DISCUSSION & RECOMMENDA- TIONS
CHAPTER 7: DISCUSSION & RECOMMENDATIONS
7.2 Recommendations to Increase Innovation Activities in Malaysia
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The survey indicated that the most active cooperation and collaboration partners in innovations fell under the categories of ‘suppliers of equipment, materials and components’ and ‘clients and customers’, for both manufacturing and services sectors. However for large services companies, the popular collaborators were ‘other companies within the company group’, ‘suppliers of equipment, materials and components’ and ‘universities or other higher education institutes’
(Chapter 5, Figure 5.21).
These showed that innovations started and continued to develop due to the companies’ desire to satisfy customers’ needs and requirements. This also shows that these innovative companies practice market pull strategy whereas to be more innovative, the companies should practice technology push strategy. Details of the discussions can be found in the analysis chapter of this study.
7.1.7 Intellectual Property Applications and Protection
Globally, the number of IP grants serves as an important measurement tool for innovation either in the form of patents, trademarks, industrial design, utility innovation, copyrights, and geographical indications. All types of IPs show similar trend of intellectual property applied and granted.
Based on �indings (Figure 5.33 and 5.34), the highest types of IP applied and granted for both sectors are trademarks and patents whereas the industrial design shows the lowest percentage.
The highest percentage for trademark applied and granted may be due to cheaper cost and shorter processing time. The application of industrial design should be encouraged since well- designed products create an important competitive advantage for companies.
This survey also revealed that the manufacturing sector placed higher importance on IP protection as compared to the services sector. In the manufacturing sector, the most common IP rights acquired in order of importance were trademark registration, design registration, con�identiality agreements and trade secret. On the other hand, the most popular IP for the services sector were the con�identiality agreements, followed by trade secret, trademarks, design registrations and trademarks registrations (Chapter 5, item 5.13). It was also observed that the IP applications trend increased steadily in both manufacturing and services sectors in the years surveyed, while the number of IPs granted is lower, which may be due to the longer time for processing the IP applications.
7.1.8 Innovation Barriers/ Hampering Factors
In this survey, the most signi�icant factor hampering innovation is associated with cost, followed by lack of knowledge, market and organisation factors. These problems faced by companies are further exacerbated by high cost of �inancing the innovations, resulting in them abandoning or not carrying-through the innovations, either for new products or products needing improvements.
This may be due to the increased cost of getting resources, limited sources of innovation funding as well as the uncertain economic condition of the country. These unfavorable factors affected their desire and enthusiasm to create change and to innovate new products and services in both sectors, i.e. manufacturing and services. This conclusion answers the eighth objective of this study and details of the discussions can be found in the analysis Chapter 5, item 5.14.
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7.2 Recommendations to Increase Innovation Activities in Malaysia
The following recommendations are aimed at enhancing the country’s innovative capabilities as well as to formulate appropriate policies and strategies as adopted by other known innovative countries. The recommendations also took into consideration the needs and suggestions made by the survey respondents, and are meant to add value, improve or complement existing initiatives. These recommendations are intended as indication of the pertinent areas that the government may want to consider for further deliberations and justi�ication to provide the necessary aid or assistance.
The other reason for these recommendations is to step-up the innovation activities within the manufacturing and the services sectors in Malaysia so that they will be at par or better in their respective sectors with other innovative companies from other countries.
7.2.1 Strengthening the Innovation Ecosystem
Many companies depend on the government to provide necessary infrastructure to spur their innovation activities and ecosystem. Innovation ecosystem (physical and non-physical) from all stakeholders needs to be strengthened to facilitate innovation activities from creation and generation of ideas to the implementation of the innovation.
Suggestions:
i. Local private sector needs to improve and expand their research and innovation facilities;
ii. Local �irms should be encouraged to exploit government research institute, university knowledge and innovation;
iii. More innovation and business incubators and innovation parks are needed for innovative companies’ growth and sustainability;
iv. Efforts in encouraging innovations have to be enhanced, and barriers (as identi�ied in item 5.14) have to be overcome. For example:
a. More supports are needed from business angels and philanthropists to invest in innovation activities to overcome cost of innovation;
b. Develop innovative and high skill workers and human capital;
c. Regulations not allowing government servants (researchers) to have more than
�ive per cent share in companies have to be revamped;
d. Related government agencies should enhance innovation and commercialisation funding to business through matching grants e.g. CRDF and TAF; and
e. Agencies involved are to consider prolonging the tenure of certain grant awards.
