Science Outlook 2015

Further Reading 2-3 Correlation analysis on the drivers of publication and patent outputCorrelation analysis It suggests that human capital development1. There is a high correlation between is a crucial part of policy instrument to improve the performance of the universities. outputs (publications and patents) and More emphasis should be given to training amount of research funding and number and skills upgrading among researchers. of researchers with PhD qualification. The Recent micro level study indicates the contribution of amount of R&D funding is following: greater for publications than patents. a) Human capital plays a more important role Every 1% increase in the amount of R&D for publications and patents than funding; spending increases publication by about and 2%, while for patent it is only 0.7%. On the other hand, every 1% increase in human b) Researchers with applied research, capital contributes nearly 7% increase in consulting experience and spin-off publication and 0.9% for patent. experience are more likely to patent, license technology and get involved in This shows that the ROI on R&D start-ups. investment is greater for publications than patents. However, this is understandable, As a whole, the drivers of performance in given that patent application and granted the university, e.g. publications and patents, requires time to materialise. indicates the relative contribution of human Comparatively, the costs of increasing capital is larger than R&D expenditure. In patents are greater than publications. other words, having quality researchers and scientist have greater impact on the outputs2. As for the patent outputs, there is no compared to amount of R&D spending. clear distinction between research universities (RUs) and non-research Source: Chandran et al. 2014 universities (non-RUs). However, there is a strong positive correlation between the amount of funding and patent outputs. Based on the panel regression analysis, the threshold amount seems to be RM14 million.3. For both publications and patent outputs, the contribution of human capital (number of researchers with PhDs) is greater than the amount of R&D funding. 145

STI Talent This section appraises the economy and The GTAP8 database carries 57 commodity region-wide effects of SBTC in Malaysia sectors. This study aggregates them into Further Reading 3-1 using the general equilibrium, multiple 10 major sectors as shown in the following country Global Trade Analysis Project (GTAP) table. The table shows the mapping of the The impact of technical/technology model. The analysis is aimed at obtaining aggregated sectors with 11 out of the 12 upskilling on industry and economic quantitative insights on which sectors are NKEAs in Malaysia. Note that it is not a growth in Malaysia relatively more impactful to the Malaysian one-to-one mapping as the GTAP economy in terms of selected commodity aggregates were based on Background macroeconomic indicators such as industrial standardised international commodity It is common to think that investing in STI outputs, demand for skilled labour, trade groups drawn from CPC and ISIC. Some will lead to economic growth through balance, GDP and welfare. The use of the NKEA sectors particularly oil, gas and energy productivity search of all factors used to multiple country models enabled the analysis appear in more than two commodity produce economic outputs. Such of impact on SBTC to not only be conducted aggregates (i.e. extraction; heavy presumption suggests more outputs can be in Malaysia but also other economies, manufacturing; and utility and construction). generated using the same amount of inputs. particularly ASEAN countries. This is due to the nature of the sector itself, From the technical and economic which has both upstream and downstream perspective, such technological change is However, this study did not attempt to linkages, as well as services sector within known as total factor productivity, where the ascertain whether there has been any the utility industry. ratio of input used by the various industries technical change in the Malaysian economy in the economy remains the same (i.e. the due to STI. The study presumes that STI in ratio of skilled labour to unskilled labour, or Malaysia results in SBTC and appraises its labour to capital ratio). impact in the economy and other regions. Yet, in Malaysia’s case, there are arguments Application of the GTAP Model that technical change may be biased towards For this study, 118 nations in the GTAP8 skilled labour. For instance, most national database were aggregated into 11 regions. policy on R&D and STI have been directed For a detailed exposition of the results, towards the creation and utilisation of more Malaysia is modelled as a single, separate skilled manpower relativeto unskilled labour. country whereas the aggregated regions are: Over the decades, Malaysia has also witnessed improvements in higher education 1. Oceania infrastructure, attainment of tertiary 2. East Asia education, along with the development of skills, technology and innovation. So we may (encompassing Japan, South Korea and China) presume that capital deepening and 3. Malaysia associated technologies are complementary 4. South East Asia (All ASEAN member with the employment of skilled labour not with all inputs. The literature describes any countries except Malaysia) improvements in production technology 5. South Asia (encompassing India, Pakistan, results in increases in relative demand for skilled (higher education, more productive Bangladesh) and efficient) over unskilled manpower as 6. North America (encompassing USA, Mexico skill-biased technical change (SBTC). and Canada)146 7. Latin America 8. EU-25 9. MENA (Middle East and North Africa) 10. SSA (Sub Saharan Africa) 11. Rest-of-the World (Rest of the World Aggregate)

Commodity Aggregates Commodity Components Malaysia NKEA Sectors1. Grains Crops (GrainsCrops) (GTAP labels/codes) Agriculture2. Meat and Livestock (MeatLstk) Paddy rice; Wheat; Cereal grains nec; Oil, gas and energy Vegetables, fruits and nuts; Oil seeds; Palm oil; Agriculture3. Extraction Sugar cane and beets; Plant-based fibres;4. Processed Food (ProcFood) Crops nec; Processed rice5. Textiles and Apparels (TextWapp) Meat: Cattle, sheep, goats, horses; Animal6. Light Manufacturing (LightMnfc) products nec; Raw milk; Wool, silk-worm, cocoons; Meat: ; Meat products nec7. Heavy Manufacturing (HeavyMnfc) Forestry; Fishing; Coal; Oil; Gas; Minerals8. Utility and Construction (Util_Cons) nec9. Transportation and Communication Vegetable oils and fats; Dairy products; (TransComm) Sugar; Food products nec; Beverages and10. Other Services (OthServices) tobacco products Textiles; Wearing apparel Leather products; Wood products; Paper Rubber products/ publishing; Metal products; Motor vehicles and parts; Transport equipment nec; Manufactures nec Petroleum, coal products; Chemical, rubber, Oil, gas and energy; Electrical and plastic products; Mineral products nec; Electronics; Palm oil and rubber Ferrous metals; Metals nec; Electronic equipment; Machinery and equipment nec Electricity; Gas manufacturing, distribution; Oil, gas, and energy Water distribution; Construction Trade (retails); Transport nec; Sea transport; Communication and infrastructure; Air transport; Communication Wholesale and Retail Financial services nec; Insurance; Business Financial services; Business services; services nec; Recreation and other services; Education; Health care; Tourism Public Admin/Defence/Health/Education; Dwellings 147

Policy Simulations and Results Effects on Demand for Labour in Malaysia Effects on Industrial Output in Malaysia We presume that there was a 3% As expected, demand for skilled and unskilled Industrial outputs for all sectors are expected improvement in technological efficiency within the major economic sectors, leading labour for most sectors increases and to increase with the other services sector to an increase in demand for skilled labour in Malaysia. Such technical improvement as decreases, respectively. The rate of change showing the largest change. This sector aforementioned maybe due to capital deepening along with the adoption of varies across sectors. For skilled labour, it comprises of the financial services, insurance, better production technologies, including innovation and advancement in information ranges from 0.23% to 1%, while for unskilled public administration and education technology. We performed seven simulation scenarios. Each scenario examined the workers it drops between -0.28% and -0.04%. subsectors. It also encompasses the NKEAs effects of a 3% SBTC within the following seven aggregate sectors separately (ceteris These results denote the elasticity of of financial services; business services; paribus): substitution between skilled and unskilled education; health care; and tourism. 1. Heavy Manufacturing 2. Light Manufacturing labour for the respective sectors has been 3. Extraction 4. Transportation and Communication inelastic (less than 1). Increases in SBTC in the individual services 5. Utilities and Construction 6. Other Services sectors (scenarios 4, 5 and 6) will induce 7. Processed Food. Given a 3% rise in own sector’s SBTC, demand substantial increases in industrial outputs Note that sectors 4, 5 and 6 above are categorised as services sectors. To allow for skilled labour within the transportation and in most other sectors. On the other hand, meaningful comparison of economic effects on industry outputs and demand for labour communication sector (Scenario 4) is poised increases in SBTC in any manufacturing inputs, the simulation is done individually for the selected sectors. The effects on GDP, to soar most by 1%. Note this sector contains sector tend to reduce industrial outputs welfare and trade balance of Malaysia and other regions were also examined. Table 1 the NKEAs on communication and of other manufacturing sectors. This is shows the implication of SBTC on demand for labour and industrial outputs in Malaysia, infrastructure, and wholesale and retail. attributed to the decline in relative demand which are expressed in percentage changes. Table 2 depicts the results on trade balance, for skilled labour in the respective sectors. GDP and welfare of Malaysia and other regions. GDP is in the form of percentage The only sector that will see considerable However, as expected, the outputs of the change, while trade balance and welfare are expressed in USD$ million. decline in the demand for skilled labour given services sectors are projected to rise, given148 a SBTC is the extraction sector (Scenario 3). increases in SBTC in the manufacturing This sector includes the extraction of forestry sectors. In particular, the outputs of the products, fishing, coal, oil, gas and minerals. utility and construction, and transportation In an economy-wide modelling framework, and communication sectors will rise more as utilised by this study, it is important to note pronouncedly given increases in SBTC in that the decline in demand for skilled labour the heavy manufacturing sector, as in this sector will be outweighed by increases compared to a similar technical change in in the demand for unskilled labour. This the light manufacturing sector. suggests high substitution elasticity (greater than 1) between skilled and unskilled labour Effects on Trade Balance within the extraction industry. SBTC in the various economic sectors in The effects on demand for labour in all Malaysia is likely to produce a positive sectors due to SBTC resulting from any impact to the country’s trade balance, individual sector is also provided in except in Scenario 5 (SBTC in the Utility Table 1. Generally, the demand for skilled and Construction services sector). Note labour in other sectors increased while that this particular analysis does not unskilled labour decreased, as the former consider whether Malaysia would eventually and other primary production factors are face a trade deficit or surplus after the drawn towards the sector that experienced technical change. The emphasis has been increases in SBTC. on whether or not the overall trade balance would improve or decline.

