fostering creation of next generation innovative tech co malaysian policy report may 2011 dr siva
TRANSCRIPT
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
1/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 1
FosteringTheCreationoftheNextGenerationof
InnovativeTechnologyEnterprisesinMalaysia
APolicyPaperfortheSpecialInnovationUnitofthe
PrimeMinistersOfficeofMalaysia
20thMay2011
byDr.SivapalanVivekarajah&Ms.RenukaSena
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
2/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 2
FOSTERINGTHECREATIONOFTHENEXTGENERATIONOF
INNOVATIVETECHNOLOGYENTERPRISESINMALAYSIA
ByDr.V.Sivapalan&Ms.RenukaSena
20thMay2011
ChapterBriefThischapterdealswiththeinnovationissuesrelatedtosmallandmediumsizedinnovativetechnologyenterprises(SITEs).AsonepartofalargerstudybeingconductedbyUNIK,weexplorethe
innovationstatusandproblemsandissuesfacedbySITEsandproposerecommendationsandimplementableactionsthatcanbetakenbytherespectivepartiestosolvetheseproblemsandassistSITEstogrowandcontributetotheMalaysianeconomyandemployment.
DefinitionsThereareseveraldefinitionalissueswewouldliketoclarifybeforeweproceedtothereportandrecommendations.
Innovation
Therearemanydifferentdefinitionsforinnovationandsomepeopleconfuseinnovationwithinventionorcreativityandotherusethesewordsinterchangeably.Asanexample,theMerriam-Websterdictionarydefinesinnovationastheintroductionofsomethingnewandanewidea,methodordevice,whileitdefinescreativityastomakeorbringintoexistencesomethingnew.Inventionisdefinedasadevice,contrivance,orprocessoriginatedafterstudyand
experiment.Thesedictionarydefinitionsareoflittlehelptousastheycontributelittletoincreasingourunderstandingofinnovationandevenconfusethemeaningsofinnovationandcreativity.Dr.EdwardRobertsaProfessorofTechnologicalInnovation,Entrepreneurship,andStrategicManagementatMassachusettsInstituteofTechnologycoinedamoreusefuldefinition.HedefineditasInnovation=Invention+Exploitation.Innovationinbusinessandsocietyisthereforeaninventionthatisexploitedtocreatevalue,eitherbusinessvalueorabenefittosociety.Inventionisderivedfromresearchanddevelopment(R&D),whilevalueiscreatedthroughtheexploitationorcommercialisation(C)oftheinvention.In
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
3/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 3
simpletermswecandefineinnovationasInnovation=R&D&C.Thisisaconceptthatembracesboththedictionarydefinitionaswellasthegenerallyusedbusinessdefinition.Inthisstudythereforewedefineinnovationastheexploitationor
commercialisationofinventionsandresearch&development,tocreateeconomicandsocialvalue.
InnovativeCompanies
WedefineinnovativecompaniesascompaniesthatarethecreatorsofinnovationwhoowntheirownIntellectualProperty.
SITEs
WedefineSITEsasSmallandMediumSizedInnovativeTechnologyEnterprises.BysmallandmediumweusetheSMECorporationdefinitionasfollows:IndustryorSector SmallEnterprise MediumEnterpriseManufacturing,Manufacturing-RelatedServicesandAgro-basedindustries
SalesturnoverbetweenRM250,000andlessthanRM10millionORfulltimeemployeesbetween
5and50
SalesturnoverbetweenRM10millionandRM25millionORfulltimeemployeesbetween51
and150Services,PrimaryAgricultureandInformation&CommunicationTechnology(ICT)
SalesturnoverbetweenRM200,000andlessthanRM1millionORfulltimeemployeesbetween5and19
SalesturnoverbetweenRM1millionandRM5millionORfulltimeemployeesbetween20and50
Ourreportandrecommendationsareprovidedbelow.