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7.2.2 Promoting Innovative Culture amongst SMLs Sector and Education Sector
An active government intervention and support in the form of promotions, liberalising the relevant regulations and actively taking up potential innovative projects until their completion are impetus towards inculcating an innovative culture. The Government needs to intensify the promotion of innovative values and practices to build an innovative culture among HLIs and companies in Malaysia.
Suggestions:
i. Encourage and boost their innovative spirit by promoting the culture of innovation sustainably among students at all levels of education and in SMLs, through innovation and entrepreneurship based curriculum in schools and innovation competition; and ii. Related government agency such as Majlis Rekabentuk Malaysia (MRM) should increase
their presence among SMLs (e.g. through mass media or digital media) and encourage continuous improvement in design thinking, prototyping and testing in SMLs.
7.2.3 Increase Cooperation between Companies
The government is to encourage more productive cooperation and collaboration in innovation activities and R&D between the business sectors and research institutions including universities in Malaysia. Triple helix (Government, Industry and HLIs) and quadruple helix (Government, Industry, HLIs and Community) cooperation models should be rigorously implemented by the government to bridge the gap between the scienti�ic and technological knowledge from research institutions especially from university to industry. The cooperation ultimately would have a big impact on society and the nation’s wealth creation capability. Universities and industry on the other hand need to develop more innovative, relevant and user-friendly products that meet users’ needs and requirements, and eventually encourage commercialisation of their products.
Suggestions:
i. Strengthen collaboration between industries and research institutions across all sectors and sizes (SMLs) and to identify efforts and barriers that hinder collaboration between researchers and industries such as continuous campaign for cooperation in innovation from universities and GRIs;
ii. Revise and improve the current conditions for granting research grants and aid, thus making sure researchers continuously must seek collaborations with companies, head of communities and GLCs. The respective collaborators are encouraged to actively participate in the R&D activities; and
iii. Introduce more classes and short-term courses related to innovation or commercialisation which involve the collaboration between academia and industry to solve industry problems. This could also encourage SMLs to absorb new and external knowledge to increase the rate of innovation.
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7.2.4 Increases in R&D, Innovation and IPs Funding
Malaysia’s share of gross expenditure on R&D to gross domestic product was 1.13% for the
�inancial year 2012 as compared to Singapore (2.10%), UK (1.72%), USA (2.79%), Canada (1.73%), China (1.98%), Denmark (2.98%), Finland (3.55%), Republic of Korea (4.04%, 2011) and Japan (3.39%). In order to increase the R&D to GDP ratio, the spending on R&D activities must continue to increase. The R&D budget to conduct high-impact researches in strategic
�ields and priority areas such as nanotechnology, automotive technology, biotechnology and aerospace for 5 research universities in 2013 was only RM600 million but not for enhancing innovations in SMLs. The total Malaysia’s expenditure on innovation was RM10.61 billion for the year 2012 (R&D, 2013).
In line with the New Economic Model (NEM) of achieving high income developed economy, a radical shift in R&D and innovation allocation is not only appropriate but a necessity. With the increased funding, more depth and facets of the R&D and Innovation can be explored which could effectively forge the studies into unexpected frontiers of innovation and culminate in more superior end products.
Suggestions:
i. Large companies need to boost their innovation base in Malaysia, so that their innovation expenditure will be recorded as Malaysia’s expenditure;
ii. Increase innovation grant for SMLs-University collaboration and cooperation such as PPRN (Public Private Research Network), Commercialisation of Research & Development Fund (CRDF) and TechnoFund grants;
iii. SMLs should enhance innovation activities such as R&D and market validation research (National Survey of R&D, 2013);
iv. Introduce funding for International IP protection (new international patent �ilings) for high technology products and processes that can be commercialised by Malaysian companies. This can be done through joint funding or matching grant by both private companies and the government. MOSTI could also extend the CRDF (2 and 3), Technology Acquisition Fund (TAF) and TechnoFund programme to include international patent
�ilings. Thus, the technology innovation could be internationally protected and could access global market; and
v. Special prototyping grants (e.g. TechnoFund and InnoFund) for innovators/researchers should be increased, such that they would be able to quickly bring their products to the market.