The study found that Scenario 1 (SBTC in should the SBTC does not occur. Technically, sectors indicate the demand for skilledthe Heavy Manufacturing sector) and it encompasses the monetary value of labour is most pronounced for transportationScenario 4 (SBTC in Transportation and changes in resource allocation efficiency, and communication services sector.Communication services sector) would terms of trade, and other sources ofyield comparable benefits of some USD10 welfare change. Results suggest the industrial outputs formillion per year. the sector experiencing SBTC will rise, with Interestingly, results indicate Scenario 6 the other services sector having the biggestResults show the trade balance for most (SBTC in other services) would lead to the impact. This sector comprises the financialASEAN member countries (SEAsia) will be largest gain in welfare, worth some USD220 services, insurance, public administration,made worse off except in Scenario 7 million per year. As discussed earlier, this and education subsectors. Generally, a SBTC(SBTC in Processed Food) where their sector largely comprises the financial within the non-services sectors would inducecombined trade balance will improve services, insurance, public administration, a rise in industrial outputs in the servicesmarginally. In general Scenario 1 (SBTC in and education subsectors. The next largest sectors, particularly the utility andHeavy Manufacturing), followed by Scenario welfare gain for Malaysia is likely to be construction, and transportation and4 (SBTC in Transportation and realised under Scenario 4 (SBTC in communication sectors. Furthermore,Communication) produce more adverse transportation and communication), followed SBTC would result in an improved tradetrade balance effects in other countries, by heavy manufacturing and again the balance for Malaysia. SBTC in heavyparticularly EU-25, East Asia, North America, services sector (utility and construction). manufacturing, and transportation andand other ASEAN countries (SEAsia). communication may produce more adverse It is also interesting to note that SBTC in trade balance effects in other countries,Effects on GDP either sector in Malaysia may lead to particularly EU-25, East Asia, North AmericaThe GDP for Malaysia will either improve considerable welfare gain in other ASEAN and other ASEAN countries.marginally or no change at all under any countries, while all other countries maySBTC scenario. Scenario 6 Scenario 4 (SBTC experience either a small gain or loss. While the impact of SBTC on Malaysia’s GDPin Services) is likely to produce the highest A SBTC in the transportation and would be minute, from the welfaremarginal impact of 0.13%, followed by communication sector, in particular, will see perspective, SBTC in the services sectors,Scenario 1 (SBTC in Transportation and other ASEAN countries enjoying a welfare particularly their services, transportationCommunication) at 0.06%. gain of USD6 million in aggregate. and communication, as well as utility and construction would likely to produceEffects on Welfare Summary, Policy Implication substantial welfare gain to Malaysia. OtherThe welfare impact of any exogenous policy and Conclusion ASEAN countries (SEAsia), in particular, willchange or economic shocks such as freer Capital deepening, human resource also benefit from a SBTC in Malaysia.trade or technical change, as in this study, development, technology augmentation andis examined by estimating the welfare innovation in Malaysia may induce a rise in Based on the welfare criterion, overall resultschange indicator. Note that the GDP technical change which is biased towards suggest Malaysian industrial policies mayyardstick has never been an adequate skilled labour. A presumed increase in SBTC be directed towards inducing a technicalmeasure of welfare change. This study uses in Malaysia will induced greater relative change within the services sectors (allthe Equivalent Variation criterion to measure demand for skilled labour over unskilled services sector within the NKEAs),the change in welfare within each country. labour within the sector experiencing the particularly the other services sector whichIn a nutshell, the Equivalent Variation efficiency gain, except the extraction sector. comprises the financial services, insurance,estimates the amount of income needed to Results from the comparative analysis of public administration, tourism and educationcompensate all economic sectors in Malaysia subsectors [Figure (a)]. The next area of focus 149

is the transportation and communication services followed by heavy manufacturing, and utility and construction. It is imperative to ensure that genuine capital and technological advances are taking place in these sectors. Note that the heavy manufacturing sector here largely utilises Malaysia’s own natural resources as inputs such as crude oil, palm oil and rubber products, which maximises the local value added content, as well as minimises leakages in the economy. It is important to note that this Study only examined the economy-wide effects of SBTC in the individual economic sector separately, presuming no change in all other sectors. In a general equilibrium framework, as utilised in this Study, the economy-wide effects are likely to be more pronounced and the direction of impacts may be significantly altered should all the SBTC occur simultaneously in all economic sectors. Such analysis is, however, beyond the scope of this Study. Figure (a). The impact of technology upskilling on industry and economic growth in Malaysia150

Table b1. Effects of a 3% SBTC on demand for labour and industrial outputs (percentage change)SScceennaarrioio Heavy Light Extraction Transportation & Manufacturing Manufacturing CommunicationSectors Skilled Unskilled Industrial Skilled Unskilled Industrial Skilled Unskilled Industrial Skilled Unskilled IndustrialSectors Labour Labour Output Labour Labour Output Labour Labour Output Labour Labour Output -0.046 -0.022 -0.012 -0.01 -0.06 1 0 0 0.02 0 0 0.04 0.02 -0.059 -0.013 0 -0.01 -0.1 2 -0.037 -0.032 -0.014 -0.01 0 0 0.04 0 0 -0.06 0.07 0.04 3 -0.129 -0.03 -0.028 -0.03 0 0 -0.32 0.01 0 4 -0.211 -0.099 -0.098 -0.04 0 0 -2.27 0.05 0.05 -0.35 0.06 5 -0.134 -0.022 -0.023 -0.01 -0.01 0.09 -0.01 0 -0.33 0.08 0.03 6 0.7 0.1 -0.01 -0.3 0.1 0.05 7 0.589 -0.069 0.165 -0.03 -0.04 0.17 0.11 -0.01 -0.36 0.14 0.06 8 -0.083 -0.039 0.035 -0.02 0 -0.01 0.1 0 0 0.11 0.09 9 -0.093 0.052 0.043 -0.03 0.01 0.12 -0.01 0 1.01 0.06 10 -0.103 0.009 -0.011 -0.02 -0.01 0.01 0.14 -0.3 -0.28 11 -0.013 0.076 0.058 -0.01 0.01 0.1 0 0.01 -0.18 0.13 0.14 0.01 0 0.09 -0.01 0.01 0.16 0.02 0.02 0.01 -0.01 0.02 0.07 0.02 0Table b2. Effects of a 3% SBTC on demand for labour and industrial outputs (percentage change).SScceennaarrioio Utilities & Other Procesed Construction Services FoodSectors Skilled Unskilled Industrial Skilled Unskilled Industrial Skilled Unskilled Industrial LegendSectors Labour Labour Output Labour Labour Output Labour Labour Output 1 GrainsCrops -0.01 -0.05 2 MeatLstk 1 0 0 0.01 0 0.02 0.02 0.01 3 Extraction -0.02 -0.08 4 ProcFood 2 -0.01 0.01 0.01 -0.06 0.03 0.02 0.01 0.01 0 5 TextWapp 3 -0.07 0 0 -0.23 -0.02 -0.01 0 0 0 6 LightMnfc 4 -0.05 0 0 -0.23 0.01 7 HeavyMnfc 5 -0.06 -0.22 0.05 0 0.25 -0.1 0.04 8 Util_Cons 6 -0.06 0.03 0.02 -0.25 0.06 0.03 -0.01 -0.01 0 9 TransComm 7 0.02 0.02 -0.12 0.02 0.04 0 10 OthServices 8 0.73 0.02 0.02 -0.23 0.18 0 0 0 11 CGDS (capital goods) 9 -0.08 0.12 0 0 0 0 10 -0.05 -0.26 0.08 0.23 0.15 0 0 0 151 11 -0.01 0.03 0.02 -0.08 -0.26 0.08 0 0 0 0.04 0.02 0.13 0 0 0 0.05 0.04 0.5 -0.01 0 0.08

Table c1. Effects of a 3% SBTC on certain variables for regions and Malaysia (% change except trade balance and welfare) (in US$ million).SScceennaarrioio Heavy Light Extraction Transportation & Manufacturing Manufacturing CommunicationSectors Trade Balance GDP Welfare Trade Balance GDP Welfare Trade GDP Welfare Trade Balance GDP WelfareCountry Balance -0.5 0 1.274 -0.21 0 0.51 0 -0.37 -0.44 0 1.11 1 -0.03 -2.667 0 -0.085 0.09 0 -0.49 0 4.16 -2.92 0 -0.71 2 10.223 0.04 53.649 2.07 0.01 16.43 -0.4 0.01 24.66 10.35 0.06 102.31 3 -1.304 -0.45 1.26 -0.92 4 0.297 0 7.34 0.11 0 -0.21 1.41 0 0.3 0 5.71 5 -2.188 - -0.97 0.07 0 -0.61 -0.37 0 1.12 0.3 0 -0.72 6 -0.281 0 3.806 -0.11 0 0.45 -0.2 0 1.02 -2.18 0 3.11 7 -3.528 0 0.751 -1.23 0 0.75 0 -0.63 -0.37 0 0.99 8 -0.157 0 -4.022 -0.11 0 -1 -0.07 0 2.45 -3.96 0 -0.29 9 -0.244 0 0.69 -0.22 0 0.78 0.86 0 -0.89 0.11 0 0.89 10 0 0.734 -0.03 0 0.7 0.12 0 -1.09 -0.29 0 1.41 11 0.35 0 3.275 0 3.73 0.16 0 -4.45 0.3 0 4.15 0.99Table 2b. Effects of a 3% SBTC on selected variables for regions and Malaysia (% change except trade balance and welfare in USD million).SScceennaarrioio Utilities & Other Procesed Legend Construction Services Food 1 Oceania 2 East Asia Sectors Trade GDP Welfare Trade GDP Welfare Trade GDP Welfare 3 Malaysia Country Balance Balance Balance 4 SE Asia 0 0.14 0 1.35 0 0.03 5 South Asia 1 -0.02 -0.26 -0.01 6 North America 0 -2.4 0 1.9 0 0.58 7 Latin America 2 0.44 0.02 39.45 -2.54 0.13 221.07 -0.56 0 2.96 8 EU-25 3 1.39 0 0.3 9 MENA 4 -2.49 0 -0.54 8.43 0 2.61 2.37 0 0.24 10 SSA 5 -0.2 0 -0.79 -0.11 0 -1.34 0.06 0 0.26 11 Rest of the World 6 0.18 0 -0.07 0.51 0 -0.32 -0.01 0 7 1.02 0 -1.35 -0.77 0 2.46 -0.64 0 0 8 0.16 0 -0.93 0 11.74 -0.09 0 0.16 9 0.56 0 0.2 -2.8 0 1.8 -0.89 0 0.07 10 0.04 0 0.35 -0.17 0 2.5 -0.03 0 0.22 11 -0.09 0 0.61 -0.76 0 10.43 0.28152 0.4 -0.6 0 -0.19

Further Reading 3-2 Table (a). Brain drain scenarios in selected countries (1000)Brain drain and the role of TalentCorp 1990 2000 1990 2000 High-Skill High-Skill High-Skill High-Skill Brain Drain1. Brain drain is a common phenomenon at Home Overseas at Home Overseas Intensity (%) among middle-income countries. Such countries experience the highest China 11,593 359 19.893 783 3.0 3.7 migration rates as talent has both the Hong Kong 379 182 696 292 32.5 29.5 means and incentives to migrate. The Japan 17,399 233 22,128 278 1.3 1.2 incentive to migrate is driven by the Korea 3,083 335 7,565 613 9.8 7.5 attractiveness of income levels, career Malaysia 222 79 818 96 26.2 10.5 opportunities and the quality of life in Singapore 84 28 279 47 25.3 14.4 other countries. Source: The World Bank 2011 exposure to careers in NKEA sectors, the2. The outflow of Malaysian talent is Government – in collaboration with MOE increasing. It is estimated that about 4% Figure (a). Decade-on-decade growth foreign-born and TalentCorp – opened up 12,000 of the country’s population resides high-skill migrant stock (%), 1990-2000 internship positions in companies of overseas, approximately 40% in Singapore. Source: The World Bank 2011 relevant industries in 2011. To promote More than 300,000 Malaysians – many of internships, Budget 2012 offers double whom possess tertiary qualifications – 4. To remedy brain drain, TalentCorp was deduction tax incentives for approved have migrated in recent years. In 2010, established in 2011 to retain talent and internship programmes. there were approximately one million attract skilled Malaysians from abroad to Malaysians living and working in other fill the country’s growing deficit in skilled 6. Together with EPU, TalentCorp countries (a third of whom comprised manpower. In 2011, 680 applications were coordinates upskilling programmes for skilled individuals aged 25 years and approved under the Returning Expert graduates to ensure resources are above with tertiary-level education). Programme (REP) scheme, which was invested on priority areas. The more than double the previous year. programmes are projected to benefit3. Malaysia’s brain drain intensity is high. close to 10,000 graduates yearly, mainly Although other countries in the region 5. On top of bringing back talent, TalentCorp engineers, involving an allocation worth have seen a more rapid increase in their is also partnering with the Government to about RM200 million per annum across respective diaspora over the period enhance the skills level of the workforce various ministries. 1990-2000, relative to the domestic skills and ease transition from school to work base, Malaysia ranks high in the chart place. Responding to calls for greater 7. TalentCorp, JPA, is providing scholarships on brain drain intensity. This suggests that, for students who have gained entrance despite slower emigration than elsewhere, to top universities of the world. In 2011, Malaysia’s stock of human capital JPA and TalentCorp introduced the domestically has not grown as fast as Scholarship Talent Attraction and other nations. While the brain drain Retention (STAR) and Talent Acceleration intensity has fallen in Malaysia, as it has in Public Service (TAPS). Those attaining elsewhere in the world, it still remains 9A+ plus and above in their 2011 SPM high [Table (a)]. exams will receive bursaries and funded to enter university, conditional on gaining entrance to a top global university. Source: The World Bank 2011 153