WehopethisstudyandourRecommendationsandExecutionPointswillfurthertheobjectiveofUNIK(UnitInnovasiKhasorSpecialInnovationUnit)andthenationinmakinginnovationthekeydriveroftheeconomyandtowardsachievingthegoalsoftheNewEconomicModelofmakingMalaysiaaHigh-Income,High-Valueeconomy.AuthorsoftheReport:Dr.V.SivapalanandMs.RenukaSena
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
4/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 4
CONTENTOUTLINE
1.0 Introduction1.1 ProjectDescription&Objectives
1.2 ModusOperandi
1.3 TowardsaHighIncomeEconomy
1.3.1 ContributionTowardstheEconomy
1.3.2 ContributiontoHighIncomeSociety
1.4 StructureofRecommendations2.0 MacroRecommendations
2.1 PavetheFootpath
2.1.1 EntireEcosystem
2.1.2 EntireLifecycle
2.1.3 BeingColourBlind
2.2 SectorSelection
2.2.1 BeSectorAgnostic
2.2.2 LetMarketsDriveSectors
2.2.3 SupportExistingSectorswithStrongMarketPlayers2.2.4 Summary
2.3 MicroActions
2.3.1 SmallThingsMakeBigDifferences
2.3.2 ExecutionPolicyMoreImportantthanMacroPolicy
2.3.3 AlwaysEngageMarketPlayers
2.4 GovernmentPolicyandRoleRethinkingNecessary2.4.1 PoliciestobeMarketDriven2.4.2 ManageInter-DisciplinaryNatureofInnovation
