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Understanding Innovation Policymakers in Malaysia

A country analysis of Malaysia from the Global Innovation Policy Accelerator.

30 April 2020
In Innovation policy
9 min read
Full report

Benjamin Reid

Benjamin Reid

Head of International Innovation - Development Programmes

Benjamin was head of the International Innovation team within Nesta's Policy and Research division.

View profile

Silvia Pau

Silvia Pau

Assistant Programme Manager, A Fairer Start mission

Silvia is an Assistant Programme Manager.

View profile

Florence Engasser

Florence Engasser

Senior Foresight Analyst

Florence was a senior foresight analyst within Nesta’s Discovery Hub, which aims to create a link between Nesta’s current portfolio and our pipeline of future work.

View profile

Nathan Kably

Nathan Kably

Senior Strategy Analyst

Nathan worked on the design and delivery of Nesta's strategy

View profile

Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Design Lead, International Innovation

Paulina was the Design Lead for the Global Innovation Policy Accelerator, a 14-country collaborative development programme for senior innovation policymakers.

View profile

Anna Schlimm

Anna Schlimm

Learning Experience Designer, Global Innovation Policy Accelerator

Anna was a Learning Experience Designer for the Global Innovation Policy Accelerator.

View profile

Introduction

Full report (210.0 KB)
Introduction Malaysia’s innovation system at a glance Innovation policymakers in Malaysia today Opportunities for Malaysian policymakers The challenges facing Malaysian innovation policymakers The priorities of innovation policymakers in Malaysia

Innovation policymakers today control huge budgets and are tasked with tackling challenges as important as the current climate crisis and the global COVID-19 pandemic. Having a deep understanding of their world is essential if governments are to support them to do their jobs effectively.

Through the Global Innovation Policy Accelerator programme (GIPA), we are working to strengthen our understanding of innovation policymakers around the world and the specific challenges they face. We’re working with partners in South America, South East Asia, India, Egypt, Kenya, Jordan, Turkey and South Africa to understand how innovation policy works within the context of each region.

We’ll be publishing a series of reports on innovation policymakers within each region (read our previous studies on India, Indonesia and the Philippines), looking at the challenges, opportunities and support for innovation policymakers in each country – most of which we’ve learned through direct conversations with innovation policymakers working within these systems.

Next up, we’re taking a closer look at innovation policymaking in Malaysia. Read on for a summary of the key findings.

Understanding Innovation Policymakers in Malaysia*

* The following text has been generated automatically from a PDF document. Please bear in mind that there may be some discrepancies between the original document and the automatically generated content. The original PDF is available to download and refer to.

Understanding Innovation Policymakers in Malaysia

* The following text has been generated automatically from a PDF document. Please bear in mind that there may be some discrepancies between the original document and the automatically generated content. The original PDF is available to download and refer to.

Contents
  • This report should be referenced as follows: Alpha Catalyst Consulting and Nesta (2019) Understanding Malaysia's innovation system.
  • Content and research: Dr Suraya Sulaiman, Azim Pawanchik (Alpha Catalyst Consulting)
  • Design: Priscila Vanneuville

Disclaimer: Information and data was collected in March 2018. Parts of this report might have since been subject to changes. The 2018 elections notably brought consequential changes to the information shown on page 10 and 11.

1. COUNTRY PROFILE

1.1 Introduction

Malaysia has undergone a remarkable growth journey, transitioning from a country dependent on primary commodities, to manufacturing and heavy industrialisation, and the present knowledge and innovation-driven economy. Having rebounded from the earlier economic crisis, by 2014 the country had achieved a gross national income (GNI) per capita of US$11,0001, just 11 per cent short of the high income threshold. In 2017, within a year, the World Bank revised the GDP growth forecast from 4.5 per cent to 5.2 per cent.2 Central to this growth was the emphasis on innovation as a core driving factor for the economy. Critical to the aforementioned turning point was the declaration of Malaysia's Innovation Year3 in 2010, which set off a series of activities which formed the nucleus of Malaysia's economic progress.

While innovation was not unknown in Malaysia, its growth in importance in the following years meant that its scope widened beyond the limits of science and technology. Agensi Inovasi Malaysia (AIM) was set up as a statutory body, overseen by the Prime Minister and seven ministers, from education to finance and trade, with members from academia, the corporate sector and government agencies. AIM leads the development of Malaysia's innovation ecosystem through multiple initiatives from supporting the development of mid-tier and large corporate organisations, strengthening the industry-academia collaboration, social innovation and inculcating a culture of innovation. This was in addition to the work that MIGHT and MOSTI were doing, which had a stronger technology focus. To ensure a comprehensive approach towards innovation, other institutions such as MaGIC and TERAJU were set up to boost the entrepreneur community, while YIM looked at how innovation could be inclusive from the citizens' perspective.