Further Reading 3-3 large cities similarly under-performed 2. National-level exams are mixed with relatively to peers in other East Asian school-based assessments: Classroom Is the poor performance on various cities. assessments with written and oral tests, as rankings and scores instrumental in well as marked assignments and homework dissuading the public away from STEM 4. Malaysia’s performance shows a minimum are used to provide real-time feedback on and related subjects? three-year lag vis-à-vis higher performing students’ performance to inform teaching, regional countries. A comparison of scores while after grade 12 (equivalent to Malaysia’s 1. When Malaysia first participated in the shows that 15-year-olds in Singapore, Upper 6), national examinations are used to TIMSS in 1999, the average student score South Korea, Hong Kong and Shanghai inform high-stakes decisions about students’ was higher than the international average are performing as though they have progression to the next level in the system. in both Mathematics and Science. By 2011, had three or more years of schooling than in the last published cycle of results, the 15-year-olds in Malaysia. Data as of 2010 3. Full-day schooling: The government performance had slipped to below indicates that Malaysia’s performance lags embarked on an expansion of full-day international average. Critically, 35% and behind other countries that have similar or schooling. About 51% of schools provide 38% of our students failed to meet the lower levels of expenditure per student, full-day schooling to all pupils, with 40% on minimum proficiency levels in such as Thailand, Vietnam, Chile and a pro-bono basis. Schools use the additional Mathematics and Science, up from 7% Armenia. time for strengthening of Mathematics and and 13% respectively, in 1999. Vietnamese; subjects that would otherwise Source: The World Bank 2013 be limited under the half-day school such 2. The number of top-performing students as music, arts, foreign languages and IT; and is also low in comparison to other Further Reading 3-4 remedial programmes for weak performing countries, meaning that Malaysian students. students, in general, are under- The Vietnamese experience performing. A breakdown of student 4. Modern curriculum and greater parent performance in the TIMSS 2011 results In seeking to improve the performance of participation: Vietnam has adapted a shows that only 1%-2% of Malaysian Malaysian students, it is worth looking at Colombian teaching model called Escuela students perform at the highest changes that were implemented in the Nueva, which emphasises group learning benchmark level, such as complex educational system in Vietnam, which was and problem solving over rote memorisation problem-solving, compared to more a star performer in the 2012 PISA, scoring and copying. Students are taught at their than 40% of students in Singapore. higher than the OECD average in all three own pace, and parents have the opportunity components of science, mathematics and to be a part of the learning process as well 3. Results for the PISA are also discouraging. english. Some of the changes made to the as contribute to learning content. The latter In 2009, the first time Malaysia participated education ecosystem in the country which is particularly meaningful in ethnic minority in PISA, the country was placed at the could explain its outstanding results are regions, where parents are encouraged pay bottom third of 74 participating countries, listed below: a visit to schools to share their cultural below the international and OECD traditions. The government is now scaling up average. Almost 60% of the 15-year-old 1. Improvements in teaching quality: In 2013, the original pilot of 24 schools in six malaysians who participated failed to nearly 60% of all primary school teachers in provinces to 1,500 schools in all 63 meet the minimum proficiency level in Vietnam held a college or university degree, provinces. Mathematics, while 43% did not meet the double the percentage from 2006. The minimum proficiency levels in science. Vietnamese education system is also highly Source: The World Bank 2013 Our performance was not driven by equitable: few teachers, including those urban-rural disparities, as students from working in disadvantaged neighbourhoods, perform poorly in assessments of their154 knowledge for teaching. In addition, teacher attendance is very high.

Further Reading 3-5 Approaches implemented in STEM teachingApproach Description Pros Cons AdaptationsInquiry Originated in the USA. Involves the use of • Decrease in teacher-directed • Limits the interrelationship 1. Australia scientific inquiry to help students make activities. between conceptual ideas, 2. Canada connections between ideas and facts through; investigative methods and 3. France • Discussion • Increase in student-centric societal applications. 4. Germany • Open questioning activities. 5. UK • Higher order conceptual explanation • Science ideas are not explored 6. USA in local contemporary contexts.Theoretical Practical Comprises activities such as: Students get to learn STEM Contents are organised 1. Australia • Demonstrations; and through hands-on application. as discrete factual information 2. France • Experimental investigations linked or problem solving algorithms, 3. USA rather than as a connected set to the development of ideas. of ideas. • Involves the use of comprehensive Curriculum is more Does not place sufficient 1. China and structured textbooks; structured and uniform attention on other useful skills in 2. Malaysia across the nation. science learning such as: • Aligns learning processes to the contents • Problem solving; of the textbooks; and • Application of principles to • Requires a great deal of memorising of novel situations; and materials and work through exercises. • Interpreting and predicting.Source: International Gas Union 2012 155

Further Reading 3-6 Critical skill shortage, 2002 and 2007 Skill Percentage of respondent (%) 2002 2007 IT skills 4.1 20.4 Technical or professional skills 3.2 18.0 English language proficiency 47.5 16.5 Creativity and innovation skills 4.1 10.0 Professional communication skills 14.0 6.4 Team-working skills 6.6 5.9 Leadership skills 4.4 5.5 Time management skills 3.8 5.0 Adaptability skills 1.9 4.2 Problem-solving skills 1.4 4.0 Social skills 8.8 2.5 Numerical skills 1.1 1.6Source: Innovation in Southeast Asia, Malaysia: Innovation Profile (OECD 2013)156

Further Reading 3-7 Human Capital Roadmap for Science and Technology 2012–2020Source: MOSTI 2012 157

Energising Industries Figure (b). Business life cycleFurther Reading 4-1 Note: Only 45% of respondents shared their company business life cycle stageIndustry perception audit key findingsDemographics and MethodologyThe Industry STI Perception Audit reflectsthe viewpoints of 49 industry leaders inMalaysia and was conducted from May toNovember 2014. Purposive samplingtechnique was used to cover stakeholdersthat most influence or are influenced bythe STI industry. Figure (a). Industry sector Figure (c). Title / position Figure (d). Location158

Key Findings Q2. Have you previously received or Q2 (a). List of Government Agencies currently receiving any assistance and/or DepartmentsQ1. Are you aware of any national policies/ (financial/technical/training/programme) or and infrastructure that supports SMEs under the auspices of any government and the industry to achieve local, agency or department)? regional and global growth?Top Three Mind Reads Top Three Mind Reads Top Three Government Agencies/Departments• 30.6% of respondents are not aware of any • 51.1% of respondents previously received or are national policies and do not know where to currently receiving assistance (financial/ • 21.3% of respondents selected MIDA as the obtain the information. technical/training/programme) under the source of assistance. auspices of Government agency or department.• 36.7% of respondents are aware and have • As many as 19.7% respondents listed other provided some examples such as National • 48.9% of respondents do not receive any sources of assistance such as HDRF, MSC, MOF Science and Policy 2, MOSTI ICT Security Policy assistance and remain independent. In regards and many more. and National Biotech Policy. However, some of to finance, most of them are self-funded. them felt that the policies lack in clarity in terms • 18.0% of respondents selected MITI as their of direction. • Some listed their top source of assistance as source of assistance. Malaysia Electricity Supply Trust Account• 32.7% of respondents were unsure of the (MESITA), SME Bank, Multimedia Super • Some respondents shared that it was policies related to them as they have not been Corridor (MSC), Human Resource Development challenging to get approval for funding due consulted or informed on any policies that Fund (HRDF), Malaysian Debt Ventures Berhad, to the processes involved. They also feel that support their growth. CISCO, Ministry of Finance, SOCSO, MITI there should be less bureaucracy in the funding process. & TERAJU. 159

Q3. What were the top three priorities that Q4. In which areas do you foresee an aided the development or growth of increase in your overall corporate your business in the past three years? spending in the next five years? Top Three Priorities that Top Three Priorities Areas Aided Growth/Development for Corporate Spending • 17.8% of respondents chose Finance and Profit • 24.4% of respondents foresee an increase in as the factor that aided the development or overall corporate spending in New Products & growth of their business. Services. Respondents spend on technology to produce innovative products and enhance their • 11.9% of respondents chose Market Driven services. Research & Development as one of their priorities that aided their development and • 18.3% of respondents foresee an increase in growth. overall corporate spending in Employee Training and Development. Respondents feel • As many as 9.6% of respondents chose that they have to constantly invest in Human Certification or Standards as a top priority which Capital Development to retain skilled workers. aided their development or growth, because they helped enhance the quality of their • 16.0% of respondents foresee an increase in products/services as well as help level the overall corporate spending in research and playing field for them to compete on the technology. Respondents feel the need to global stage. invest in research and technology as they need to ensure that they produce products with high160 quality. In addition, technology will help them increase productivity and save cost.

Q5. Can you share the top three issues, Q6(a). What has been the company’s challenges and opportunities in your average annual spending for line of business [STI perspective]? technology/ICT (e.g. license, procurement, maintenance)?Top Issues, Challenges and Opportunities• Lack of funds The highest average annual spending for• Lack of STI talent technology/ICT is RM2 billion and the• Lack of awareness on STI policies and lowest is RM5,000-RM10,000. infrastructure Company average annual Total• Lack of policy implementation/enforcement respondents spending for technology/ICTQ6. How much does technology / ICT 2 contribute in furthering your objectives? Less than 0.1 million*The scale is from 0-to-10. Scale 0 refers to no Between 0.1 – 1 million 9contribution and scale 10 refers to very extensive. Between 1.1 – 10 million 7Top Three Parameters with Highest Score• 9.5% of respondents chose productivity. Between 10 -100 million 2 Technology helps respondents complete their More than 1 billion 3 tasks at a faster rate. It also helps them save more time. *Note: 53% of respondents were reluctant to share• 9.0% of respondents chose human capital figures due to company regulations. development. Respondents use technology to enhance the skills of their workforce. Q6(b). Roughly what percentage of the• 8.8% of respondents chose innovation. expenditure is spent on locally Respondents use technology to innovate their developed technologies? products to remain competitive. 161

Q6(c). Please describe your firm’s capability Q7. Are you currently also targeting Q7(a). Which geographic markets hold great in mastering the technology? international markets to grow your potential in terms of revenue business? contributions over the next 1-3 years? Top Three Description of Firm’s Top Three Mind Reads Capability in Mastering Technology • As many as 63.6% respondents are targeting • As many as 47.6% respondents chose firm that has international markets to grow their business. They are capacity to innovate the technology and produce targeting countries in the Asia Pacific, Middle East new variants. and Europe. • As many as 19.0% respondents chose use of • As many as 27.3% respondents chose to focus on technology is out-sourced. domestic markets to grow their business instead of targeting international markets. • As many as 14.3% of respondents chose firm that has capability to improve the technology and its • As many as 9.1% of respondents were not sure if applications. they will target international markets any time soon.162