2.4.3 ReformBureaucracyandRewardsSuccessandMeritocracy
2.4.4 Summary
3.0 ContributionofFundingMechanismstoInnovation
3.1 GrantMechanismBigPicture
3.2 StandardTimelinesandDocumentation
3.2.1 ClientCharterandRuleof4
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
5/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 5
3.2.2 StandardClientCharterforALLGrants
3.2.3 StandardiseDocumentationandDueDiligence
3.3 LackofCommercialEvaluationsandExpertise
3.3.1 LackofCommercialEvaluationsinGrants3.3.2 LackofExpertiseinProcessingApplications
3.3.3 StandardisedVotingMechanismforApproval
3.3.4 SetUpSharedDatabaseofExperts
3.4 LackofTransparency3.4.1 NoTransparencyinProcessingApplications
3.4.2 PublishRecipientProjects,AmountsaswellasResources
3.4.3 SetupSharedDatabaseofPhysicalAssetsandResources
3.5 LowReturnsfromR&DFunding3.5.1 IncludeCommercialEvaluationsforALLGrants
3.5.2 IncludeAllocationwithinGrantsforCommercialActivities
3.5.3 TrackingMechanismonCommercialAspects
3.6 LackofCommercialisationFunding3.6.1 CreateaBalancebetweenR&DandCommercialisation
Funding
3.6.2 IncorporateCommercialisationActivitiesinalPre-Seed,
R&DandPre-CommercialisationGrants
3.6.3 IncreaseHumanResourceAllocationsinCommercialisation
Funding
3.6.4 IncorporateVoucherMechanisminALLGrantFunding
Programs
3.6.5 Summary
4.0 MarketDynamics
4.1 MarketDynamics-BigPicture
4.2 MarketAccessibility
4.2.1 GLCstoBuyLocal:FirmDirectionNeeded
4.2.2 PriorityforCertifiedCompanies
4.2.3 BuildACultureofTrust
4.2.4 SetupLabsforLocalSITEstoTestBedInnovations
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
6/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 6
4.3 MarketAdoption
4.3.1 NeedtoBoostAdoption
4.3.2 IncentiviseAdoption
4.3.3 RemoveBenefitsthatRestrainAdoptionofTechnology4.3.4 AdditionalIncentivesforEarlyAdoptersofTechnology
4.4 GoGlobalandExportingInnovations
4.4.1 IncreaseFundsforExportPromotion
4.4.2 HaveMoreTech-KnowledgeableStaffatMatradeOffices
Abroad
4.4.3 MoveAgenciesfromIndustrialtoNewEconomy
4.4.4 SpecialProgramstoPromoteGlobalAccess
4.4.5 MatradeExportAccelerators(MExA)
4.5 GovernmentRoleandContributiontoMarketDynamics
4.5.1 PolicyMakingtoEngageMarketPlayers
4.5.2 QuarterlyProblemSolvingDialogues
4.5.3 GovernmentandGLCProcurementTransparencyand
Meritocracy
4.5.4 OneStopCentreforComplaintsandProblemResolution
5.0 StakeholderDynamics
5.1 StakeholderDynamicsBigPicture
5.2 EmpoweringAgencies
5.2.1 MoveAgenciestoPMOandEmpowerthemAdequately
5.2.2 RemoveoutdatedPoliciesandShackleCompanies
5.2.3 ImproveRecognitionofCertifiedCompaniesAmongPublic
andCorporations
5.2.4 HelpCompaniesEngageGLCsandPLCs.
5.2.5 KPIstobeSuccessDriveandNotNumbersDriven
5.2.6 DataCollectiontobeBetterUtilisedtoHelpCompanies
5.2.7 CreateSuccessStoriesbyBackingtheBestCompaniesAll
theWay
5.3 InstitutionalRolesandResponsibilities
5.3.1 DevelopmentalFinancialInstitutionstoSupportInnovation
5.3.2 InstitutionsNeedMoreKnowledgeableStaff
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
7/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 7
5.3.3 SMECorptoUpdateandUpgrade
5.3.4 IHLstoProvideMoreMarketDrivenEducationand
Training
5.3.5 PromoteRiskTakingByAmendingBankruptcyLaws5.3.6 EliminateCorruptioninTechnologySector
6.0 Contributionofexistingfundingmechanismstoinnovation
6.1 RightKindofSupportforRightKindofPeople
6.2 PoliciesShouldPavetheFootpath
6.3 PolicyofPositiveEngagement
6.4 InnovationisInter-disciplinaryDontworkinSilos
6.5 AgenciesandOrganisationalKPIsshouldbemoreMarket,GNI
andEmploymentDriven
6.6 ReduceMonopoliestoPromoteInnovation
6.7 LuckyCountry
AppendixA:
IntegratedGrantManagementSystem
AppendixB:
FurtherDetailsOfRecommendationsAndExecutionPlansForTheGrantMechanismsInChapter3
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
8/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 8
Chapter1: Introduction
1.1 ProjectDescriptionandObjectives
Inthetechnologysector,anecdotallyitisacceptedthatmanyofthemostinnovativeenterprisesintheworldstartedassmallenterprises,whichthengrewtobelargeenterprisesorwereacquiredbythelargercorporationstoenhancetheirowninnovativeproductsandservices.Mostnewordisruptiveinnovationsarecreatedbysmallandmediumsizedinnovativetechnologyenterprises(SITEs)whereasthelargercorporationsaremostlythecreatorsofincrementalinnovations.HencelargercorporationsacquiretheseSITEsfortheir
innovationsorinnovationcapabilities,therebyensuringtheircontinueddominanceintheirindustries.ThisStudywillreviewthestatusofinnovationbySITEsprimarilyintheInformationandCommunicationsTechnology(ICT)andBiotechsectorsandalsotheGreenTechnologysectoreventhoughthisisstillarelativelynewsectorinMalaysia.ItexplorestheircontributiontotheeconomyandsecondlytorecommendproposalsandpoliciestofosterthegrowthanddevelopmentoftheseSITEstoensurethattheircontributiontothenationalagendaofaHighIncome,HighValueeconomyandVision2020ismaximized.
Theobjectivesaretorecommendpoliciesandproposalsto:
1. Fosterhigh-growthandinnovation-basedentrepreneurship2. IncreaseinnovationamongITEs3. Promoteanopen,dynamicmarketforinnovativeproductsandservices4. Supportopenpublicfundingmarketsthatallocateresourcestothemost
promisingideas5. Promotetheexportsofproductsandservicesregionallyandglobally6. EnsurethatthereisavibrantandsupportiveecosystemforITEs
ThereportwillincluderecommendationsbasedonbestpracticesandpoliciesfromothercountriesthatarerelevanttothegrowthofMalaysianITEs.
1.2 ModusOperandi
Thisstudywillincorporatewhenappropriatethefollowingstrategies:extensivestakeholderinterviewsanddialogues;reviews;benchmarking;datacollectionviasurveyswithindustryplayersandrelatedstakeholders;dataanalysisandstakeholderreviews.However,thebulkofthestudyandrecommendationsarebasedonwhatwecallabottomsupapproach,whereweexaminetheproblemsandissuesfacedby
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
9/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 9
thebeneficiariesofthepolicies,theinnovatorsandSITEsthemselvesandproviderecommendationsbasedonwhattheywantandneed,basedontheirowninput.CurrentlymostGovernmentpolicynormallyadoptsatopdownapproachwherecivilservantsandconsultantscreatepoliciesbasedonbenchmarkingwithothercountriesandassumethatthisiswhatthe
beneficiariesneedandthencreatepoliciesforthem.Theprocessofconsultingthesebeneficiariesisseldomdoneingreatdetailandrarelydoneonaface-to-facebasis.Thishasresultedinpoliciesthatdontmeetrealneedsandsometimespoliciesareinappropriateanddownrighthatedbythecompanieswhofindthatsomeofthesepoliciesstiflegrowthratherthanpromotegrowth.WearestrongbelieversinthestrategytoPavetheFootpath,whichweexplaininChapter2below,whichessentiallymeansprovidingpoliciesthatbenefiteveryoneregardlessofindustryorsectorandwebelievestronglythatthismustalwaysbedoneinconsultationwiththebeneficiariesofthepoliciesthemselvesandnotdoneinisolationfromthem.Indoingthisstudywehavehadconsultationswiththreegroupsofcompaniesandassociationsinthethreesectorsmentionedabove(ICT,Biotech&Green),whicharetheprimaryinnovativesectorsinMalaysiawiththelargestnumberofSITEswhocreateandowntheirownIntellectualProperty(IP).WhiletherearemanyothertechnologysectorsliketheElectricandElectronic(E&E)andOil&Gas(O&G)sectors,therearentasmanySITEsinthesesectorswhoareIPcreatorscomparedtothethreesectorswehavestudied.
Wehavehadconsultationswiththefollowing:
1) TechnopreneursAssociationofMalaysia(TeAM)15members2) BiotechCorp15members3) PIKOM10members4) GreenTechindustry30members
Consultationsincludeindepthdiscussionsanddialoguestounderstandtheissuesthatimpacttheseindustrysectors,theirproblemsandtheirpolicysuggestionstoimprovetheecosystemforSITEstothriveandgrow.Additionally,therecommendationswerealsopresentedandtestedwiththeICT,BiotechandGreenentrepreneursinaseparatesessionpriortothefinalisationoftheserecommendationstoobtaintheirconfirmationandvalidationofourpolicyrecommendationsandproposals.