The focus on entrepreneurship led to a disbursement of RM5.88 billion by the various ministries and agencies, for SMEs and startup development. This covered human capital development, access to funding, providing market access, innovation and technology adoption and infrastructure development.

However, all these efforts towards propelling Malaysia to being an innovation-led economy resulted in overlapping initiatives and policies. There were 81 national policies of which 56 were related to science, technology and innovation (ST&I), with 458 agencies promoting or implementing them. These agencies and institutions were not working collaboratively and were often seen competing among each other. This was counterproductive in fully harnessing Malaysia's ST&l potential. The main reasons for implementation weakness were the insufficient political will and legislative drive to address ST&l issues, absence of an overarching ST&l master plan and most importantly, failure to converge ST&I with economics and finance, geopolitics as well as society and culture.5

Over the past two and a half decades, a key driving force in Malaysia's transformation was Vision 2020, which outlined how it would be a developed nation by 2020. The Government had put in place numerous programmes, the latest being the 11th Malaysia Plan and National Transformation Policy. As the future of Vision 2020 began to be uncertain, in 2017, the Government launched 'Transformasi Nasional 2050′ or TN50 as a strategic plan for the future of Malaysia in the period 2020 to 2050.8

1.2 Key Innovation Numbers

INDICATOR MALAYSIA
Global Innovation Index Rank (2017) 37/1288
Global competitiveness index (2016-2017) 25/1382
R&D gross domestic expenditure as % of GDP (latest available) 1,26 (OECD, including company spending)
High-Tech exports, in % of manufactures exports (2015, Worldbank) 42,80%
Patents per million people (2016) 45 (2014)4 2299 patents 30.33mln population(2015) = 75.801 2636 (20166) – population 31.19 million7 = 84.5
Per cent growth in total patent applications between (2001-2015) 46,81
Time in hours required to start a business 18.5 days5 (18 days for men, 19 days for women)
Percentage of the 18-64 population who believe they have the right/skills/knowledge to start a business Slightly above 25%3

1.3 Highlights of Key Innovation Programmes

TN50 - Transformasi Nasional 2050

One of Malaysia's goals is to become a high income country by 2020. Through TN50 they attempt to design a future shaped by the people, where any citizen of Malaysia can join in a discussion or share his/her vision for the upcoming 30 years after 2020. The topics discussed include society, the environment, the economy, technology and connectivity, and governance. The Government engaged almost two million Malaysian youths to gather over 60,000 projects for possible implementation. (https://mytn50.com/)

MaGIC CER Circle

MaGIC CER Circle is a national initiative to facilitate greater corporate and private sector involvement in entrepreneurship development across Malaysia. It aims to connect corporates and startup communities and help them capitalise on disruptive technologies and build a continuous innovation pipeline through partnerships. The platform connects some of the biggest corporations across various industries with startup communities. (https://mymagic.my/programs/)

High Impact Programme 2 (HIP2)

A collaborative effort between SME Corp and AIM, an end-to-end innovation and commercialisation facilitation platform, it aims to remove market and financing barriers to innovation. (http://www.platcomventures.com/HIP2-@-High_Impact_Programme_2.aspx)

Launch of DFTZ (Digital Free Trade Zone)

Malaysia launched the world's first Digital Free Trade Zone (DFTZ) which is expected to double the growth rate of SMEs' goods export, increase overall goods export by US$25 billion, and create 60,000 jobs by 2025. With DFTZ, the contribution of Malaysia's digital economy to the GDP is expected to exceed the 20 per cent target by 2020 from the current 17 per cent. https://mdec.my/news/malaysia-launches-worlds-first-digital-free-trade-zone

National Corporate Innovation Index (NCII)

The NCII was an initiative of the National Innovation Agency (AIM) to drive innovation within the corporate sector. Suitable for SMEs and large corporates it set 32 areas of innovation, such as innovation process, risk, leadership, level of collaboration, impact of innovation and many others. (http://www.ncii.my/)