Q7(b). What are the top three challenges Q8. Does your company have a section/unit/ Q8(a). Do you have any existing partnershipthat you face in export markets? division/department devoted to R&D? with any R&D institute or university that help you with product • Lack of funds innovations etc.? • The pricing pressures • Tough competition in market • Lack of understanding the local law requirements, tax and regulatory compliance and local business culture • Lack of talent • Lack of international recognition of Malaysian products and services • Regulatory compliance costQ7(c). How do you fund your expansion currently and what are your sources?• Self-funding• Loans – private, government• Internal profit• Cess fund• Leasing and partneringQ7(d). How do you use STI to support Top Two Mind Reads Top Two Mind Reads your expansion plan? • As many as 58.7% of respondents have a • 70.5% of respondents chose the answer “No”. • Relationships management section/ unit/ division/ department. However, Most companies felt that universities are not • Timely communication with clients, internal most of them do not own patents or R&D able to commercialise their products. facilities. and external stakeholders • 29.5% of respondents chose the answer “Yes”. • Online training • 41.3% of respondents do not have a section / They had/have partnerships with universities • Marketing and sales support tool unit/ division/ department because of lack of such as USM, UKM. UTM, UITM, UPM, MMU, • Product and facilities improvement funds and R&D is not top priority. UNITEN and University Teknologi PETRONAS. -through R&D 163

Q8(b). Do you have sufficient funds to Q8(c). What has been the company’s/ engage in or outsource R&D? organisation’s R&D spending (annual average) in terms of % of turnover? R&D spending 2 4 5 10 15 20 30 50 90 300 in terms of % of turnover Percentage of 11 5 5 11 16 11 16 16 5 5 respondent (%) *Note: 59% of respondents were either not at liberty to disclose their company’s R&D expenditure, or the question was deemed not relevant to them. Q8(d). What do you expect your R&D spending to be like one year from now? • 54.8% of respondents chose the answer “No”. Top Three Expectations of R&D Spending Most of the respondents felt that it is costly to engage in or outsource R&D and do not • 32.4% of respondents are not sure on what to expect for R&D spending for the following year. consider R&D as a top priority. • 16.2% of respondents expect an increase of 6-10% in R&D spending. • 13.5% of respondents predict no change in their R&D spending. Another 13.51% expect an • 45.2% of respondents chose the answer “Yes” because they believe that engaging in R&D will increase by 20%. benefit them in the long run.164

Q8(e). What are your company’s current Q9. Do you have any registered patents or research & development priority IP or trademark applications in the areas? process?Top Three Research and Registered Patents or IP orDevelopment Areas Trademark Applications• 26.3% of respondents chose new products. • As many as 36.6% of respondents have• 13.2% of respondents chose improving registered patents or IP or trademark applications in the process. productivity.• 7.9% of respondents chose cost effectiveness • As many as 63.4% of respondents do not have them as they find it costly. and another 7.9% chose energy efficiencyNote: 18.4% do not have a current research and development priority area. 165

Q9(a). If you have answered YES in the Q11. In your opinion, what are the key previous question, how many IPs/ advantages of using technology for growth patents that are currently registered and performance of your businesses? and/or patent pending in your organisation?Q10. Which of the following clusters of *Note: The scale is from 1-to-7. Scale 1 refers to adjectives would you use to express being the most important and scale 7 refers to your views on R&D, adoption of new being the least important. technologies, promoting technopreneurship and Scale rank 1 2 3 4 5 6 7 commercialising innovations? (You may select up to three options) FrequencyClusters Total* Percentage Increased Productivity 18 11 4 7 1 3 0Profitable, performance-drive 28 21.05% Increased Cost Efficiency 9 16 6 4 6 1 1Market advantage, brand differentiation 23 17.29%Expensive, lack of funds, not a priority 14 10.53% Better Customer Satisfaction 9 7 10 7 6 1 4Industry and market relevance, growth 14 10.53%Export potential, global competitiveness 11 8.27% Wide Market Coverage 5 2 9 5 5 8 10Lack of local R&D - industry linkages 10 7.52%Long pay-off period 9 6.77% Enhanced Reputation/ Image 1 1 4 9 13 14 1Capable, reliable, results-oriented partners 8 6.02%Politically motivated, government-linked 7 5.26% Improved Product Range 4 4 5 9 7 9 5Bureaucratic, difficult to manage 4 3.01%Lack of opportunity for cooperation with Less Labour Intensive 0 5 7 2 4 6 19local R&D institutions 4 3.01%Innovation too easy to replicate 0 0.00%Others 1 0.75% *Note: Frequency of clusters selected by respondents.166

Q12. What are the key barriers to adopting, developing and commercialising new technology?*Note: The scale is from 1-to-13. Scale 1 refers to being the most important and scale13 refers to being the least important. Scale ra nk 1 2 3 4 5 6 7 8 9 10 11 12FrequencyAvailability ofFunding 17 3 3 3 1 1 2 1 1 0 2 0Costs 3 10 5 8 2 2 3 3 0 0 0 0ROI 7 4 4 2 3 2 2 4 2 3 1 0Technology Complexity 7 4 4 1 2 7 1 1 2 1 4 1Collaboration 3 6 1 3 4 3 3 1 5 1 0 1Human Resource 5 2 7 3 2 2 1 1 1 1 2 0Internal Structure 2 0 4 3 3 5 3 5 1 1 0 4Risk Management 2 1 1 4 4 0 4 6 4 3 2 1Governance / Security 1 2 1 3 4 1 2 2 0 5 3 3RegulatoryCompliance 1 3 1 2 2 4 0 1 2 4 2 7Internal Structure 0 1 2 0 0 2 3 3 4 2 1 2Obsolete Technology 1 0 2 0 4 1 3 1 2 1 2 7External Institutional Arrangements 1 0 2 1 1 0 1 1 2 4 6 3 167

Q13. What would be the potential threats Q14. Has your company/organisation been for your company as a whole in the consulted or informed on any policies next 1-3 years? regarding S&T? *Note: The scale is from 1-to-16. Scale 1 refers to being the most important and scale 16 refers to being the least important. Top Two Mind Reads • 77.1% of respondents chose the answer “No”. Most of the respondents have not been consulted or informed of any policies regarding S&T. They feel that there is lack of implementation of the policies. • 22.9% of respondents chose the answer “Yes” have been briefed or consulted on the policies.168

Q15. If you have answered YES in the Q16. Have you had any challenges receiving previous question, which of these best information or communicating with describe the communication you your stakeholders? Please elaborate. receive from various industry players in your line of business or technology? • Respondents that answered ‘no’ have well-established communications systemsTop Two Mind Reads in place• 44.4% of respondents chose the option • Those who answered ‘yes’ felt that there is a ‘’Other”. Some respondents feel that most need for stakeholders such as industry, industry players are not open with information. government, MNCs to be more open• 16.7% of respondents chose the answer with information “One-Way”. They feel that the communication is usually one-way and that it does not give Q17. What should be the main function them the opportunity to express their views of international cooperation in regarding the policies that affect them. developing Malaysia’s STI capabilities? Top Three Main Functions of International Cooperation • As many as 32.7% of respondents chose “introduction of advanced technologies”. • As many as 28.6%of respondents chose “identification of gaps/ opportunities for improving STI capabilities”. • As many as 26.5% of respondents chose “training and education of scientific personnel”. 169

Q18. What should be the main forms of Q19. What should be the main impact of international research/innovation Malaysian researchers’ mobility in cooperation for Malaysian public and acquiring scientific and technological private stakeholders (research information? organisations and firms) in Malaysia? Top Three Main Forms of International Main Impacts of Malaysian Research / Innovation Cooperation Researchers’ Mobility • As many as 43.5% of respondents chose • As many as 44.9% of respondents chose “setting up joint ventures with foreign “development of knowledge, connection organisations”. and access to front edge of basic research”. • As many as 28.3%of respondents chose • Others (12.2%) felt that Malaysia needs to “participating in international collaboration identify the gaps between industry and projects and fellowships”. academia. • As many as 19.6% of respondents chose “sending personnel abroad for scientific education and research collaboration”.170

Q20. What should be the main forms of Q21. From your perspective, in which of the Malaysian research and technology following areas are Malaysian STI plans infrastructure opening to foreign and programmes are most successful? researchers? • 11.1% of respondents chose “increase in theMain Forms of Malaysian Research and number of new scientists and engineers hired”Technology Infrastructure Open to and another 11.11% chose the “promotion ofForeign Researchers international collaboration”.• As many as 52.1% of respondents chose • 53.3% of respondents feel that the STI plans and programmes are not successful. “programmes designed to promote return of Malaysian scientist with foreign nationality”. 171 Some felt that there should be incentives to promote the return of Malaysian scientist.• 12.5% felt that there should be more “job positions for foreign researchers at universities or public research centres” as they will be able to share their knowledge and expertise.

Q22. What is the major challenge you Q23. What resources do you use to get data expect of Malaysian STI plans and on STI development (e.g. programmes? commercialisation rate)? • 42.9% of respondents feel that “promotion of Top Three Resources indigenous innovation” is a challenge for Malaysian STI plans and programmes. • 42.1% of respondents “read newspapers, consult consultants and participate in industry • 30.6% of respondents feel that “development forums to obtain data on STI development”. of market and innovation culture and support to the creation and growth of innovative • 31.6% of respondents use “local government enterprises” is major challenge. databases” to get data on STI development. • 16.3% of respondents had other opinions. • 13.2% of respondents use “international databases”.172

Q24. What do you think of the current public Q26. What do you think is the main issue in institutional arrangement of STI in STI governance in Malaysia? Malaysia? Is it effective in developing STI for nation-building? • There is lack of awareness, cohesion and clarity/ focus in policiesQ25. What are the main challenges in obtaining data for STI? • There is also lack of efficiency and commitment in implementation/coordination/enforcement.Top Three Main Challenges inObtaining Data • Lack of talent and skills for STI project• 28.6% of respondents “do not know where management to obtain the data required”. • Fragmented STI development• 22.6% of respondents feel that there is • Weak ecosystem for R&D and innovation “lack of current data”. Q27. Do you believe science and• 17.9% of respondents feel that there is technology are relevant today in the development of the nation’s ICT “ambiguity on the type of data required”. economy? In which areas, in particular? • STI is the engine of development for the nation • Need to improve in the areas such as education and intra-collaboration between industry players and inter-collaboration between Malaysia and other countries Q28. If there is one thing that could be done or implemented immediately to rectify any of these, what would it be? • Provide public STI support and financial aid • Increase cohesion/clarity/focus in the STI initiatives • Inculcate a STI culture/orientation and increase public STI awareness • Connect between industries, academia and government • Provide quality education and focused training • Promote meritocracy, and equality across all sectors. 173

