2.

0 Research And Innovation Environment

2.2 Support Facilities By Malaysian Government

2.2.1 What Is Research & Development (R&D)?

The Promotion of Investment Act 1986 defines R&D as any systematic or intensive study
undertaken in the field of science or technology with the object of using the study results for the
production or improvement of materials, devices, products, produce or processes. R&D as well
as technological innovations is essential in the Malaysian government’s strategy of sustainable
development and knowledge-based economy. Recognizing these factors, the government has
accorded a high priority to the scientific and the technological development of the country.

Under the current market trend of trade liberalization and globalization, companies face
increased competition for products and services due to lower entry barriers. This borderless
world has induced hyper competition which will make the less competitive SMEs fail. To
become a significant player in this modern era, SMEs need to undergo a paradigm shift. SMEs
need to be developed and nurtured into an efficient and globally competitive supporting sector,
which is capable of producing high value-added critical parts and components for other leading
industrial sectors, not just a purely export orientated producer.

2.2.2 Science, Technology And Innovation (STI) Development Thrusts

The Government is fully committed towards enhancing the nation’s competency in R&D,
science and technology and ability to innovate. Under the 9th Malaysia Plan (9MP, 2006-2010),
the Government will place greater emphasis on capacity building and strengthening the National
Innovation System (NIS) to build upon leading-edge technologies and know-how.

The thrust for STI development during the 9MP period will be to contribute towards
innovation-led growth as well as enhance productivity and competitiveness for wealth creation
and social well-being. Efforts will be intensified towards mastering and harnessing S&T for
widespread applications in generating knowledge, innovation and growth. In this regard,
concerted efforts will be undertaken to implement the strategies such as strengthening the NIS
to contribute more effectively towards the development and diffusion of new technologies to
enhance productivity, competitiveness and growth; enhancing S&T human capital as a principal
source of innovation and competitive advantage; promoting technopreneurship to enhance
national innovative capacity and increasing the number of S&T-based companies; enhancing
technological capability and capacity of SMEs to meet the challenges of globalization and
increasing competition; prioritizing and consolidating R&D and commercialization initiatives to
ensure more effective resource allocation and increase the rate of commercialization of R&D
and returns to investment; focusing on targeted R&D to generate new sources of growth;
promoting standardization and quality assurance for competitiveness and consumer well-being;
increasing STI awareness to contribute towards nurturing a culture of creativity and innovation;
and improving international linkages in STI development to tap global knowledge.

2.2.3 Government Support For R&D

Malaysian SMEs are very fortunate to have the full support of the government in all
aspects of their operations, including R&D. The facilitation and support from the government
and the continuous initiatives from SMEs themselves to improve their productivity through
continuous R&D in products, services and processes will enhance their competitiveness.

The Ministry of Science, Technology and Innovation (MOSTI) is in charge of managing

the fund and the implementation of S&T research and development programmes in Malaysia.
Other private agencies such as Malaysian Technology Development Corporation (MTDC),
Multimedia Development Corporation (MDeC) and SIRIM Berhad also provide assistance.

1. The Ministry of Science, Technology and Innovation (MOSTI)

In line with the National Science & Technology (S&T) Policy, a number of programmes
are administered by MOSTI’s S&T Division to encourage SMEs to strengthen their technology
base and improve their products.
a) eContent Fund

The objectives of eContent Fund are to spur the development of the local ICT content
industry for domestic and export market and also to develop a more resilient and competitive
local content industry. The focus areas for content development under the 9MP are animation,
games, e-learning, culture and heritage, e-commerce, simulation and virtual reality. These
contents should be able to run on multiple platforms such as 3G/mobile phone, Internet, and
other media such as PDA and TV, etc.

The grant is awarded to local companies and Malaysian teams only. Two categories of
companies are eligible to apply, namely micro-enterprises and medium scale enterprises. The
scope of funding is limited to content development only. However, a maximum of 20% of total
cost is allowed for procurement of infrastructure such as hardware, software, etc. Applicants are
categorized into three groups, namely teams (comprising two individuals), micro-enterprises
and medium scale enterprises. The maximum grant amount for teams is RM90,000, micro-
enterprises get RM500,000 and medium scale enterprises qualify for RM6 million.

2. Standards and Industrial Research Institute of Malaysia (SIRIM) Berhad

SIRIM Bhd, wholly-owned by the Malaysian government, is Malaysia’s largest provider

of technical and quality services. Since its corporatization in 1996, SIRIM has become more
market-orientated. It is focus on discovering and developing new technologies to enable
industries to move up the value chain and aimed to expand from simply using technology to
solve technical problems to discovering technology that will help industries to reinvent their
products and business. With over 800 researches and experts at its disposal, SIRIM is given the
mandate to assist SMEs in improving their operations.

