CHAPTER 10
PUBLIC SUPPORT FOR
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Chapter 10 Public Support for Science and Technology
This chapter is devoted to the types of schemes provided by various government agencies to support or accelerate technology- based activities such as research and development, commercialisation, acquisition of technology, and etc. in the nation’s drive to become one of the world’s most competitive industrialised economies by 2020. The first attempt at providing information and analysis of the government support for science and technology appeared in the 1998 Science and Technology Indicators Report that carried a chapter on the various incentives, schemes and programs offered by the Government for the development of science and technology in Malaysia. A review of the number of applications and approvals for the incentives was presented in the Science and Technology Indicators Report, 2000. While the chapter in the 1998 Report serves to create awareness with respect to the numerous incentives, the 2000 Report gives an indication as to the extent of the utilisation of incentives and schemes for the development of science and technology in the country.
To encourage further the development of science and technology, the Government of Malaysia has introduced new schemes. In addition to introducing the new schemes, this chapter will continue to provide an update on the status of applications and approvals for the existing schemes. This serves to indicate the extent of application and usage of the various incentives. As was the case in the last report, there still exist gaps in data and hence limits the completeness and comprehensiveness of this report. Due to data gaps, it is recommended that any attempt to draw conclusions from this chapter should be made only after having considered this shortcoming.
10.1 New Schemes Introduced in 2002
The government of Malaysia has introduced four additional schemes in its effort to encourage further the development of science and technology in the country. These are the Technology Acquisition Fund for Women (TAF-W), the E-Manufacturing Grant, the Grant for Rosettanet Standard
Implementation for Small and Medium Size Enterprises (SMEs), and the Grant for Upgrading Engineering Design Capabilities.
10.1.1 Technology Acquisition Fund for Women (TAF-W)
The Technology Acquisition Fund for Women (TAF-W) was introduced the Ministry of International Trade and Industry as an extension of the existing TAF scheme.
The TAF-W specifically caters to women entrepreneurs, providing partial grants to them to enhance their technology levels and production processes. This fund hopes to upgrade the technological capabilities, technical skills and expertise of women-owned companies in order to enhance the competitiveness of these companies and to integrate them into the mainstream of manufacturing. It offers two forms of assistance for the successful applicants: Acquisition of technology and training overseas.
Acquisition of Technology
Acquisition of technology is further categorized into three distinct classifications, namely, technology licensing; acquisition of patent rights, prototypes and design; and purchase of high tech machinery and equipment.
(i) Technology Licensing
The objective of this grant is to enhance the design and production of new and existing products and processes. The technology to be acquired should include design, blueprints, manufacturing know-how, training, technical support and proprietary equipment. Partial grant of up to a maximum of 70% or RM 1 million whichever is lower will be given to successful applicants. Expenses that are eligible for approvals include design, blueprints, manufacturing know-how, training, technical support and proprietary equipment.
(ii) Acquisition of Patent Rights, Prototypes and Design
Grants are allocated to facilitate the transfer of technology to enable the
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development of new processes and products.
All acquisition must include manufacturing rights from technology provider for manufacturing purposes. As in the case of technology licensing, partial grant of up to a maximum of 70% or RM 1 million whichever is lower, will be given to successful applicants.
Eligible expenses include cost of procuring patent, registered design and or procuring prototype.
(iii) Purchase of High Tech Equipment and Machinery
The objective of technology acquisition through purchase of high tech equipment and machinery is to enhance the current production processes and the physical development of new products. Partial grant of up to a maximum of 50% or RM 1 million of the total cost for the purchase of machinery or equipment whichever is lower will be granted.
Only cost of machinery is eligible for consideration.
Training Programme (Overseas) Overseas training programmes fall into the following categories: Placement of Malaysian in Technology Companies or Technology Institutes and Foreign Expert Sourcing Programme.
(i) Placement of Malaysian in Technology Companies or Technology Institutes
The objective of this programme is to expose Malaysians and upgrade their knowledge on technology development in foreign technology companies or institutes excluding affiliated or subsidiary companies overseas. Placement takes the meaning of job attachment or on-the job training. Partial grant up to a maximum of 50% of the total cost or RM30,000, whichever is lower for each person;
and subject to a maximum of 3 persons eligible for funding per project. The training period should not exceed three months. Expenses that are eligible for funding include airfare, accommodation, and daily allowances.