Further Reading 4-2 Japan • Globalisation: The New Growth Strategy has set an objective of doubling the flow of Industrial policy interventions in China, • Public financial support: Its support to people, goods and money to Japan within India, Japan and Korea the business sector is limited as firms 10 years. Today, with Korea, it has the self-finance 98% of their R&D activities. lowest share of GERD funded by abroad China and India Tax incentives are the main funding in the OECD area (0.4%). In 2010, the instrument but direct funding has Inward Investment Promotion Programme • Direct state ownership; Selective credit increased in relative terms since 2005. suggested accelerating FDI through a cut allocation; Favourable tax treatment to In 2009, grants, loans and contracts in the corporate tax rate and deregulation specific industries; Tariff and non-tariff accounted for an estimated 35% of public of investment procedures. It also includes a barriers to imports; support to business R&D. broader series of initiatives to attract R&D facilities and global companies’ regional • Restrictions on FDI; Local content • A new strategic regional innovation Asian headquarters to Japan. Incentives, equirements; Special IPR policies; support: In 2011, a new strategic such as tax treatment and subsidies, are government procurement; Promotion of regional innovation support programme also to be developed under the corporate large domestic firms; Avoiding permanent was launched for regional revitalisation certification system. infant industries especially by trying to through knowledge transfer between develop indigenous ones; Developing universities and industry. It capitalised on • Green innovation: It is a priority for Japan. broad and sophisticated industry for the prior cluster initiatives such as the A Comprehensive Green Innovation long term; Encourage SMEs: Legally Knowledge Cluster Initiative, which ended Strategy was announced to develop reserving certain products to small in 2010. The Reconstruction Agency is also environmental and energy technologies. industries. contributing to invigorate local industry. It aims at creating over USD468 billion of new demand and 1.4 million jobs in the • Other interventions and programmes • Knowledge flows and commercialisation: environment sector by 2020, and to reduce complemented: Huge investment in higher The commercialisation of scientific research greenhouse gas emissions by 25% relative education (China); Investment in a select has been a priority of Japanese STI policy to 1990 using Japanese private- sector group of elite engineering & management in recent decades as reflected in the technology. After the Great East Japan schools (India); Manufacturing hub of the number of measures taken since the Earthquake in 2011, the Japanese world (China); Major offshore service centre mid-1990s to foster technology transfer government decided to draw up a Green (India) through outsourcing of from academia to industry. For example, Growth Strategy. knowledge-based services. the A-step programme (Adaptable and Seamless Technology Transfer Programme • Strategies for tapping into global through Target-driven R&D) defines overall knowledge: Trade, FDI, technology objectives to facilitate medium- and licensing, copying and reverse long-term collaboration on R&D and engineering; Foreign education and combines several funding programmes to training; Accessing information in print and enable technological development at internet; Large market pull; and technology various stages of commercialisation. The parks that attract the diaspora back. New Growth Strategy also encourages the use of intellectual property rights. In the • R&D expenditure: There has been an context of increasingly open innovation, a increase in R&D expenditure needed for new patent licensing and patent MNCs to do R&D locally to adapt their co- ownership system will be in force in goods and services to the domestic 2012. market; MNCs increasingly set-up R&D centres aimed at developing products and services for the global market.174

South Korea a number of schemes over the years. As a result, Korea had 105 regional• Recent changes in STI expenditures: innovation centres and 18 techno-parks Korea’s GERD was 3.74% of GDP in 2010 in 2010, as well as seven programmes to and has grown by a robust 9.3% annually strengthen the competitiveness of in the past decade and by 10% a year in industrial cluster programmes. the five years to 2010. In 2010, 72% of • Schemes: There are several schemes GERD was funded by industry, 27% by aimed at improving commercialisation and government and only 0.2% from abroad. knowledge transfer from the public sector research, namely: the Technology• Overall STI strategy: Korea’s 577 Initiative Holding Company system, which promotes aims at increasing GERD to 5% of GDP by the establishment of venture businesses by 2012, nurture seven strategic technology universities and research institutes; the areas, and become the world’s seventh Leaders in Industry University Programme “S&T power”. To meet these targets, the (LINC) and the Brain Korea Programme Government has increased its expenditure (BK), both which seek to improve on R&D and has used various tax incentives industry-academia collaboration. to encourage more private investments. In line with a decade-long trend, government Source: Akademi Sains Malaysia 2013 support has continued to shift away from large firms towards SMEs.• Business R&D and innovation: The structure of business expenditure on R&D (BERD) shows that R&D is mainly conducted by large manufacturing conglomerates. Small and young firms have contributed relatively little to innovation, though there are signs of improvement. Much government support to the business sector goes to SMEs. The Small and Medium Business Administration’s R&D investments for start-ups will increase by 33% in 2012, and the Ministry of Trade, Industry and Energy (previously known as Ministry of Knowledge Economy) has announced that the share of its R&D budget allocated to SMEs will reach 40% of the total by 2015.• Clusters and regional policies: The Seoul Metropolitan Area is the focus of much S&T and innovation activity and this has led to quite unbalanced regional growth. In response, the government has introduced 175

Further Reading 4-3 STI funds under MOSTI Science Fund Pre-Commercialisation Fund (InnoFund) Pre-Commercialisation Fund (TechnoFund) Agency Agency Agency MOSTI MOSTI MOSTI Sector Sector Sector Agriculture and Forestry, Biotechnology, Agriculture and Forestry, Biotechnology, Agriculture and Forestry, Biotechnology, Engineering &Technology, ICT, Medical and Health Engineering &Technology, ICT, Medical and Health Engineering &Technology, ICT, Medical and Health Sciences, Natural Sciences & Social Sciences. Sciences, Natural Sciences & Social Sciences. Sciences, Natural Sciences & Social Sciences. Fund Objective Fund Objective Fund Objective 1. To support research that can lead to the innovation of InnoFund is a grant scheme which funds the 1. The development of new or advanced technologies products or processes for further development and development or improvement of new or existing or further develop/ value add existing technologies/ commercialisation; and/or products, processes or services with elements of products in specific areas for the creation of new innovation. The project must have economic value and businesses and creating economic wealth; 2. To generate new scientific knowledge and strengthen improves the societal well-being of the community. national research capacity and capability. InnoFund can be categorised into: 2. Promote market driven R&D towards • Enterprise InnoFund (EIF) commercialisation of R&D outputs; Description / Scope • Community InnoFund (CIF) ScienceFund covers preliminary research 3. Encourage institutions, local companies and investors leading to laboratory proof of concept or Description / Scope to capitalise their IP registration; and towards the development of new products or processes. The quantum of fund approved will • Specialised Equipment. 4. Stimulate growth, capability and capacity of Malaysian be determined based on the merit of each • Pre-Clinical/ Clinical Trial/ Field Trial (if applicable). technology based enterprise, GRIs and IHL through application. • IP (intellectual property) Preparation and Registration local and international collaborations. Quantum of Funding: RM500,000 in Malaysia only (excluding maintenance). Description / Scope • Market Testing and Regulatory and Standard Phase • The acquisition of technology (foreign and/or local). Applied R&D Compliance. • Applicants to provide the acquisition agreement or to Eligibility Quantum of Funding: RM500,000 provide details of the technology if an agreement is This fund is open to all research scientists and non-existent. engineers who are employed on a permanent or Phase • The upscaling of laboratory-scale prototype or the contractual basis from the following organisations: Pre-Commercialisation development of commercial ready prototype; and • Pre-clinical testing/clinical testing/field trials. The • GRIs; Eligibility funding can be used for: pilot plant/prototype – • Government STI agencies; and equipment and supporting infrastructure which is • Public and private IHL with accredited research • EIF: This fund is open to individuals, sole proprietors directly related to the pilot plant; IP Preparation and and small and micro enterprises registration in Malaysia only (excluding maintenance) - programmes. existing and new IP; market testing/assessment and/ • CIF: Registered associations/NGOs, registered or evaluation; regulatory and standards compliance; cooperatives and community groups expenditure for services (consultancy/testing) not exceeding 20% of project cost; contract expenditure applicable to IHLs and GRIs only (research assistant); raw materials/consumables; and technology/IP acquisition (if applicable). Quantum of Funding: RM1.5 - RM3 million Phase Pre-Commercialisation Eligibility Researchers and individuals from: • SMEs; • IHL; and • STI agencies.176

Commercialisation of Research & Biotechnology Commercialisation Fund (BCF) Business Start-Up Fund (BSF)Development Fund (CRDF). Agency AgencyAgency Malaysian Biotechnology Corporation (MBC) MTDCMTDC Sector SectorSector Biotechnology & Medical and Health Sciences Agriculture and Forestry, Biotechnology Engineering and Technology, ICT, Medical andAgriculture and Forestry, Biotechnology, Fund Objective Health Sciences & Natural SciencesEngineering and Technology, ICT, Medical andHealth Sciences & Natural Sciences. • To facilitate ongoing commercialisation of Fund Objective biotechnology products and services; and • To support and encourage entrepreneurshipFund ObjectivePromoting commercialisation of locally developed • To facilitate expansion of existing biotechnology and creation of new strategic businesses thattechnologies (public and private universities, GRIs business. are important, and potentially scalable; andundertaken by Malaysian owned company). • The funding of supporting companies within a Description / Scope technology ecosystem.Description / ScopeFor the commercialisation of R&D output from • The BCF Facility is a term loan/financing facility Description / Scopepublic and private university/GRIs by a spin-off that will be offered based on conventional principlescompany: primarily for the financing of working capital and • A seed funding of technology-based start-ups. capital expenditure; • The maximum funding is RM5 million or 90% of the• Maximum funding of RM500,000 or 90% of the eligible expenses; and • Hybrid loan & grant facility; and total eligible cost; whichever is lower. • Maximum of RM3 million, based on ratio 2:1 • Redeemable Convertible Cumulative Preference• Activities covered are purchase of equipments (QC & production), administration and overhead, technology between loan and grant. Shares (RCCPS) with fixed interest rate of 3.5% and services costs (raw material, advertisement and • The maximum tenure is eight years, inclusive of a promotion, certification and standard, IP registration Quantum of Funding: & protection and production outsourcing) RM500,000 - RM3 million three years grace period (repayment shall commence on the 1st month of the fourth year on monthly basisQuantum of Funding: RM500,000 Phase over five years. Commercialisation • The activities covered are operational expense (OPEX)Phase & capital expenditure (CAPEX) excluding purchase ofCommercialisation Eligibility land & purchase of building 1. The applicant must be a BioNexus statusEligibility Quantum of Funding: RM5 million company;• The company is incorporated in Malaysia; 2. Majority ownership by Malaysians, i.e. at least Phase• The company must be at least 51% owned by Commercialisation 51% of the equity is owned by Malaysians; and Malaysian; 3. Minimum paid-up capital of RM250,000. Eligibility• The proposed technology to be commercialised must A spin-off company incorporated under the Companies Act 1965; be from one of the Priority Technology Clusters • A minimum 70% owned by a Malaysian identified by MOSTI, excluding ICT;• The R&D must have been completed successfully and entrepreneur or group of entrepreneurs; the commercially-ready prototype is available; • The proposed technology to be• The proposed project must be tangible or can be incorporated into tangible product; commercialised must be from one of the Priority• Significant paid-up capital which commensurates the Technology Clusters; and total project cost (proof of the availability of the fund • The product must be significant in novelty to finance the project); /innovation.• Licenses from relevant authorities; and• Proposed project is recommended by industrial 177 expert.