1.4 Timeline of Innovation Policies and Initiatives

Year Policy/Initiative Description
2010 ECONOMIC TRANSFORMATION PROGRAM This programme implemented the New Economic Model (NEM) by identifying National Key Economic Areas (NKEAs) and six strategic reform initiatives.
NATIONAL INNOVATION STRATEGY An inclusive plan to promote innovation as a key component towards achieving Vision 2020. It had three main thrusts; nurturing skills and providing capital; enable more innovation through platforms and collaboration, and thirdly, streamlining PRI research and nurturing high potential firms towards global penetration.
2011 TENTH MALAYSIA PLAN The Tenth Malaysia Plan contains the aspirations of both the Government Transformation Programme and the New Economic Model, based on high income, inclusiveness and sustainability, and includes new policy strategies and programmes that will enable the country to develop as a high income nation.
DIGITAL MALAYSIA An initiative to build an ecosystem that promotes the use of ICT in all aspects of the economy, to create globally connected communities which interact in real-time.
2013 SCIENCE TO ACTION (S2A) The Science to Action (S2A) initiative aims to translate the broad policy framework of the National Science, Technology and Innovation Policy into specific action measures.
NATIONAL SCIENCE, TECHNOLOGY AND INNOVATION POLICY (NSTIP) The National Science, Technology and Innovation Policy provides a framework for improved performance and long-term growth of the Malaysian economy.
2016 ELEVENTH MALAYSIA PLAN The final leg in the journey towards realising Vision 2020 to achieve full development in Malaysia. Productivity and innovation are basic pillars for the Plan, which is based on six strategic thrusts: 1. Enhancing inclusiveness towards an equitable society; 2. Improving wellbeing for all; 3. Accelerating human capital development for an advanced nation; 4. Pursuing green growth for sustainability and resilience; 5. Strengthening infrastructure to support economic expansion; 6. Re-engineering economic growth for greater prosperity.123

1.5 Institutional Maps

1.5.1 Institutional Map of the Innovation System

While MOF is the keeper of the country's coffer, EPU acts as a screening organisation on which projects would get funding, prior to a decision by MOF.

JKPDA funds projects related to R&D and C&I.

PEMANDU has been disestablished since March 2017 and its role is taken over by a newly formed Civil Service Delivery Unit, under EPU.

  • Disclaimer: Following the 2018 General Elections which resulted in a change in government, there have been modifications to the list of ministries, with disbandment of some and formation of new ones. The distribution of the agencies under them have also changed.

This diagram illustrates the institutional map of the innovation system in Malaysia. It shows a hierarchical structure starting from the Prime Minister Department and NSC/JKPDA at the top, flowing down to Ministries, then Agencies Under-Ministries, and finally Relevant Institutions including Universities.

Top Level: * Prime Minister Department * NSC (National Science Council) * JKPDA (Jawatan Kuasa Pelaburan Dana Awam)

Coordinating Councils / Oversight (Directly under Prime Minister Department): * MIGHT * TERAJU * AIM * PEMANDU (disestablished, role taken by EPU) * EPU (Economic Planning Unit)

Ministries (Connected to NSC and JKPDA via dashed lines): * MCM (Ministry Of Communication and Multimedia) * MDTCC (Ministry of Domestic Trade, Co-operative and Consumerism) * MOSTI (Ministry of Science, Technology and Innovation) * MOHE (Ministry of Higher Education) * MOF (Ministry of Finance) * MITI (Ministry of International Trade and Industry)

Agencies Under-Ministries: * Under MCM: MDEC, MCMC * Under MDTCC: MyIPO, SSM * Under MOSTI: YIM, MTDC, TPM, ASM * Under MOHE: Universities * Under MOF: Cradle, MaGIC * Under MITI: SME Corp, MPC, MIDA

Legend: * -> Attached to * ---> Provides funds * -----> Political influence

1.5.2 Role and Influence Diagram of Key Ministries and Agencies

These are the more active/important ministries and agencies relating to innovation policy design and implementation.

Some of the players within the wider network of agencies in relation to driving and supporting innovation in the country may not have been included. There also appears to be a disconnect between organisations at the 'design' and 'operations' end of this diagram, resulting in policies which are not totally aligned with the industry needs. There is also no clear channel for organisations at the 'operation' end to feed back to the organisations in charge of 'design'.

  • Disclaimer: Following the 2018 General Elections, the influence of the various agencies has also changed, with some playing a less prominent role.

Level of influence: the bigger the size of the bubble, the more influence in the innovation system.

This influence map is indicative and reflects the insights of the project team rather than a formal statement of roles and structures.

This diagram illustrates the roles and influence of key ministries and agencies in Malaysia's innovation system, categorized by their alignment with Science and Technology, Design, Innovation, and Operation. It uses bubble size to indicate influence and connection lines to show relationships.

Key Zones: * Science and Technology: Aligned with agencies like CREST, MTDC. * Design: Associated with ASM, MOSTI, MOF, EPU, MaGIC, MIGHT. * Innovation: Associated with AIM, YIM. * Operation: Associated with PEMANDU, MDeC, Cradle, MPC.