1.3 TowardsaHighIncomeEconomy
InlinewiththeGovernmentinitiativeoftheNewEconomicModelourstudyand
proposalshavebeenmadewiththeobjectiveofcreatingcompaniesthatcontributepositivelytowards:
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
10/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 10
a) TheEconomyandGDP,and;b) Highincomeemployment
1.3.1ContributiontowardstheEconomyOurstudycoverstheinnovativeSITEsofICT,BiotechandnewtechnologyareasincludingGreentechnology.IntermsofcontributiontoGDP,inICT,MSCMalaysia'svalueaddcontributiontoMalaysia'seconomywasrecordedat1.2%ofGrossDomesticOutputofMalaysiain20071,whileBiotechcontributed1%toGDPin20092.WearentabletoassessGreenTechscontribution,asthisisstillanascentindustryinMalaysia.EvenforbothICTandBiotech,whiletheGDPcontributionwasmeasuredin
termsoftheirfirmsactualrevenuecontribution,theirrealcontributiontotheeconomyincludestheexpansionintheuseofICTandBiotechwithinbusinessesandtheconsequentincreaseinproductivityofthoseindustriesinMalaysia.Forexample,ICTisbeingusedinallsectorsfromretailtomanufacturingtobankingtoconstructionwhileBiotechisusedinsectorsfromagriculturetoindustrialtohealthcare.Theuseofthesetechnologiestoincreaseproductivity,reducecostsandincreaserevenuesallmakeasignificantthoughindirectcontributionthatiscurrentlynotbeingmeasuredintermsoftheircontributiontoGDP.Thepointwewishtomakeisthatonecannotvaluethesesectorscontributionto
GDPorGrossNationalIncomeonlyintermsofitsDIRECTcontributionasmeasuredintheNewEconomicModel(NEM).Theirindirectcontributionisalsoimmenseandisprobablygreaterthantheirdirectcontributionhencetheyareextremelyimportantsectorsfortheeconomy.EventhefirmsowncontributioncouldhavebeenmoreimpactfulonGDPhadMalaysianSMEsadoptedmoretechnologywithintheirownbusinessesandifthelargercompaniesandGLCssupportedlocaltechnologyinsteadofusingforeigntechnology.TheproblemwithICTandBiotechisnotthatthereisalackoftechnologycreationbutalackoftechnologyadoptionbyMalaysiancompaniesbothSMEsandlargercompanies.Ifwefixtheadoptionproblem,theirdirect
contributiontotheeconomyandoverallcontributiontothebusinesssectorsproductivityincreaseandprofitabilitywillincreasetotalcontributiontotheeconomyandGDP.So,whilecurrentstatisticsshowonlyalowlevelofcontributionbytechnologycompaniestowardsGDP,thiscanbesignificantlyimprovedwiththerightkindofpoliciesandproposalsandtheproperexecutionofthesepoliciescoupledwithincreasedadoptionbybusinesses.
1MSC Malaysia Impact Survey 20082 As stated by CEO of Biotech Corp to New Straits Times on 21st March 2009.http://www.biotechcorp.com.my/pages/20090321_BiotechSectorConfidentOfHittingGDPContributionGoal.aspx?AudienceId=1
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
11/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 11
1.3.2 ContributiontoHighIncomeSocietyWemustalsodifferentiatebetweenasectorscontributiontoGDPandits
contributiontoaHighIncomeeconomy.Forexample,whilethereisnodisputingthecontributionoftheplantationsectortoGDP,however,itscontributiontoaHighIncomeeconomyisminimal.Otherthanmanagementlevelstaffinthefewcompaniesthatownplantationsandperhapsattheestates,therestoftheworkersarelow-incomeemployeeswhileamajorityofestateworkersareactuallylowlypaidforeignworkers.BasedonaminimumstandardofRM4,000permonthinearningsasbeingarelativelyhigh-incomesalary,mostestateworkerswouldearnfarbelowthis,thustheirmonikeroflow-incomeemployees.ThegoodnewsisthatthehightechnologysectorisasignificantcontributortotheGovernmentsdrivetowardsahigh-incomeeconomy.Statisticsbythe
MultimediaDevelopmentCorporationandBiotechCorpshowthatsignificantnumbersoftheemployeesinMSCStatus3(74.2%)andBionexusStatus4companies(50%)respectivelyareknowledgeworkerswhoearnaboveRM4,000amonth,therebycontributingtoanannualpercapitaincomeofRM48,000orUSD16,000whichalreadymeetstheGovernmentsNewEconomicModeltargetofapercapitaincomeofUSD15,000bytheyear2020.ItisthereforeimperativethattheinnovativetechnologysectorbepromotedandsupportedasadriverofgrowthanddevelopedfurthertohelpachievetheNEMobjectivesespeciallyofcreatingahighincomesociety.