Technology Acquisition Fund (TAF) Business Growth Fund (BGF) Bioeconomy Transformation Programme (BTP) Agency Agency Agency MTDC MTDC MBC Sector Sector Sector Agriculture and Forestry, Biotechnology, Others Biotechnology & Medical and Health Sciences Engineering and Technology, ICT, Medical and Health Sciences & Natural Sciences. Fund Objective Fund Objective To provide support for successful grants of • To complement and accelerate the Fund Objective recipient companies until they can generate Facilitating local companies to acquire foreign sufficient commercial value to attract VC implementation of Bioeconomy Trigger Projects technologies for immediate inclusion into the financing and other forms of financing. (BTP); company’s manufacturing activity. TAF’s partial • To attract more high impact FDIs and Domestic grant helps companies to avoid expensive and Description / Scope Direct Investments (DDIs) to participate into risky technology development stages. local Agro-biotechnology, Bio-industrial, and • Hybrid (combination of grant + equity) bio-medical industries; and Description / Scope • The maximum funding is RM4 million (up to 25% of • To emphasise Government’s commitment in developing a high income, inclusive and • Technology acquisition cost (a cap of RM 2.8 total funding or maximum of RM1 million in the form sustainable bio-economy for the nation. million or 70% of total cost, whichever is lower). of grant and RM3 million in the form of Redeemable Convertible Preference Shares (RCPS) excluding the Description / Scope • Cost of technology acquisition + acquisition of M&E grant portion) • To support the implementation of BTP under (a cap of RM2.4 million for IP or 70% of total • Exits within three to five years through initial public cost, whichever is lower and a cap of RM1.6 million for offering (IPO), buyback, trade sale, etc. the Bioeconomy Transformation Programme. M&Es or 50% of total cost whichever is lower). • To support the implementation of NEM Quantum of Funding: RM150 million • BTP comprises of three main subsectors; • Engagement of foreign individual within a specific • Agro-biotech area of expertise on process or product improvement Phase • Bio-industrial (a cap of RM200, 000 per application for travelling Commercialisation • Bio-medical for commercialisation of bio-economy and lodging for six months) Eligibility projects using a loan mechanism. • Training (a cap of RM250,000 or 70% of total cost whichever is lower) All Malaysian grant recipient companies. Quantum of Funding: RM10 million or 10% of its total project cost, whichever is lower Quantum of Funding: RM250,000 - RM2.8 million Phase Commercialisation Phase Commercialisation Eligibility The 10 shortlisted EPPs include the following: Eligibility • Industrial bio-inputs; • The company is incorporated in Malaysia; • Bio-chemicals; • The company must be at least 51% owned by locals; • Bio-materials; • The technology acquired must be a registered IP • Bio-based farm inputs; • High value bio-ingredients; (Patent/Copyright/Industrial Design) with significant • High value food varieties; sales volume; • Bio-similars; • The technology acquisition must be from one of the • Drug discovery; Priority Technology Clusters identified by MOSTI; • Molecular screening; • The technology provider must not hold any equity in • Stem cells; and the applicant’s company; • Regenerative medicine in Malaysia. • The proposed project must be tangible or can be incorporated into tangible product; Source: Agensi Inovasi Malaysia 2014 • The company must be involved in the production, fabrication and manufacturing of the products; and • Significant paid-up capital commensurating total project cost (proof of the availability of the fund to finance the project).178

STI EnculturationFurther Reading 5-1 Funds promoting enculturation of STIFund Funding Quantum (RM) ObjectiveMSC Malaysia Pre-Seed RM150,000 for 12 months Boost the development of commercially viableFund Programme maximum ICT projects and stimulate a chain reaction in the creation of new local K-SMEs in ICT. Online Education RM100,000 conditional For local SMEs and technopreneurs who want toContent Creation funding up to 8 months be innovative and commercially focused onGrant (ICONedu) putting their educational projects up for online consumption.Online Social and RM100,000 conditional For the development of socialCommunity Content funding up to 8 months and community content platformsCreation Grant and ecosystems by Malaysians.(ICONity)Source: Abdullah 2011Further Reading 5-2 • STI interest level is positively related to the • Most Malaysians correctly answered “the education level of the respondents. earth travel around the sun” (85%) and “thePublic awareness of STI centre of the earth is very hot” (75%). • Compared to 2008 findings, the percentageInterest in STI of very interested responses in selected STI • In contrast, very few Malaysians correctlyOverall, Malaysians are interested in STI and related issues had doubled in 2014. answered “antibiotics kill viruses as well asonly a small percentage were unsure or bacteria” (16%) and “all radioactivity isunaware about STI. • Compared to the US and EU, local man-made” (20%). respondents showed the lowest level of • Most respondents (84%) stated that they interest in STI. On average, 78% of local • More urban respondents (48%) answered the were interested or very interested in “the use respondents were interested STI compared factual knowledge questions correctly of new inventions and technologies”, to 89% in the US and 83% in the EU. compared to rural respondents (39%). followed by “new medical discoveries” (79%), “innovation” (78%) and “new scientific Knowledge of STI • Male respondents (49%) had a higher discoveries” (76%). Less than half of all respondents (46%) were percentage of correct answers than female able to correctly answer the factual respondents (43%). • In contrast, 25% of respondents were not knowledge questions in the 2014 survey. interested in “environmental pollution”, • The youth group (51%) had a higher followed by “renewable energy” (22%) and • The public’s average knowledge levels of percentage of correct answers than adult “new scientific discoveries” (21%). STI hovered below 50% over the past 16 (46%) and children’s group (36%). years (1998 till 2014). 179

• There is positive correlation (Pearson’s R = much on science and not enough on faith.” Awareness of STI related Government 0.299) between educational attainment and • Most of the respondents believed Programmes and Policies correct answers to the STI statements. science have more positive effects over At least one in four of respondents had heard of • Malaysia’s public knowledge of STI is lower the negative for the issues of “public STI related government programmes. than US (as of 2014), EU (as of year 2005), healthcare” (79%), “job creation” (78%), Japan (as of 2011) and South Korea (as of “working conditions”(70%), “lifestyle” (68%), • Most of the programmes had a low 2004). “food security” (66%), “environment” (66%), participation rate of below 2%. “cost of living” (63%) and “world peace” • Nevertheless, Malaysia is on par with India • About one third of the respondents felt the (as of 2004) and marginally better than China (54%). government spend too little to support scientific research. (as of 2010). STI Information Sources Television was the most popular media in Source: MOSTI 2014b Attitudes towards STI Malaysia. 89% of respondents used it as the Public attitudes towards STI were seen to source of information for learning about STI. be more positive in 2014 than in 2008. More than half of all respondents (53%) in the 2014 • The next most popular media for survey commented that scientific research information related to STI was print was more beneficial than harmful. newspapers (63%), followed by internet (53%), radio (43%), books (39%) and print • About 33% said it was equally beneficial as magazines (24%). well as harmful, 4% thought that scientific research did more harm than good, while • In terms of the most reliable source of 10% were not sure. information for STI, about half of the respondents (49%) picked television, • Compared to 2008, the percentage of followed by internet (19%), print newspapers respondents who agree that scientific (13%) and books (9%). research has done “more good than harm” declined from 74% to 53% while the response • Surveys in the EU, UK and Taiwan indicated of “more harm than good” had always television to be the primary source of STI remained at below 10%. Most respondents information for the public, except for the US have either become more sceptical or less where the primary source of STI information sure that scientific research had generated was the internet. more positive or more negative effects. Zoos (31%) and museums (23%) were the two • The percentage of Malaysians who believe most popular STI related places. that scientific research had greater benefits was relatively lower than the percentage of • About 13% of respondents had made at least respondents in the US and EU, but, it was one visit in last 12 months to aquariums, 10% about the same with the UK. of respondents had visited Petrosains , 7% had visited the National Science Centre and • Compared to the US (42%), more Malaysians 7% had visited planetariums. (81%) agreed that “science caused our lifestyles to change too fast”. Similarly 95% of • Malaysian public engagement with informal Malaysians agreed with the statement “STI STI venues are comparable to countries like are very important for the progress of our the UK and South Korea, but were lower than nation” while only 42% of the US the US, China and Taiwan. respondents and 62% of EU respondents shared the same view. • There are no notable differences between Malaysia (42%), the US (42%) and EU (39%) relating to the statement “we depend too180

Further Reading 5-3 Strategy Report on achieving 60:40 Science /Technical: Arts Stream (60:40 Report)The 60:40 Report suggested the followingas a measure to increase scientific literacyand interest in S&T:No. Subject Focus Discussion Recommendation 1. Designed or Informal science learning Modest investment can make Structured Informal institutions or environments formal education more effective. Science Learning that have well designed or well-structured pedagogical The infrastructure is already Provide recognition and rhleeaasverenaircnclgeha-abrpalepsaerordna,icnchgree ds itbhlaet iMn apnlaycaevainil aMbalelaoysffiea r. ings L everage further DA eCMsigTOnIeOEdN or are, and structured informal science learning outcomes. of different size, scale, and institutions reach. 2. General Informal All informal science Highly diverse range of Support MOE Science Learning learning opportunities. offerings that although ACTION support science learning, are Informal science learning often too various to manage institutions or control.3. Mass Media All mass media platforms. Has the potential to popularise Incentivise production MOE science. ACTION MOE, others Numerous quality offerings ministries already available but not often accessible. Encourage collaboration MOE No broader governing or ACTION MOE, directing body in terms of others content production, delivery, Platform for scientists ministries or reach. and technologists MOE No strategic framework in place ACTION for science popularisation. MOE,Source: Kementerian Pendidikan Malaysia 2012 others ministries 181

Further Reading 5-4 Once they are selected, they are given specific assignments and help to facilitatePetrosains’ Volunteer Scheme exhibition areas and interact with visitors just like a permanent staff. A considerableIntroduction amount of resources are spent toPetrosains’ Volunteer Scheme is an continuously mentor, coach and train theexemplary demonstration of enculturation volunteers during their tenure in Petrosains.and how science based graduates andprofessionals, students, and school-leavers In addition to a minimal honorarium,can work with the public including children, added experiential values for Petrosains’and engage them with science. volunteers are countless as there are many programmes and activities implemented forObjective their enhancement, giving them a richThe key objective of this scheme is to work and life experience. Activities suchencourage Malaysians (minimum age of 17) as fundamental skills training, educationalto be involved with Science learning and visits to similar industries, collaborativecommunication, through a more structured opportunities as well as sports andapproach. Meanwhile, participants are able recreational activities are also carried outto build their confidence in understanding to enhance output and teamwork.science and gain a greater appreciation forscience as a culture. To date, Petrosains has 1,371 active volunteers and 2,626 ex-volunteers whoVolunteer Induction Training Programme are now enrolled as Petrosains VolunteersPetrosains volunteers go through proper Alumni members. The Alumni contributerecruitment and training process before they back to Petrosains as catalysts to inspireare rostered “on the floor”. The existing and future volunteers. Some of thecurrent volunteer induction training former volunteers are now employed byprogramme focuses on: Petrosains as permanent staff, or working in oil and gas companies such as PETRONAS,1. Overview of Petrosains business principles Schlumberger, Exxon Mobil; while others and key operational areas; have found jobs in the government agencies and other renowned companies.2. Health, safety and environment awareness;3. Overview of departmental functions; Source: Petrosains Sdn Bhd 20144. Science communication criteria and approaches;5. Customer service and visitor engagement approaches; and6. Having the right mindset as a Petrosains volunteer through self and team development activities.182

Further Reading 5-5 Further Reading 5-6 Inquiry Based Science Education (IBSE) Sustainable CSR initiativesFigure (a). A framework for Science Enquiry PINTAR for Underprivileged ChildrenSource: OECD 2014 The Promoting Intelligence, Nurturing Talent and Advocating Responsibility programme (PINTAR), launched in 2006, by Khazanah Nasional and the Putrajaya Committee on GLCs High Performance Project, is to provide access to quality education to all Malaysians, especially the needy. In the initiative, GLCs and other corporations adopt schools and run various programmes to help students aspiring for excellence, and teachers to adopt effective methodologies to improve students’ performance. From 44 schools supported by 13 GLCs in 2006, PINTAR now involves 309 schools and 31 firms, including 15 non-GLCs. Supporting firms enjoy autonomy to run the programmes but most focus on helping students perform well in national examinations via remedial classes and workshops. This is achieved through enhancing the pedagogy of teachers, in addition to promoting sports talents and general knowledge on important issues such as conservation. Since its inception, there has been notable improvements in academic performance among students in PINTAR schools in national examinations. In 2012, 71.71% of PINTAR pupils passed the UPSR compared to the national average of 56.94%, while the pass rate for the Lower Secondary Assessment PMR examination was at 68.9% among PINTAR students, on par with the national average; 1.82 percentage points more than in 2011. Meanwhile, 90.93% of PINTAR students received the SPM certificate in 2012, 0.33 percentage points more than in 2011. Source: PINTAR Foundation 2014 183