Services provided by SIRIM in research and technology division include contract

research, product development, technology transfer, process optimization incubation, materials
research, skills development and consultancy. Listed below are the facilities for R&D under
SIRIM:
• Advanced Manufacturing Technology Centre

The centre provides a wide range of services to the industries through its three
programmes: Electronics and Intelligent System Development Programme, Industrial
Automation and Robotics Programme, and National CAD/CAM Programme.

• Environment & Bioprocess Technology Centre

The core focus of the centre is Bioprocess and Chemical Engineering,

Environmental Engineering, Energy and Cosmeceuticals. It compliments AMREC by
focusing on the process technology aspects of material technology.

• Techno-Economy and Commercialization Centre (TECC)

The Techno-Economy and Commercialization Centre (TECC) provides

specialized solutions to catalyze the commercialization of technologies to promote the
transfer of technologies and nurture the development of technology enterprises.

• Advanced Materials Research Centre (AMREC)

As the national advanced materials research entity, AMREC has the strategic role
as the nucleus of development on advanced materials technology that is to explore the
potential use of local commodities for higher value added applications, investigating the
use of alternative new materials to reduce material consumption and cost and also to
source for environmentally-friendly substitutes for safer and more comfortable living
environment.

• National Centre For Machinery And Tooling Technology

The National Centre for Machinery and Tooling Technology is a state-of-the-art

industrial support centre that provides end-to-end machinery and tooling solution.
Located in Rasa Industrial Park, Hulu Selangor, the Centre provides customized solutions
in commercial manufacturing processes in the area of design, prototyping and fabrication
of machinery and equipment, as well as parts and components, molds and dies and jigs
and fixtures. The Centre’s establishment is one of the government’s long-term strategies
and action plan to turn Malaysia into an industrialized nation by the year 2020.
3. Malaysian Technology Development Corporation (MTDC)

MTDC was set up in 1992 under the directions of MOSTI to spearhead the development
of technology businesses in Malaysia. Its initial role was to concentrate on the promotion and
commercialization of local research and to invest in new ventures that can bring in new
technologies from abroad.

From those investment activities, MTDC has evolved to become a venture capital outfit
and has been the leading venture capitalist in the country. MTDC has since evolved to become
an integrated venture capital solutions provider. Today, MTDC is the only one-stop agency
where financing can be sourced from; all the way from laboratory ideas to full
commercialization of such ideas.

Two of the funds administered by MTDC to speed up the marketing and production of
commercially viable R&D results are as follows:

a) Commercialization of R&D Fund (CRDF)

The purpose of CRDF is to provide financial support to universities, RIs and eligible
companies to undertake full commercialization of indigenous technology and R&D
results, thus enhancing the national competitiveness and capability of the Malaysian
industrial sector. Basically the fund is divided into four groups – CRDF 1 and CRDF 2
are meant for universities and RIs; CRDF 3 and CRDF 4(a),(b) and(c) are for SMEs,
large corporations and public listed companies.

b) Technology Acquisition Fund (TAF)

Established to facilitate the acquisition of strategic and relevant technology by the

Malaysian Industrial Sector, it provides partial grant to further promote efforts by the
private sector to acquire new technology and to enhance their technology level and
production processes. TAF is targeted towards Malaysian incorporated manufacturing
companies (SMEs and large corporations). Public listed companies or their subsidiaries
are not eligible to apply.
2.3 INNOVATION AND COMMERCIALIZATION CENTRE (MOSTI)

Under the Ninth Malaysia Plan (RMK-9), the Government has undertaken to consolidate the
National Innovation System and encourage the commercialization effort of R&D projects funded
by the public sector. The I&P Division was established in December 2007 to help the
Government to achieve the objectives as stated under MOSTI’s innovation and
commercialization programmes. Its establishment was a result of a merger of the Strategic and
Commercialization Division (S&P) with the Innovation Sub-Unit which was previously under
the Technology Management Unit (UPT).
INNOVATION SECTION

National Innovation Council (NIC) Unit

(a) To plan strategic directions to enhance the nation’s innovation capability and expedite
measures undertaking innovation.

(b) To plan, coordinate and monitor the implementation of the National Innovation Policy.

(c) To coordinate policy initiatives that impact on innovation.

(d) To implement and monitor society programmes which develop their creativity and
entrepreneurial skills.

(e) To evaluate the national innovation level and achievements in accordance with national
mission and objectives.

(f) Administer NIC meeting and working committee under the council.
Innovation Promotion and Development Unit

(a) To plan and coordinate the innovation programmes under the National Innovation Agenda.