1.4 StructureofRecommendationsWehavestructuredourrecommendationsinthefollowingmanner.Wehavedividedourstudyandproposalsintothreedistinctareas:a)FirstlywehaveourHeadlineTopicsasfollows:
(i) MacroViewwherewelookatmacropolicydecisionmakingand
issues(ii)GrantMechanismsthemainfundingmethodologythatwereviewed(iii) MarketDynamicswhichincludesmarketaccessandadoption,twoof
themostimportantcommercialisationandvaluecreationproblemsfacedbyinnovatorsand;
(iv) StakeholderDynamicswherewestudyseveralGovernmentstakeholders,especiallytheAgenciesandInstitutionsthatimpactoninnovation
3MSC Malaysia Impact Survey 2008, Employment Outlook4Malaysian Biotechnology: Human Capital Development Report 2009
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
12/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 12
b)Secondly,withineachoftheHeadlineTopicswehaveourgeneralRecommendations,whicharethemainrecommendationsweproposeinthisstudy.Wehaveatotalof15Recommendations,whichusetheabbreviationR.c)Finally,wehaveExecutionPoints(EP),whicharetheactualactionstobe
takenbyUNIKortherelevantstakeholderstoexecutetherecommendationswehavemade.TheseareimplementableactionsthatarethekeytothesuccessofourRecommendations.Wehaveatotalof76ExecutionPoints.Weshallnowproceedtotheactualrecommendationsofthisstudy.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
13/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 13
Chapter2: MacroRecommendations
Inpreparingourrecommendations,wehaveidentifiedasetofMacroRecommendationsthatwillbetheguidingplatformforthestudyandourpolicyrecommendations.ThisisrepresentedinTable2.1belowandwillbeexpandedfurtherinthisintroduction.
2.0 MacroRecommendations
TherearefourkeyMacroRecommendationsPavingtheFootpath,SectorsandFocusPolicy,MicroPolicyActionsandGovernmentPolicyandRoleRethinking.
WhyhaveaMacroView?
Policiescannotbeformulatedwithoutproperconsiderationoftheimpacttheywillhavenotjustonthebeneficiariesweidentifybutalsoonthewholeecosystem.Furthermore,onresearchingthebestpossiblepoliciestohavethegreatestpossibleimpact,wehavealsostudiedothermarketsandnationsandhaveexploredexperiencesandpracticeselsewheretoensurethatwecreatethebestpossiblepoliciesforMalaysia.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
14/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 14
2.1 PavetheFootpath
R1:WerecommendthatinformulatingpolicytheGovernmentadoptsthe
strategyofPavingtheFootpathwherepolicyisdrivenbythemarketandpoliciesshouldfocusonmakingtheentireecosystembetterforALL
innovatorsandEntrepreneurs.Prof.DanielJ.Isenberg,ProfessorofManagementPracticeatBabsonCollegeandExecutiveDirectoroftheBabsonEntrepreneurshipEcosystemProjectcoinedthetermPaveTheFootpathinhisinfluentialHarvardBusinessReviewarticleHowToStartAnEntrepreneurialRevolution.5HebelievesthatGovernmentsshouldnotdictatethedirectionofeconomicactivity,especiallypredictingthefutureofbusinessactivityincludingtheformationofeconomicclustersorselectedsectorstopush.InsteadtheyshouldobservewhatEntrepreneursaredoingandbuildeconomicactivitiesaroundthemtohelpthemdobetter.ToquoteProf.Isenberg,They[meaninggovernments]shouldobservewhichdirectionentrepreneurstakeandpavethefootpathbygentlyencouragingsupportiveeconomicactivitytoformaroundalreadysuccessfulventures,rather
thanplanningnewsidewalks,pouringtheconcrete,andkeepingtheentrepreneurs
offthegrass.GovernmentpolicyshouldthereforebedrivenbythemarketandpoliciesshouldfocusonmakingtheentireecosystembettersothatEntrepreneurscandowhat
theydobest:buildcompanies,hirepeopleandcreatesuccessfulventuresthatcontributetoeconomicactivity,theGDPofnationsandtoemployment.Ourstudythereforedoesnotfocusonspecifics,insteaditisfocusedonmakingtheentireecosystembetterforallEntrepreneurs/Innovatorssothateveryonehasanequalopportunitytothriveandsucceednomatterwhathappensinthefuture,especiallyinthearenaoftechnologyEntrepreneurshipandinnovationwherechangesarerapidandunpredictable.WeproposethefollowingExecutionPointstoensurethesuccessfulapplicationofthisRecommendation.