Strategic International • Market seeking Prospective Engagement & Collaboration • Acquiring means of distribution Strategies and STI Sectorial ImpactAlliances • Gaining access to new technology, and 1Further Reading 6-1 converging technology • Learning & internalisation of tacit, collective and Model: Hierarchical RelationsTypes of STI-centric internationalstrategic alliance embedded skills Engagement Strategy • Obtaining economies of scale Through acquisition or merger, one firm takes fullA strategic alliance involves at least two • Achieving vertical integration, recreating and control of another’s assets and coordinatespartner organisations, countries and/or actions by the ownership rights mechanism.firms that: extending supply links to adjust to environmental changes STI Sectoral Impact1 Remain legally independent after the alliance • Diversifying into new businesses Merger of smaller companies to achieve greater is formed; • Restructuring, improving performance economies of scale and availability of resources to • Cost sharing, pooling of resources pursue R&D activities.2 Share benefits and managerial control over the • Developing products, technologies, resources performance of assigned tasks; and • Risk reduction & risk diversification 2 • Developing technical standards3 Make continuous contributions in one or more • Achieving competitive advantage Model: Joint Ventures strategic areas, such as technology or products. • Cooperation between potential rivals and pre-emptying competitors Engagement StrategyThese three criteria imply that strategic • Complementarity of goods and services to Two or more firms create a jointly owned legalalliances create interdependence between markets organisation that serves a limited purpose for itsautonomous economic units, bringing new • Co-specialisation parents, such as R&D or marketing.benefits to the partners in the form of • Overcoming legal / regulatory barriers.intangible assets and obligating them to STI Sectoral Impactmake continuous contributions to their Invite suitable technology/knowledge transferpartnership. Different alliance forms companies to participate in the local economy.represent different approaches that partnerfirms adopt to control their dependence on 3the tie-up and on other partners. Table (a)below describes the various alliances Model: Equity Investmentspractised globally that can be considered byASEAN STI stakeholders. The following are Engagement Strategyprospective purposes for strategic alliance A majority or minority equity holding by oneand collaboration: firm through a direct stock purchase of shares in another firm. STI Sectoral Impact Venture funding from STI focused investment funds in local companies.184

4 7 10Model: Cooperatives Model: Franchising Model: Industry Standards GroupsEngagement Strategy Engagement Strategy Engagement StrategyA coalition of small enterprises that combine, A franchiser grants a franchisee the use of a Committees that seek the member organisations’coordinate, and manage their collective brand-name identity within a geographic area agreements on the adoption of technicalresources. but retains control over pricing, marketing, standards for manufacturing and trade. and standardised service norms.STI Sectoral Impact STI Sectoral ImpactPrivate medical practitioners working together to STI Sectoral Impact Setting of uniform STI standards and derivativesaccess expensive plant and machinery. Access to knowledge and technology through throughout ASEAN to ease collaboration franchising of foreign businesses. projects.5 8 11Model: R&D Consortia Model: Licensing Model: Action SetsEngagement StrategyInter-firm agreements for research and Engagement Strategy Engagement Strategydevelopment collaboration, typically formed in One company grants another the right to use Short-lived organisational coalitions whosefast-changing technological fields. patented technologies or production processes members coordinate their lobbying efforts to in return for royalties and fees. influence public policy making.STI Sectoral ImpactICT firms developing communications and social STI Sectoral Impact STI Sectoral Impactoutreach platforms. Licensing of technology to boost economic Joint communication and awareness programmes output rates. for STI initiatives among the ASEAN community.6 Collaboration between governments reduces the 9 overall cost of disseminating the message.Model: Strategic Cooperative Agreements Model: Subcontractor Networks 12Engagement StrategyContractual business networks based on Engagement Strategy Model: Market Relationsjoint multi-party strategic control, with the Inter-linked firms where a subcontractorpartners collaborating over key strategic negotiates its suppliers’ long-term prices, Engagement Strategydecisions and sharing responsibilities for production runs and delivery schedules. Arm’s-length transactions between organisationsperformance outcomes. coordinated only through the price mechanism. STI Sectoral ImpactSTI Sectoral Impact Blanket access to advanced technology is STI Sectoral ImpactAgency to agency agreements on the provided to industry in a bid to improve efficient General inter-company relations.development of human capital. and effective use of capital and other resources 185

Further Reading 6-2 List of STI-related multilateral treaties adhered by MalaysiaAgriculture Intellectual & IP Convention on the Prohibition of the Development, Production andInternational Treaty on Plant Genetic Convention for the Protection of Industrial Stockpiling of Bacteriological (Biological) andResources for Food and Agriculture Property and Revision Toxin Weapons and on the DestructionSignatory: 12 Signatory: 8 Signatory: 110Ratification-Accession: 129 Ratification-Accession: 175 Ratification-Accession: 178Food and Agriculture Organization of United Nations Office for Disarmament Affairsthe United Nations (FAO) Convention Establishing the World (UNODA) Intellectual Property OrganisationAtmosphere and Outer Space Signatory: 50 Convention on Early Notification of Ratification-Accession: 187 Nuclear AccidentTreaty on Principles Governing the Activities World Intellectual Property Organization (WIPO) Signatory: 69of States in the Exploration and Use of Outer Ratification-Accession: 110Space, including the Moon and Other Transport & CommunicationCelestial Bodies Convention on Assistance in the Case of aSignatory: 25 Convention on International Civil Aviation Nuclear Accident or Radiological EmergencyRatification-Accession: 103 Signatory: 190 Signatory: 68 Ratification-Accession: - Ratification-Accession: 115Agreement on the Rescue of Astronauts, the International Civil Aviation Organization (ICAO) International Atomic Energy Agency (IAEA)Return of Astronauts and the Return of ObjectsLaunched into Outer Space Disarmament Convention on the Prohibition of theSignatory: 24 Development, Production, Stockpiling and UseRatification-Accession: 94 Treaty Banning Nuclear Weapons Testing in the of Chemical Weapons and on their DestructionUnited Nations Office for Outer Space Affairs Atmosphere in Outer Space and Underwater Signatory: 160(UNOOSA) Signatory: 106 Ratification-Accession: 192 Ratification-Accession: 115 Organisation for the Prohibition of ChemicalEnvironment Nuclear Threat Initiative (NTI) Weapons (OPCW)Vienna Convention for the Protection Treaty on the Non-Proliferation of Comprehensive Nuclear-Test-Ban Treatyof the Ozone Layer Nuclear Weapons Signatory: 183Signatory: 28 Signatory: 93 Ratification-Accession: 165Ratification-Accession: 197 Ratification-Accession: 189 Preparatory Commission for the CTBTUnited Nations Environment Programme (UNEP) Organization (CTBTO) Treaty of the Prohibition of the Emplacement ofInternational Convention on Oil Pollution Nuclear Weapons and Other Weapons of Mass Convention on the Prohibition of the Use,Preparedness, Response and Cooperation Destruction on the Seabed and the Ocean Floor Stockpiling, Production and Transfer ofSignatory: 24 and in the Subject thereof Anti-Personnel Mines and on their DestructionRatification-Accession: 94 Signatory: 83 Signatory: 183International Maritime Organization (IMO) Ratification-Accession: 115 Ratification-Accession: 165 United Nations (UN) Source: CTBTO Preparatory Commission 2014; IAEA 2014a; IAEA 2014b; International Civil Aviation Organization (ICAO) 2014; International Maritime Organization (IMO) 2014; The International Treaty on Plant Genetic Resources for Food and Agriculture 2014; NTI 2014; UNEP Ozone Secretariat 2014;UN 2014a; UN 2014b; UN 2014c; UN 2014d; UN 2014e; UNOOSA 2014a; UNOOSA 2014b; World Intellectual Property Organization (WIPO) 2014a; World Intellectual Property Organization (WIPO) 2014b186

Further Reading 6-3 A summary of multilateral treaties by regionsRegion: ASEANCountries Signatory Ratification-Accession Signatory + Ratification-Accession Total 8Brunei 0 4 4 12 14Cambodia 0 6 6 13 11Indonesia 1 5 8 16 14Lao PDR 0 7 6 15 12Myanmar 2 6 3 17Philippines 2 5 9 15 14Singapore 0 9 5 9 16Thailand 2 6 7 17Vietnam 1 8 3 13 14Malaysia 4 6 7 14 15Region: MIST 0 5 10 Mexico 1 5 8 Indonesia 1 7 1 South Korea 0 7 9 Turkey Region: BRICSBrazil 1 5 11 0 5 8 Russia 0 7 7 1 8 5 India 0 6 9 China South Africa Source: CTBTO Preparatory Commission 2014; IAEA 2014a; IAEA 2014b; ICAO 2014; IMO 2014; The International Treaty on Plant Genetic Resources forFood and Agriculture 2014; NTI 2014; UNEP Ozone Secretariat 2014;UN 2014a; UN 2014b; UN 2014c; UN 2014d; UN 2014e; UNOOSA 2014a; UNOOSA 2014b;World Intellectual Property Organization (WIPO) 2014a; WIPO 2014 187

Further Reading 6-4 Further Reading 6-5 ASEAN Framework Agreement on Services (AFAS) and Network of collaboration in publicationsMutual Recognition Arrangements (MRAs) and patents in ICT and biotechnology ASEAN Framework Agreement on Eighth Package are better than the ICT Services (AFAS) commitments under the World Trade The analysis indicates: Organization (WTO), which covers: AFAS is aimed at forging closer economic a) Accounting, auditing and bookkeeping services 1. The maturity of the ICT industry indicates integration and increasing the region’s that the research landscape is dominated competitive advantage as a single up to 49-51 % equity ownership; by universities working on fundamental production unit. It is the vision of the ASEAN b) Taxation services up to 49% of foreign equity; research related to ICT. leaders that by 2020, ASEAN as an Economic c) Advertising Services up to 51% of foreign Community (AEC) will be a stable, 2. The Malaysian ICT research map shows prosperous and highly competitive region; equity; strong tie-up between local universities. a single market and production base with d) Research and Development Services up to However, the network lacks global free flow of goods, services, investment and exposure (international partners) which skilled labour; freer flow of capital; equitable 70 % foreign equity; and may limit its potentials [Figure (a)]. economic development and reduced e) Telecommunication Services up to 70 % equity. poverty and socio-economic disparities. The 3. In the patent network landscape, local AFAS was signed on 15 December 1995 in Mutual Recognition Arrangements (MRAs) varsities also undertake patenting works in Bangkok, Thailand. joint effort with local firms [Figure (b)] but MRAs are among the more recent the tie-up is small and limited to a few The key objectives of AFAS are: developments in ASEAN cooperation on entities. Many productive firms, both trade in services. MRAs enable the foreign and local SMEs, were excluded in a) To enhance cooperation in services amongst qualifications of professional services the process of innovating system member states to improve efficiency and suppliers to be mutually recognised by development. In contrast, university competitiveness, diversify production capacity signatory member states; hence, facilitating presence in the network is absent in Taiwan. and supply and distribution of services of their easier movement of professional services The conjecture is that the industry maturity service suppliers within and outside ASEAN; providers in the ASEAN region. in Taiwan is different, with firms leading the change in contrast to Malaysia, where b) To eliminate substantially restrictions to trade At present, ASEAN has concluded seven university research is still skewed towards in services amongst member states; and MRAs: patenting. a) MRA on Engineering Services signed on 9 c) To liberalise trade in services by expanding the 4. Taiwan’s ICT scientific research is localised, depth and scope of liberalisation beyond those December 2005 in Kuala Lumpur, Malaysia; with high density of networks, indicating undertaken by member states under the b) MRA on Nursing Services signed on 8 Taiwan’s success in developing a strong General Agreement on Trade in Services national innovation system conducive for (GATS), aimed at realising a free trade area in December 2006 in Cebu, the Philippines; scientific activities. Nearly 30 of its top services. c) MRA on Architectural Services and Framework institutions have strong links with various universities and PRIs. The Academica Sinica Malaysia has offered market-opening Arrangement for the Mutual Recognition of and Industrial Technology Research measures in the form of allowing Surveying Qualifications both signed on 19 Institute (ITRI) emerged at the core of the establishment of equity ownership and November 2007 in Singapore; and network, playing a key role in bridging joint presence of professionals from ASEAN d) MRA on Medical Practitioners, MRA on Dental efforts between universities, industry and countries. The concessions under the AFAS Practitioners, and MRA Framework on research institutions. This element is Accountancy Services all signed on 26 February missing in Malaysia.188 2009 in Cha-am Hua Hin, Thailand. Source: ASEAN Secretariat 2009