(b) To set innovation policy, programmes and activities for MOSTI and its agencies and clusters.

(c) To provide advisory services for National programme or activity.

(d) To manage Innovation Programme studies.

(e) To set-up strategic networking with national, regional and international innovation
bodies/institutes.

(f) To manage innovation awards – Innovation Research Awards For Public and Private Sector
(AIPB) and National Innovation Award.

(g) To plan and coordinate innovation programmes/workshops/conference exhibitions.

COMMERCIALISATION SECTION

Intellectual Property Unit

(a) Drafts Guidelines on Commercialisation of Intellectual Property of Public Sector’s R&D;

(b) Provides advisory service, assists and facilitates researchers and inventors to obtain
Intellectual property protection;

(c) Assists in the management of commercialisation of Intellectual Property activities arising

from R&D carried out by research institutions which received funding from the Government and
Electronic Government Applications;
(d) Assists the Malaysian Science and Technology Information Centre (MASTIC) Division to set
up database on Intellectual Property commercialization activities; and

(e) Acts as a secretariat for the Steering Committee on Commercialisation of Intellectual

Property.

Business Development Unit

(a) Identifies and match makes potential R&D projects to be commercialized with the industry

(b) Works closely with the Fund Unit of MOSTI and Venture Capital companies (MTDC,
MAVCAP AND MDV) in the aspect of funding to enhance commercialization activities; and

(c) Secretariat to the Committee for the Verification Of R&D Projects/Activities and its
Commercialisation For The Purpose of Claiming Tax Exemption.

2.4 PLANTATION INDUSTRIES AND COMMODITIES MINISTRY

MALAYSIAN RUBBER BOARD (MRB)

The Malaysian Rubber Board (MRB) spearheads the overall development andmodernisation of
the various sectors of the Malaysian rubber industry. Acknowledged globally as the centre of
excellence in natural rubber research and development, MRB is ever ready to share its expertise
through smart partnership with investors and entrepreneurs who plan to venture into a wide range
of rubber and rubber based product manufacturing. A statutory agency under the aegis of the
Plantation Industries and Commodities Ministry, MRB works closely with the government in
formulating the nation's rubber policies and at the same time, it carries out R&D primarily on all
aspects of natural rubber and rubber products.

R&D activities are carried out both in MRB as well as the Tun Abdul Razak Research
Centre (TARRC) in the United Kingdom. In addition there are two subsidiaries within the MRB.
The units are RRIM-CONSULT Corporation or RRIMCORP, which undertakes
commercialization of MRB's technologies and Lembaga Getah Malaysia Properties Corporation
which manages MRB's properties. TARRC also has a consultancy unit called Rubber
Consultants which provides advisory and testing services to the rubber industry.

MALAYSIAN PALM OIL BOARD (MPOB)

The Malaysian Palm Oil Board (MPOB) is the premier government agency that isresponsible for
promoting, developing and advancing the country's palm oil industry. It is also responsible for
providing scientific and technological leadership to support the development of the palm oil
industry.

1. TRANSFER OF TECHNOLOGY

The main objective of Research and Development in MPOB is to ultimately transfer

technology to the industry. MPOB welcomes entrepreneurs to take up its technologies for
commercialization under mutually agreed terms and conditions.

2. FORMS OF TECHNOLOGY TRANSFER OR COLLABORATION

MPOB generally does not involve itself directly in the business of commercial
production, processing or marketing. We license our technologies to interested
parties who will do the production and marketing and of the products.
2.1 Licensing
An interested party may be licensed by MPOB the patents and knowhow on
the technologies for commercialization under mutually agreed terms and
conditions including payment of royalties. Production and marketing will
carried out by the licensee. Royalties may be imposed on the licensee as a
percentage of sales or as a lump sum or both. Licenses may be exclusive or
non-exclusive.

2.2 Pilot Plant Development

Where necessary MPOB may conduct further development work with
interested parties at the scaled up pilot plant level. Costs may be negotiated.
Government grants may be applied for where available.
2.3 Incubator Facilities
MPOB may allow its facilities to be used for trial manufacturing and
marketing of products subject to payment of fees. This enables the
entrepreneur to test the product and market on a small scale before making
decision to invest heavily in a full scale production plant.
2.4 Consultancy
(i) MPOB will continue to provide technical support through its researchers
if required even after commercial production. Consultancy fees may be
charged.
(ii) MPOB also provides consultancy to help the oil palm industry apply
MPOB's research findings in industry operations.
2.5 Collaborative R&D
MPOB collaborates with outside parties to develop certain technologies of
mutual interest upon mutually agreed terms and conditions. These
technologies are then transferred to the industry as above.