2.1.1.EntireEcosystem
EP1:Weproposethatinnovationpoliciesfocusonthepromotionand
enhancementoftheentireecosystemandnotjustonselectedsectorsor
industrialclustersorpartsoftheecosystem.OurFootpathistheentireecosystem.Althoughwehavecoveredonlypartsoftheecosystem(theshorttimeframeforthisstudymeanswehavetofocusonthemostimportantareas)wehopethatfuturepolicystudiesincorporatethe5Harvard Business Review, June 2010
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
15/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 15
Footpathideologysothatallplayers(EntrepreneursandInnovators)willbenefitfrommoreholisticpolicies.ArepresentationoftheEntireEcosystemisprovidedbelow,inFigure2.1.WeusethemodeldevisedbyProf.Isenbergasthatisacompleterepresentationof
theEntrepreneurshipEcosystem.
Figure2.1:MapOfTheEntrepreneurshipEcosystem.ToparaphraseLewisCarroll,ifyoudon'tknowwhereyouaregoing,anyroadwillgetyouthere.Weusethephrase,"entrepreneurshipecosystem,"butwithoutamap,howwillweknowifwehaveone?Hereisasimplemapof13elementsofanentrepreneurshipecosystem:theseareelementsthatallmustexistinorderforanentrepreneurshipecosystemtobeself-sustaining....Encourageandempowereachofthehyper-localinitiativestocultivateall13elementsoftheirownentrepreneurshipecosystem,inwaysthatareuniquetothem.6
6Daniel J. Isenberg in the Harvard Business Review Blog topic President Obama can make
Startup America succeed. Wednesday February 2, 2011
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
16/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 16
Wedonotcoverallaspectsinthisstudy,merelythefollowing:Government,financialcapital(primarilygrants),entrepreneurialorganisations(wecallthemstakeholders),economicclusters(Biotech,ICTandGreentech)andcustomers
(marketaccess).Otherresearchersarelookingattheotheraspectsoftheinnovationecosystemandinnovationstakeholdersthatwehopewillbringaboutbetterpolicymaking.ItisourferventbeliefthatMalaysianpolicymakersmustconsidertheentireecosysteminfuturepolicydecisions,asincompletepolicymakingwillleadtoineffectivepoliciesashasbeenproveninthepast.Asanexample,wehavespentbillionsonR&Dandfilingpatentsbutweneverfirstaddressedwhetherthesepatentapplicationshaveanycommercialpotentialorinfact,whetherregisteredpatentscanbecommercialised.Similarlycompanieshavebeenfundedwithoutfirstconductinganymeaningfulassessmentofthecompaniesproducts(networks,supportservicesandcustomers)andwhetherthereisareadymarketforcommercialisation.Wealsocreatedeconomicclusters(MSC,Biotech,Green)butdidnotaddresseducationandfinancialcapital(morethanjustR&Dgrants).Thislackofaholisticpolicyhasledtobillionsinwastedfundsandnotenoughreturnoninvestment.WehavecreatedsomesuccessstorieswithmanylistedICTcompaniesbutitcouldhavebeenmuch,muchbetterifwehadaddressedallpartsoftheecosystem.
2.1.2 EntireLifecycleEP2:Policiesmustnotjustcovertheentireecosystembutalsotheentirelifecycleofentrepreneurialventures.
InthepastpoliciesandsupporthavebeenseriouslyimbalancedmostlytowardsventureorR&DcreationwhilepoliciesforventuregrowthandR&Dexploitationwereseriouslylacking.Thisledtothecreationofentrepreneurialstartupsbutmediocregrowthofthesestartupsandmanypatentsandinventionsbutpoor
exploitationofthesecreations.Theproblemhereistwofold.Firstly,thefocusofpolicyhasbeenoncreationwithverylittleregardpaidtotheexploitationofthetechnologyandsecondly,noregardhasbeenpaidtoenhanceadoptionofthetechnologiesbeingcreated.Ourpolicieshavenotbeenholisticandwecontinuetomakethismistakeeventoday.Figure2belowrepresentstheentirelifecycleofthebusinessventurefromideatomaturity.Itwillbecleartopolicymakersthatthefocushasbeenveryone-sidedifviewedfromtheperspectiveofFigure2.Mostofthemoneyhasbeen
http://blogs.hbr.org/cs/2011/02/dear_president_obama_how_to_ma.html
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
17/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 17
spentondiscoveryandR&D,someonprototypeandproductdesignandasmalleramountontheearlystagesofcommercialisation.Muchofpolicyhasalsobeenfocusedonpatentcreationwithverylittleoncommercialisation.Afewoftheagencieshavedealtwiththegrowthaspectsbuttherehasbeenlittle
thoughtgiventohelpinginnovativecompaniesattheirmostvulnerablestage,theearlycustomersandgrowthstage.Thisiswherefailurehappens.Iftheyfailtogetmarketadoptionintheearlystagesofcommercialisationthentheventurewillfailandeverythingthatthegovernmentspentonthemislost.ThisisthereasonforthepoorROIongovernmentinvestmentininnovation.Policiesshouldbemoreholisticandbalancetheneedbetweencreation,exploitationandgrowth.TheyshouldthereforebedesignedforeverystageofthelifecycleofabusinessventureoratleastfromDiscoverytogoingGlobal.