Central Hub (connected to Science and Technology, Design, Innovation): * SME Corp * MOHE * MCM

Specific Agencies and their approximate positions: * Upper half (Design/Science & Technology/Innovation focus): ASM, MOSTI, MOF, EPU, MaGIC, MIGHT, AIM, YIM. * Lower half (Operation/Science & Technology focus): CREST, MTDC, Cradle, MPC, PEMANDU, MDeC.

The diagram shows connections and overlaps between these agencies, with some having broader influence (larger bubbles) than others.

1.6 Glossary of Institutional Abbreviations and Acronyms

  • AIM: Malaysian Innovation Agency
  • ASM: Academy of Sciences
  • CIP: Cradle Investment Programme
  • CREST: Collaborative Research in Engineering, Science and Technology
  • DFTZ: Duty Free Trade Zone
  • ECF: Equity Crowd Funding
  • EPU: Economic Planning Unit
  • INTAN: Institut Tadbiran Awam Negara @ National Institute of Public Administration
  • ISTIC: International Science, Technology and Innovation Centre
  • JKPDA: Jawatan Kuasa Pelaburan Dana Awam (JKPDA) @ Investment Committee for Public Funds
  • KHAZANAH: Khazanah Nasional Berhad
  • MaGIC: Malaysian Global Innovation and Creativity Centre
  • MAMPU: Administrative Modernisation and Management Planning Unit
  • MBC: Malaysia Biotechnology Corporation
  • MCM: Ministry Of Communication and Multimedia
  • MDEC: Malaysia Digital Economy Corporation
  • MDTCC: Ministry of Domestic Trade, Co-operative and Consumerism (KPDNKK)
  • MIDA: Malaysia Investment Development Authority
  • MIGHT: Malaysia Industry High Technology Group
  • MITI: Ministry of International Trade and Industry
  • MOF: Ministry of Finance
  • MOH: Ministry of Health
  • MOHE: Ministry of Higher Education
  • MOSTI: Ministry of Science, Technology and Innovation
  • MPC: Malaysia Productivity Corporation
  • MTDC: Malaysia Technology Development Corporation
  • MyIPO: Intellectual Property Cooperation of Malaysia
  • NCII: National Corporate Innovation Index
  • NHESP: National Higher Education Strategic Plan
  • NIBM: National Institute of Biotechnology Malaysia
  • NSC: National Science Council
  • NSRC: National Science and Research Council
  • PDPA: Personal Data Protection Act
  • PEMANDU: Performance Management & Delivery Unit - This has been disestablished since March 2017 and its role is taken over by a newly formed Civil Service Delivery Unit, under EPU.
  • PEMUDAH: Pasukan Petugas Khas Pemudahcara Perniagaan @ Special Task Force to Facilitate Business
  • PMO: Prime Minister's Office
  • PSMB: Pembangunan Sumber Manusia Berhad
  • PTD: Malaysian Civil Service administrator
  • RSOG: Razak School Of Government
  • SC: Securities Commission Malaysia
  • SITEC: Selangor Information Technology & E-Commerce Council
  • SME CORP: SME (Small and Medium Enterprises) Corporation Malaysia
  • SSM: Suruhanjaya Syarikat Malaysia @ Companies Commission of Malaysia
  • STEM: Science, technology, engineering and maths
  • ST&I: Science, technology and innovation
  • TDA: Technology Depository Agency
  • TERAJU: Unit Peneraju Agenda Bumiputera
  • TN50: Transformasi Nasional 2050
  • TPM: Technology Park Malaysia
  • UTM: Universiti Teknologi Malaysia
  • YIM: Yayasan Innovasi Malaysia

A short note on PEMANDU

Performance Management & Delivery Unit (PEMANDU) was formally established in 2009 as a unit under the Prime Minister's Department. Its main role and objective was to oversee the implementation, assess the progress, facilitate as well as support the delivery and drive the progress of the Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP). They were mandated to catalyse bold changes in public and private sector delivery, support the ministries in the delivery planning process and provide an independent view of performance and progress to the Prime Minister and ministers.