(ii) Foreign Expert Sourcing Programme
The objective of this programme is to assist companies to engage foreign technical experts and consultants in upgrading their products and processes. Partial grant up to a maximum of 50% of the total cost or RM30,000, whichever is lower will be eligible for funding.
Similar expenses are eligible for funding in addition to the professional fees for foreign experts.
10.1.2 E-Manufacturing Grant
The E-Manufacturing Grant - ERP, introduced in 2002, provides funding to Small and Medium Enterprises (SMEs) to adopt Information and Communication Technology (ICT) aimed at improving competitiveness, efficiency and productivity. The objective of E- Manufacturing Grant is to assist SMEs in the acquisition of Enterprise Resource Planning (ERP) software; or to subscribe to on-line ERP system. The maximum grant allocated per company is RM 500,000. The funding is in the form of a matching grant where 50% of approved project cost is borne by the Government and the remainder by the applicant. Priority is given to: (1) SMEs that manufacture products or are involved in activities or services promoted under the Promotions of Investment Act (1986); and (2) those companies that participate in the Industrial Linkage Programme. Eligible expenses include the following:
• Purchase of ERP software or first-year subscription to on-line ERP system;
• Implementation charges including system study, customisation and training;
• Purchase of related networking equipment and server; and
• Other software such as Computer Integrated
Manufacturing (CIM), Enterprise Resource Management (ERM), Materials Resource Planning (MRP), and Supply Chain Management (SCM) can also be considered based on the
capabilities of SMEs.
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Chapter 10 Public Support for Science and Technology
10.1.3 Grant for RosettaNet Standard Implementation for SMEs
Introduced at the end of 2002, the RosettaNet Standard Implementation for SMEs scheme provides assistance to SMEs in the Electrical and Electronics (E&E) sector to implement RosettaNet, an Internet based common messaging standard for global supply chain management. The RosettaNet enables companies in the supply chain to communicate and conduct business electronically through common codes for sourcing of parts and components. The objective of the grant is to assist SMEs in the E&E sector to implement the RosettaNet Standard through subscription to hosted services offered by Application Service Provider (ASP) registered with RosettaNet (M) Berhad.
The maximum grant allocated per company is RM30,000. The funding is in the form of a grant, where 70% of approved project cost is borne by the Government and the remainder by the applicant. Expenses that are eligible for other Government grants are not entitled under this scheme. Eligible expenses are:
• One time registration fee with ASP of RosettaNet;
• First year licensing fees of RosettaNet Application / Software;
• Professional fees to carry out system integration works, interfacing between enterprise applications and the middleware;
• Purchase of related computer hardware, peripheral and networking equipment;
• Setup and installation cost for connection to RosettaNet (including costs of acquiring firewall, modem, router and remote access server); and
• Related training fees.
Rossettanet Malaysia Bhd, which specializes in promoting e-business standards for global supply chain has managed to attract 62 companies, of which 42 are local companies and 20 foreign to adopt the standards (The
Star, StarBiz, p. 5). Of these 62 companies, some have already implemented the standard while others are still in the decision-making process.
10.1.4 Grant for Upgrading Engineering Design Capabilities
Introduced in 2002, the grant provides assistance for SMEs to enhance their engineering design capabilities. This would enable SMEs to undertake their own designs in-house. The objective of the scheme is to provide grant for SMEs to acquire related design software, hardware and training. The maximum grant allocated per company is RM300,000. Funding is in the form of a matching grant where 50% of approved project cost is borne by the Government and the remainder by the applicant. Eligible expenses include: purchase of design software (CAD, CAM, and CAE) or subscription fee/license fee for on-line engineering design services;
purchase of related computer hardware, peripheral and networking equipment; and related training. Priority is given to SMEs, which either manufacture products or are involved in activities or services promoted under the Promotion of Investments Act (PIA), 1986; and participate in the Industrial Linkage Programme (ILP).