2.1.3 BeingColourBlindEP3:Innovationpoliciesmustbecolourblind,theymustnotfavourany
groupsorsectorsandmustbecompletelytransparentandmeritocracybased.
DuringtheconsultationprocessthisissuewasbroughtupmanytimesbyEntrepreneurswhofeelthatintherapidlychangingarenaoftechnologyandinnovation,thebestwaytoensuresuccessistoensurethatpoliciesarebasedon
meritocracyandonlydeservingprojectsandentrepreneursareprovidedthesupporttheyneed.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
18/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 18
AsGovernmentresourcesneedtobeallocatedmorecarefullyinthefuture,policiesthatbenefitonlycertainclassesofpeopleshouldbeavoided.Transparent,meritbasedpolicieswillalwaysensurethebiggestbangforthebuck.Bycuttingoutleakagesandremovingbarrierstoensureonlythe
deservingaresupportedwewillgivethebestcompaniesarealchanceofcreatingsuccessstoriesthatwillultimatelybenefitthenationasawhole.Furthermore,inmarketaccess,theGovernmentandGLCsarethebiggestbuyers/usersoftechnology.Bybeingcolourblindwecanremovethemiddlemanfromtheequationandthiswillinalmostallcasesensurebetterdeliveryofproductsandservicesatthebestprice.Infartoomanycases,favouredmiddlemenhavebeennothingbutrentseekerswhocollecttheirmoneyupfront,delaypaymentstotherealcompaniesthatdelivertheprojectandinmanycasesuseupthemoneyallocatedfortheprojectforpersonaluseandtherebycausetheprojecttobeabandonedbecausetherealcompaniesareunabletodeliverbecauseofcashflowproblemsandbecausepaymentsarenevermadeforservicesdelivered.Thisisoneoftheworstkeptsecretsinthetechnologyspaceandthisisthemainculpritthatleadstothelowprofitabilityoftechnologycompanies.Worsestill,technologycompaniesarethenblack-markedorstigmatisedbecauseoftheirinabilitytodeliverandthosethatdodeliver,aresometimesalmostbankruptedintheirattempttoensurecustomersatisfactionandthereforecannotsustainthemselvesforthelong-term.Ifprojectswereawardedbasedonmeritandbestpricebasis,thenthebest
companieswillwintheprojectstheywilldelivertheprojectontimeandmakeadecentprofit.Thisprofitwillthenbeutilisedtofurthergrowthecompanyandhirebetterpeopleandultimatelyleadtobiggerandmoresuccessfulcompanies.TheGovernmentprobablyrealisesthisbuthasnotactedonthisinformationtocreatemeritbasedprocurementpolicies.Thisisoneofthebiggestcausesoffailureamonginnovativecompanies.TheGovernmentcancurethisproblemimmediatelyandifitwantstoensurethesuccessofallthesupportandpublicfundingprovidedtocompaniesthenitmustfixthisproblemorcompanygrowthwillalwaysbestunted.
2.2 SectorSelection
R2:WerecommendthatinformulatingpolicytheGovernmentadoptsa
sectoragnosticpolicyoutlookandformulatespolicybasedamarketdriven
approach,whereEntrepreneursandMarketsCreateClustersandnotapolicywhereClustersCreateEntrepreneurs.
Clustercreationandsectorpickinghavebeenanactivitythatmanygovernmentshavebeendoingforyears.Yettherehasbeenverylittlesuccesswhengovernmentsdothis.AdherentsmentionKoreaandTaiwanascompaniesthat
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
19/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 19
pickedsectorsandcreatedsuccessbutthisisnotwhattheydid,atleastnotthewayproponentsofthetheorythinktheydid.ClusterthinkingwasfirstderivedfromProf.MichaelPortersanalysisinTheCompetitiveAdvantageofNations.However,mostpeoplemistookhisanalysis
forwhichheprovidedthisresponseinaHarvardBusinessReviewarticlein1998.Governmentshouldreinforceandbuildonexistingandemergingclustersratherthanattempttocreateentirelynewones.Infact,mostclustersformindependentlyofgovernmentactionandsometimesinspiteofit.Theyformwhereafoundationoflocationaladvantagesexists.Tojustifyclusterdevelopmentefforts,someseedsofaclustershouldhavealreadypassedamarkettest7EveninKoreaandTaiwan,theyalreadyhadheavyindustriesandelectronicsindustriesrespectivelywhentheychosetofocusandpromotethemfurtherbyformingclusters.Itwasnotinitiallydrivenbythegovernmentandthisisstillthebestwaytoformclusters,aroundtheinitialsuccessofthemarket.2.2.1 BeSectorAgnostic
EP4:Werecommendthatthegovernmentbesectoragnosticincreating
innovationpolicy.Creatingnewsectorsshouldonlybeundertakenwhen
thereismarketdemandandnotbecauseofresourceavailability,prioritisingbyacademicsorotherreasons.