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7.2.4 Increases in R&D, Innovation and IPs Funding
Malaysia’s share of gross expenditure on R&D to gross domestic product was 1.13% for the
�inancial year 2012 as compared to Singapore (2.10%), UK (1.72%), USA (2.79%), Canada (1.73%), China (1.98%), Denmark (2.98%), Finland (3.55%), Republic of Korea (4.04%, 2011) and Japan (3.39%). In order to increase the R&D to GDP ratio, the spending on R&D activities must continue to increase. The R&D budget to conduct high-impact researches in strategic
�ields and priority areas such as nanotechnology, automotive technology, biotechnology and aerospace for 5 research universities in 2013 was only RM600 million but not for enhancing innovations in SMLs. The total Malaysia’s expenditure on innovation was RM10.61 billion for the year 2012 (R&D, 2013).
In line with the New Economic Model (NEM) of achieving high income developed economy, a radical shift in R&D and innovation allocation is not only appropriate but a necessity. With the increased funding, more depth and facets of the R&D and Innovation can be explored which could effectively forge the studies into unexpected frontiers of innovation and culminate in more superior end products.
Suggestions:
i. Large companies need to boost their innovation base in Malaysia, so that their innovation expenditure will be recorded as Malaysia’s expenditure;
ii. Increase innovation grant for SMLs-University collaboration and cooperation such as PPRN (Public Private Research Network), Commercialisation of Research & Development Fund (CRDF) and TechnoFund grants;
iii. SMLs should enhance innovation activities such as R&D and market validation research (National Survey of R&D, 2013);
iv. Introduce funding for International IP protection (new international patent �ilings) for high technology products and processes that can be commercialised by Malaysian companies. This can be done through joint funding or matching grant by both private companies and the government. MOSTI could also extend the CRDF (2 and 3), Technology Acquisition Fund (TAF) and TechnoFund programme to include international patent
�ilings. Thus, the technology innovation could be internationally protected and could access global market; and
v. Special prototyping grants (e.g. TechnoFund and InnoFund) for innovators/researchers should be increased, such that they would be able to quickly bring their products to the market.
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7.2.5 Generating and Disseminating Information on Innovations
Information on innovation is central to the success of innovation activities. The methods through which information is collected and made available for use by the companies are important. It is also essential that innovative research results in the country be made known to companies to utilise. This survey indicated that 51.25% of innovative companies were not aware of incentives and innovation support (�inancial, technical, knowledge and market) provided by the government through its various relevant agencies. The dissemination of this vital information (item 5.8) is important in catalysing innovations within the companies. The innovation information is also needed to measure the levels of innovation in the country.
Suggestions:
i. Strengthen the dissemination of R&D result from universities and research institutes to SMLs;
ii. Companies should be more forthcoming in providing data and explanations of their innovation activities; and
iii. Strengthen coordination of the data gathering and dissemination efforts of S&T, R&D and NSI surveys by MASTIC or other relevant government agencies, e.g. DOSM.
7.2.6 Supporting the Innovation Product and Services
Commercialisation of innovative products needs support from the government and industry as it sometimes requires huge capital and long processes.
Suggestions:
i. Government, GLCs and industry must exploit (as initial buyer) innovative products and technologies generated from research efforts by the universities and research institutes;
ii. Government should encourage industry, universities and research institutes to hire more international expertise to mentor, collaborate and conduct research in radical and leading edge technologies;
iii. Special incentives should be given to SMLs who hire international expertise and who collaborate with local university and research institutes- Malaysia My Second Home program could be integrated with this proposed incentives by inviting more high-skilled expatriate to work and live in Malaysia;
iv. Special incentives (e.g. tax relief on capital spent on innovation activities) should be given to SML that exploit research products of universities and government research institutes; and
v. Encourage more Public-Private research linkages by giving more grants for SMLs working directly with the Universities to produce innovative products and services locally. The present Public-Private Research Network (PPRN) scheme under Ministry of Higher Education (MOHE) should be enhanced.
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7.2.5 Generating and Disseminating Information on Innovations
Information on innovation is central to the success of innovation activities. The methods through which information is collected and made available for use by the companies are important. It is also essential that innovative research results in the country be made known to companies to utilise. This survey indicated that 51.25% of innovative companies were not aware of incentives and innovation support (�inancial, technical, knowledge and market) provided by the government through its various relevant agencies. The dissemination of this vital information (item 5.8) is important in catalysing innovations within the companies. The innovation information is also needed to measure the levels of innovation in the country.
Suggestions:
i. Strengthen the dissemination of R&D result from universities and research institutes to SMLs;
ii. Companies should be more forthcoming in providing data and explanations of their innovation activities; and
iii. Strengthen coordination of the data gathering and dissemination efforts of S&T, R&D and NSI surveys by MASTIC or other relevant government agencies, e.g. DOSM.