Monash University Multimedia University Tokyo University Louisiana State University Universiti Teknologi MARAUniversiti Sains Malaysia Indian Institute of TechnologyUniversiti Malaysia Terengganu Universiti Malaysia Sabah International Medical University Forest Research Institute Malaysia Nanyang Technology UniversityUniversiti Teknologi PETRONAS Universiti Malaya Universiti Malaysia Sarawak Universiti Tunku Abdul RahmanUniversiti Tun Hussein Onn Malaysia Universiti Tenaga Nasional Universiti Teknikal Malaysia Melaka Swinburne University of Technology Universiti Malaysia Perlis Universiti Teknologi Malaysia International Islamic University Malaysia Universiti Putra Malaysia Nottingham University Universiti Malaysia Pahang Universiti Kebangsaan MalaysiaFigure (a). Malaysia ICT Publications Network - Auto-Correlation Map 189

Koninklijke Philips Electronics N.V National University of Singapore Universiti Sains Malaysia Clicque Technology Sdn Bhd Universiti Malaysia International Islamic Sarawak University Malaysia International Business Machines Corporation National History Massey University Creative Technology Ltd Museaum Advanced Product Design Sdn Bhd Universiti Malaysia Petroliam Nasional Berhad (PETRONAS) Sabah Matsushita Electric Industrial Co. Ltd Motorola Inc British Telecommunications Public Limited Company World Fish Ctr Forest Research Emanual System Sdn Bhd Institute Universiti Malaysia Universiti Kuala Malaysia Perlis Lumpur Universiti Institute for Kebangsaan Medical Research Malaysia Telekom Malaysia Berhad Cambridge University Technical Universiti Malaysia Services Ltd Terengganu Qualcomm Incorporated University of Nottingham Trek 2000 International Ltd Monash University Universiti Putra Malaysia University of Universiti Malaysia Pahang Malaya Universiti Sains Malaysia Kok-Wah,Lee International Medical University Universiti Teknologi Malaysia Yahoo Inc Balda Solutions Malaysia Sdn Bhd Universiti Teknologi MARA Unisay Sdn Bhd Universiti Malaya Agency For Science Kyushu Institute of Technology Simplex Major Sdn Bhd Baker Hughes Universiti Tunku Abdul Rahman Incorporated Nanyang Technological Malaysian Agricultural Universiti Putra Malaysia University Research & Development Malaysian Palm Oil Board Multimedia Institute University Multimedia Glory Sdn Bhd Fujitsu Technology Solutions INTEL Corporation Ecava Sdn Bhd Islamic Azad University Intellectual Property GMBH Lucent Technologies Inc Universiti Teknologi PETRONAS MIMOS Bhd Figure (c). Malaysia Biotechnology Publications Networks - Auto-Correlation MapFigure (b). Malaysia ICT Patents Networks -Cross-Correlation Map190

Biotechnology Further Reading 6-6 B. The ASEAN Community of Science and1. R&D in biotechnology is heavily Technology (COST) Report ASEAN – Areas of strengths in STI issues, dominated by universities, with GRIs challenges and advantages for Malaysia to The ASEAN Community of Science and supporting the research network in several explore alliances Technology (COST) Report (2014) highlights key positions with specific universities the following areas of strengths for ASEAN [Figure (c)]. Proximity is a major factor as A. The World Economic Forum (WEF) countries, which present an opportunity for most collaboration happens within specific Global Competitiveness Report Malaysia as the AEC takes shape. Malaysia clusters that are physically close to each 2014-2015 is well-positioned to forge meaningful and other. Universiti Putra Malaysia (UPM, strategic international alliances with these formerly known as Universiti Pertanian The WEF Global Competitiveness Report countries for two main outcomes: Malaysia), is relatively the highest 2014-2015 had separated the stages of contributor with strong collaboration with development into five stages as shown in 1. Development of Capabilities: With the Malaysian Agriculture Research and Figure (a) as below. The chart shows the Development Institution (MARDI) and Malaysia’s performance in the 12 pillars of countries in transition from efficiency Malaysian Palm Oil Board (MPOB), as well the Global Competitive Index (GCI) (blue as foreign universities. line), measured against the average score of -driven stage of development to the group to which the economy belongs,2. Several foreign universities are within the using the same classification as in the GDP innovation-driven, or which have matured network, indicating significant per capita (grey line). international collaboration but confined and are already innovation driven to Asian universities or branch campuses of Western universities in Malaysia. Thus, economies. the patent landscape in biotechnology is weak [Figure (c)]. ASEAN Member Singapore Areas of Strength in S&T Electronics; Biomedical sciences; ICT & Media; Engineering; and3. Given that Malaysia is similar to Singapore Clean Technology. where universities drive the research agenda, the study benchmarks Malaysia’s biotechnology landscape with Singapore. Singaporean biotech landscape is dominated by its two largest universities, National University of Singapore (NUS) and Nanyang Technology University (NTU). However, the key difference is the fact that Singapore taps into a highly developed research network in the US and UK, leveraging heavily on inter-university collaboration.Source: World Intellectual Property Organization 2013 Figure (a). Stage of development for Malaysia(using Vantage Point Analytic Tools) Source: The Global Competitiveness Report 2014-2015 (World Economic Forum 2014 191

2. Reverse Linkages: With countries that are C. National Innovation Profiles Government policies tended to neglect the factor-driven or in transition towards development of adequate scientific and efficiency-driven stage of development Cambodia technological base and framework conditions for innovation, but there is now a new emphasis on ASEAN Member and its areas of Issues and Challenges policies and mechanisms designed to stimulate strength in S&T Lags behind many of its regional neighbours in innovation-led growth, with mechanisms freshly in terms of overall development. place to oversee their coordination. Brunei Darussalam Biodiversity; energy; food security/ agro Innovation performance is weak. Very little Advantages technology; climate change modelling; expenditure on R&D, the number of researchers is The rapidly expanding higher education system Asian studies; Islamic banking and finance. low, publication levels are modest albeit growing, is one means by high the innovation potential of and patenting is extremely rare. Indonesia could be better harnessed. Cambodia Agriculture; mines and minerals; construction. The relative immaturity of the country’s innovation Singapore system suggests that it is too early for innovation Indonesia to be at the heart of its short-term plan for Issues and Challenges Public health; plant sciences; environmental development. Started to shift towards a more balanced sciences; ecology; multidisciplinary geo-sciences; approach, with increasing emphasis on tropical medicine; microbiology; pharmacology & Continued expansion via trade and inward developing its own R&D and innovation pharmacy infectious diseases, zoology, investment and efforts to upgrade the general capability. immunology; biology; biochemistry; molecular business and educational environments must biology; medicinal chemistry; agronomy. take priority. The emergence of a more vibrant technological entrepreneurial community is likely to be critical Laos Advantages to Singapore’s continuing transition from Agriculture; forestry; horticulture; livestock; living Agriculture and garment manufacturing, and technology adapter to innovator. aquatic; fisheries. employment growth has helped to reduce poverty. Move nimbly and strategically to stay ahead of Myanmar regional competitors in capability development in Engineering; agriculture; forestry; natural General improvements to the business selected S&T technology clusters. resources. environment are likely to remedy framework conditions for innovation. Advantages Philippines Significant progress in developing its STI Disaster science and management; climate Indonesia capability over the near half century since full change; aquaculture; biodiversity. political independence. Issues and Challenges Thailand It has not developed a technology-intensive Its ability to attract global talent, especially Food-biotechnologies; manufacturing industry structure and imports of high-technology innovative and entrepreneurial talent, is crucial to technologies; electronics industry; medical products outweigh exports. achieving this, even as it seeks to nurture greater science. entrepreneurship and innovation among its local Significant improvements in infrastructure will population. Vietnam be required to realise the government’s growth Material science; biotechnology; ICT; ambitions. The ICT infrastructure, in particular, mathematics; chemistry. is relatively poor, in comparison to much of the regions. Other barriers include entrepreneurship192 and business risk which holds back rapid knowledge-based economic development.

Thailand The national innovation system needs to be strengthened in terms of public research,Issues and Challenges incentives for private R&D, and technologyTourism has been threatened by political transfer and linkages between the public andinstability. private sectors, particularly with foreign firms.Threatened by the more technological, Advantageslearning-intensive economies of the original There is a strong case for streamlining andfour Asian tigers. clarifying the role of government S&T agencies, while the country would benefit from centres ofProgrammes to encourage R&D and technology research excellence focusing on public healthdevelopment has had limited results. and environmental goods.Advantages The expanding tourism sector and agricultureServices carry great potential for growth. niches could also be targeted areas for research and development.The government has adopted a dual track policyto enhance the capabilities of Thai firms while Priority sectors such as ICT continue to developincreasing international competitiveness by well and Vietnam is now attracting investmentsexpanding foreign investment, exports and from multinational enterprises in IT.tourism.Can boost performance in the long term byimproving the skills level of the labour force,investing in ICT infrastructure, and bettercoordination and implementation S&T policies.VietnamIssues and ChallengesDue to fewer international links, Vietnam sufferedrelatively less than other countries in the regionfrom the Asian financial crisis in 1997 and theglobal economy crisis in 2008.The Government dominate all aspects of S&Tand research and innovation in both the publicand private sectors is limited.Continued economic growth in Vietnam and itsability to compete in global markets will dependon increasing investments in education andtechnology-based production. 193

D. COST COE Networki. An Operational Model for a COST COE Network (supported by public sectors and/or private sectors, research development centres, incubators and IHLs) will establish strategic alliances with international communities in the STI space. Figure (b). COSTNET Operational Model Source: The Asean Secretariat 2015COST COE’s strategic intents and the expected impact on ASEAN-wide STI stakeholders and specifically on COST COST Strategic Intent COST Impact ASEAN Wide Impact Increased collaborative and applied research • Increase in external R&D funding, notably industry • Open innovation mindset as documented sponsored R&D projects and industry chairs; and • Outstanding university / Increased production • Increase in patents filed and obtained or other institutional / industrial of advanced human manners of knowledge commercialisation and transfer. potential capital as measured by: • Specific mutual interest / • Increase in enrolment of Masters and PhD students,and knowledge base Developing long term rise in number of PhD graduates; • Capability in technology and R&D capability as knowledge transfer evidenced by: • Increase in placement of graduate students and • Entrepreneurial and creative research staff in short and long-term positions within leadership and teams194 collaborating firms as well as with local industry; and • Believe in “a world without borders” and have interest • Updated and more relevant undergraduate and and ability for cross cultural postgraduate engineering curricula. understanding and sharing • Supportive and holistic • Increase in publications of refereed journals; infrastructure in each • Increase in joint publications of refereed journals with location • Adequate resources, international authors; including finance • Increase in joint programmes/projects/exchanges with • Obsession to communicate and network international research organisations and institutions; • Trust as a basis for success • External awards for research at the national and international levels; and • Publications of books and technical reports.