Innovation Collaboration with Government / Public Research Institutes: Very low (Mean score:
1.33)
The government as a
partner or collaborators rated lowest by the respondents among other collaborators.
i. Promotion
a. Promotion activities should be strengthened by the government agencies to ensure the industry is aware of the services provided such as technical consultancy services (provided by MIDA).
b. This can be done through one-stop center (e.g. at UTC/ RTC/ SSM)/ Mass Media/ Social Media (MIDA, SIRIM, RIs).
ii. Business Matching for Innovation Collaboration Program
a. The government should escalate the innovation collaboration between SMLs and GRIs through business matching program.
b. The government may also provide some incentives for the SMLs to collaborate with GRIs such as in terms of grant allocation and project recognition.
i. MIDA
ii. SIRIM
iii. SME Corp.
iv. RIs
Services Sector:
Level of Innovation Collaboration with Government / Public Research Institutes: Very Low (Mean score:
1.13)
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8.2.5 Innovation Barriers
Findings in Section 5.14 showed that both manufacturing and services sectors faced some barriers to innovate because of two critical factors namely the cost factor and knowledge factor. Where cost factor is concerned, the high cost of innovation and lack of funding prevent most companies from innovating. Additionally, lack of qualified personnel knowledgeable in executing innovative activities such as getting the right funds or partners as well as securing intellectual property protection, also pose a major problem in innovative activities. Due to these issues, several actions are proposed in Table 8.6.
Table 8.6 Critical Areas in Innovation Barriers
Items Issues Actions Agencies
All Sectors:
Cost and
knowledge factor rated highest in innovation barriers (Mean score:
2.19 and 2.05 respectively)
Companies in both
sectors having similar issue in executing innovation activities
i. Funding
a. Process of grant application should be simplified.
b. Increase the number of
government-backed capital firms or private venture capital firms (business angels, philanthropist).
ii. Mentoring
a. Large or successful companies should be appointed (by MOSTI/
MIDA) as mentors to enhance knowledge capabilities for small industries.
iii. Business Innovation Training
a. SMLs should be encouraged to attend continuous business innovation training.
b. Relevant government agencies such as HRDF should scale up and strengthen the delivery of business innovation training to SMLs.
iv. Human Capital
a. Short term: Nurture innovative and creative thinking among workers through up-skilling programme (e.g. by TalentCorp/ MOSTI/ AIM/
HLIs).
b. Nurture innovative and creative thinking learning approach since early stage of education (e.g. in primary school).
i. TalentCorp ii. MOSTI
iii. MIDA
iv. Industry players
v. MTDC
vi. HRDF
vii. HLIs
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