1.7 Strengths and Weaknesses Analysis

| Category | STRENGTHS | HUMAN CAPITAL / KNOWLEDGE ASSETS | Ample resources set aside and initiatives to develop the human capital in SMEs, in higher education and in science, technology and innovation. 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| WEAKNESSES | Current apparent low demand from industry. 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| Description | A table listing a policymaker's seniority levels and corresponding characteristics. 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(3) While the Panel is authorised to issue rulings, as described in paragraph 2, it is not its practice to make its approval of particular aspects of a transaction conditional on a commitment by the applicant to a particular course of action, for example the entry into the transaction (or parts of the transaction) at a particular time. If the Panel considers that the proposal made to it is deficient, the Panel will usually decline to issue a ruling on the basis of that proposal. If, however, the Panel considers that it is appropriate to issue a ruling subject to conditions, it may do so, for example where the Panel considers that an applicant should give an undertaking to the Panel to act in a certain way in connection with a transaction, or to perform a particular action prior to or after a transaction. Such undertakings must be in a form that is acceptable to the Panel, and will normally be published by way of an announcement made by the Panel. | 24 |

2.2Where there is strong leadership

An instance was cited by the interviewee where a particular Minister was chairing a cross-ministerial committee for policy implementation and insisted that only the very senior level officers represent their respective ministries and that if any were not up to date with the progress they were supposed to make, they were asked to leave the meeting.

  1. The World Bank, 2017a. ↩↩↩↩

  2. Ragananthini, V., 2017. ↩↩↩

  3. The World Bank, 2010. ↩↩↩

  4. Agensi Innovasi Malaysia (AIM), 2017. ↩

  5. Xavier, S.R., Sidin, S.M., Guelich, U., Nawangpalupi, C., 2016. ↩↩

  6. Academy of Sciences Malaysia, 2015. ↩

  7. The Star Online, 2017a. ↩

  8. Transformasi Nasional 2050, 2018. ↩↩

  9. World Intellectual Property Organization, 2017. ↩

  10. WEF, 2016. ↩

  11. GEM, 2016. ↩

  12. UN Data, 2018. ↩

  13. World Bank, 2017b. ↩

  14. MyIPO, 2016. ↩

  15. World Bank, 2016. ↩

  16. Global Innovation Index, 2017. ↩

  17. The Organization for Economic Co-operation and Development, 2014. ↩

  18. Prime Minister's Office, 2015. ↩

  19. Degelsegger et al., 2014. ↩

  20. Thiruchelvam, K. et.al, 2013. ↩

  21. Degelsegger et al., 2014. ↩

  22. OECD, 2013. ↩

  23. Ministry of Higher Education, 2018. ↩

  24. The Star Online, 2017b. ↩

  25. Tang, R., 2017 ↩

  26. Saieed, Z., 2016. ↩

  27. 1Dana, 2018. ↩

  28. Suruhanjaya Sekuriti, 2016. ↩

  29. CM2, 2017. ↩

  30. Razak, N., 2017. ↩

  31. Hasnan, H.A., 2014 ↩

  32. Kok, C., 2017. ↩

  33. Lee, L., 2015. ↩

  34. MDEC, 2017. ↩

  35. Malaysian Wireless, 2017. ↩

  36. MDEC, 2015. ↩

  37. Malaysian Investment Development Authority, 2017. ↩

  38. SME Corp Malaysia, 2017. ↩

  39. SME Corp Malaysia, 2016. ↩

  40. The Star Online, 2018. ↩

  41. Rasid, A.H., 2017. ↩

  42. Perera, V., 2016. ↩

  43. Christopher Gomez. O., 2018. ↩

  44. UTM, 2018. ↩

  45. UM, 2018a. ↩

  46. UM, 2018b. ↩

  47. Razak School Of Government, 2018. ↩

  48. INTAN, 2018. ↩

  49. KISTEP, 2017. ↩

  50. GRIPS, 2018a. ↩

  51. GRIPS, 2018b. ↩
Next section: Malaysia’s innovation system at a glance
Part of
Global Innovation Policy Accelerator

Authors

Benjamin Reid

Benjamin Reid

Head of International Innovation - Development Programmes

Benjamin was head of the International Innovation team within Nesta's Policy and Research division.

View profile

Silvia Pau

Silvia Pau

Assistant Programme Manager, A Fairer Start mission

Silvia is an Assistant Programme Manager.

View profile

Florence Engasser

Florence Engasser

Senior Foresight Analyst

Florence was a senior foresight analyst within Nesta’s Discovery Hub, which aims to create a link between Nesta’s current portfolio and our pipeline of future work.

View profile

Nathan Kably

Nathan Kably

Senior Strategy Analyst

Nathan worked on the design and delivery of Nesta's strategy

View profile

Paulina Gonzalez-Ortega

Paulina Gonzalez-Ortega

Design Lead, International Innovation

Paulina was the Design Lead for the Global Innovation Policy Accelerator, a 14-country collaborative development programme for senior innovation policymakers.

View profile

Anna Schlimm

Anna Schlimm

Learning Experience Designer, Global Innovation Policy Accelerator

Anna was a Learning Experience Designer for the Global Innovation Policy Accelerator.

View profile

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