7.2.6 Supporting the Innovation Product and Services
Commercialisation of innovative products needs support from the government and industry as it sometimes requires huge capital and long processes.
Suggestions:
i. Government, GLCs and industry must exploit (as initial buyer) innovative products and technologies generated from research efforts by the universities and research institutes;
ii. Government should encourage industry, universities and research institutes to hire more international expertise to mentor, collaborate and conduct research in radical and leading edge technologies;
iii. Special incentives should be given to SMLs who hire international expertise and who collaborate with local university and research institutes- Malaysia My Second Home program could be integrated with this proposed incentives by inviting more high-skilled expatriate to work and live in Malaysia;
iv. Special incentives (e.g. tax relief on capital spent on innovation activities) should be given to SML that exploit research products of universities and government research institutes; and
v. Encourage more Public-Private research linkages by giving more grants for SMLs working directly with the Universities to produce innovative products and services locally. The present Public-Private Research Network (PPRN) scheme under Ministry of Higher Education (MOHE) should be enhanced.
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7.2.7 Innovating by External Sources
Knowledge for innovations can be acquired through internal and external sources. Although the trend (See Table 5.2) shows slight improvement compared to previous survey (NSI-6), Government’s effort to embolden external innovation in SMLs should continuously be done for a better achievement (e.g. better product/ services, higher R&D activities). The Government should encourage local companies to acquire innovative knowledge through multiple channels from external sources as a fast route to greater innovation.
Suggestions:
i. Increase source of industrial funding for innovation as aid for SMLs to acquire external scienti�ic knowledge and technologies (e.g. TAF Fund for technologies initiated outside Malaysia); and
ii. Attract more foreign companies to invest in Malaysia, and base their R&D in Malaysia.
Subsequently, they should be encouraged to collaborate with local companies.
7.2.8 Increase Human Capital Capacity
To become a high income economy, Malaysia needs brilliant and innovative workforce.
Suggestions:
i. School and university curriculums should be enhanced (or revamped if need be) to meet the future industrial needs of the nation;
ii. Government should recognise the contributions of PhD holders as a source of innovative ideas;
iii. Recognise workers’ efforts and innovations to support the industrial needs of the nation;
iv. SMLs should be encouraged to hire more local universities PhD graduates (local and foreigner);
v. Foreign PhD scholars in Malaysian universities who have high potential R&D results should be encouraged to stay, continue to innovate and venture out from Malaysia.
Special incentives should be given to attract and retain them in Malaysia such as granting permanent resident (PR) status to them and their families;
vi. TalentCorp should enhance their functionality towards innovation oriented such as:
a. Increase awareness about the importance of innovative thinking among graduates through TalentCorp communication/ marketing medium e.g. Ready4work.my;
b. Collaborate with training providers (e.g. HLIs/ Industries) and related Government Agencies (e.g. MOSTI) to offer Innovation Certi�ication programme such as Professional Innovation Certi�ication programmes;
c. Enhance �lexWorkLife.my in nurturing innovation among women workforce since it is proven (through this study) in maximising work ef�iciency; and
d. Include innovation under ‘areas of critical skill gaps’ in facilitating foreign talent to ensure they contribute their expertise.
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7.2.9 Promote Competitive Market
Promoting a competitive market is the most logical option of achieving high level of innovation towards a high income and developed economy. With the ever increasing demands and shortages of skilled workers in the various industries, it is imperative that local companies play a role in encouraging innovations, and thus serve as catalysts of positive change to propel and safeguard their future business ventures.
Suggestions based on overall �indings:
i. SMLs should offer more competitive salaries for highly skilled workers;
ii. The government should offer special tax structure, or exemptions, for a speci�ic period to those companies that are considered innovative companies;
iii. The government should enhance the quality and the number of awards and recognitions for innovative companies (e.g. increase the monetary value and categories of award to include awards for process, marketing and organisational innovations for Anugerah Inovasi Negara); and
iv. Global market needs innovative and competitive products. Hence there should be enhanced export initiatives by Malaysian innovative companies to penetrate global market, in concert with government efforts.
7.2.10 Extensive Promotion during NSI Survey is Conducted
Based on �indings in Chapter 4, item 4.2, extensive promotion of NSI survey by the government e.g. mass media and digital media advertisements should be done before and during the time the survey is conducted. This is to increase the awareness and response rate by SMLs especially large companies. Normally large companies are more innovative thus their participation would lead to better ranking for Malaysia.