Tuesday, March 16, 2010

Innovation and R&D: Hurdles Galore

Just how bad is the situation with respect to R&D in Malaysia? Even considering our demographic profile, it’s really, really poor. The latest report available on actual expenditure paints a gloomy picture (click on the pic for the larger version; source: MASTIC):


Not pretty is it? All’s not quite lost however, as a lot of the foundation for a growth spurt in innovation and R&D intensity is already in place:

  1. The legal framework is in place, from laws governing patents and trademarks to intellectual property rights, though enforcement is still a bit of an adventure.
  2. Malaysia acceded to the international Patent Cooperation Treaty in 2006, which greatly speeds up the granting of international patents.
  3. A little more than half of total R&D spending is done by industries rather than government.
  4. Universities have mostly gotten their act together and are starting to really push for industrial collaboration to commercialise patents, and to offer research consultancy services.
  5. We have a numbers of science parks operational such as Technology Park Malaysia, Kulim High-Tech, and Cyberjaya with more on the way. These developments can create the potential (I won’t say actual realisation) for cooperative R&D between academia and industry, as well as serve as an incubator for start-ups and joint ventures.
  6. Various tax incentives and the IRPA grants provide financial motivation for both public and private sector R&D.

There has been in fact some progress since 2006 in fostering innovation (patents applied for and granted; source:MYIPO):


Nevertheless, just looking at the chart, there’s still a long way to go before we catch up with our regional peers or even domestic based foreign R&D. Some of the issues I see (my opinions, not necessarily the facts):

  1. Issue number 1 is that Malaysian companies just aren’t interested in spending on R&D, with most of the private sector contribution coming from MNCs and other foreign owned firms – that has to change. Local companies that do engage in R&D collaboration with universities run into a culture clash mainly because business and academic incentives for R&D aren’t aligned.
  2. Issue number 2 is universities aren’t always doing research that can be commercially applied, and aren’t terribly good at communicating their discoveries when they do. As a result, existing patents aren’t picked up on by the private sector and bought or licensed to be commercialised.
  3. Issue number 3 is that IP laws aren’t fully grasped yet, which results in disputes and delays in getting products to market.
  4. Issue number 4 is that outside of the science parks, we have a problem getting R&D going in SMEs as they lack the scale and resources to conduct R&D on their own, even if it’s just market research.
  5. Issue number 5 is quite simply capacity and capability. We just don’t have enough people doing research or the facilities to support them.
  6. Issue number 6 is that tax incentives and government research grants are too narrowly based. While there’s a good argument for prioritising limited resources, when you talk about a new economic model based on innovation and creativity, putting your money on just hard sciences isn’t exactly going to get you far.

Technical Notes:

  1. Report excerpt from Mosti Pocket Book 2008 (warning: pdf link), Malaysia Science and Technology Information Centre (MASTIC)
  2. Patent statistics from the Intellectual Property Corporation of Malaysia


  1. Lucintel-A consulting and market research company provides cost effective market intelligence, business insights and corporate advisory services for the composites, performance material and related end-user markets to help customers make better business decisions.

  2. Legal framework need to be updated with many outdated Malaysian Acts have to be revised