Yetgovernmentisalsonotoriousforitsabilitytomisreadtechnicalchange
MattRidleyinTheRationalOptimist,2010TheGovernmentshouldnotpresumetoknowwhatsbestforthecountryorindustryorwhatthefutureholds.SectorselectionshouldbemarketdrivenorindustrydrivenandnotGovernmentdriven.HenceGovernmentpolicieswheresomesectorsareselectedoverandaboveothersectorsforspecialtreatmentshouldbeavoided.Historyhasshownthatsectorselectionhasfailedandhasseriousrepercussionsontheeconomyandonbusinesses.Asrecentlyasthelast5years,duetotheriseinoilpricesandbecauseofthedrivetowardsrenewablefuels,theGovernmentpushedheavilyfortheuseofpalmoilasbiodiesel.ThissectorwasendorsedbytheGovernmentand100licencesweregivenoutaswellasloansandgrantstowardsmakingMalaysiaaleadingplayerinbiodiesel.Fiveyearslateralmostallthebiodieselcompaniesthatstartedfactorieshaveeithercloseddownorareseriouslyflounderingindeepredink.HundredsofmillionsofRinggitininvestmentbothbytheGovernmentandbyindustryplayershasbeenlost.Canwepredictwithanycertaintywhethertheagro-biotechsectororevenGreenindustrieswillcontinuetodriveinnovationaswellasbotheconomicandhigh
7
Clusters And The New Economics Of Competition, Harvard Business Review, 1998
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
20/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 20
incomeemploymentoverthenext10oreven20yearsinMalaysia?Atbestwecanguess,crossourfingersandhopeforthebest.Furthermoresectorselectionshouldnotbetoonarroweither,unlessthereisamarketdrivenreasonforit(asweshallseelaterinrelationtoCreativeContent).
Hencepickinganichesectorwithinabroadersector(likeagritechanichesectorwithinthebroaderbiotechsector)shouldbeavoided.Theremaybetoofewcompaniesandemploymentlevelsalsomaynotbehighenoughtomakethisasuccess.Finally,creatingnewsectorsisalong-termgame.WithMSCMalaysiaittook10yearsbeforeitborefruitandwiththeBiotechsectorafter5yearswestillonlyhavelessthan150Bionexuscompanies.ItwilleasilytakeBiotechanother5to10yearsbeforetheinvestmentsbearfruit.Creatinganewclusternowwillmeannotjustanother10yearswaitbutalsoalltheinvestmentswemadeinpriorsectorswillbewasted.Technologicalchangestodayaretoofastpacedforanyone,whetherGovernmentorConsultants,tomakeproperfuturepredictionsonwheresectorsareheading.Westronglyrecommendthatthegovernmentbesectoragnosticincreatinginnovationpolicy.Ourrecommendationshavebeenbasedonbeingsectoragnostic.
2.2.2 LetMarketsDriveSectorsEP5:Sectorselectionshouldbemarketdrivenorindustrydrivenandnot
Governmentdriven.Henceincreatingpoliciespolicymakersshouldstudythe
market,understandtheposition,needsandwantsofmarketplayersandformulatesectoralpoliciesonlywherethereexistsagroundswellof
companieswhosegrowthandactivitiesthatcanbefurtherenhancedwithrelevantpolicy.
Clustersdontcreateentrepreneurs.Entrepreneurscreateclusters
Prof.MichaelPorter,1999Informulatingpolicyandindrivingclustersorsectorsweshouldletthemarketsdrivesectors.Henceweshouldfocusonexistingsectorsthatalreadyhavemanymarketplayersandhelpthesesectorstogrowandthrive.Overthelast15yearswehavecreatedmarketplayersinICTandBiotech.AlthoughBiotechwillstillneedanother5yearstocontributemeaningfullytothecountry,thefactremainswehavesomemarketplayersinthissectorandmanyinnovations.WealsohaveothermarketdriveninnovativesectorslikeElectrical&Electronicsbutnotmanyothers.Manyofthedriversoftheeconomyareinprimaryresourcesormanufacturing(mostlynon-innovativemanufacturing).Eveninthe
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
21/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 21
burgeoningsectorlikeoilandgas,whilecontributionishigh,innovationbylocalsisnotmeaningful.Thesamegoesfortheagriculturalsector.Sowhatshouldwefocuson?Certainlynotincreatingnewclustersorsectorslikeagricultureoroilandgasorotherprimaryresourcesbutincreatingan
ecosysteminwhichALLthesesectorscanthrive.Innovationpoliciesmustbesectoragnosticbutmarketdriven,sothatanysectorinwhichtherearemarketplayerswhowanttoinnovatewillbegivenallthehelptheyneed.Andifwithintheseplayersaclusterdevelops,thenandonlythenshouldwespendmoremoneyandresourcesinhelpingthatsectortothriveandgrowfaster.Justlikeinallourpolicies,weseemtobeleaningtowardsthecreationelementandnotinthegrowthelement.JustlikeweseemtofundR&Dandnotcommercialisation,eveninthismatterweseemtobecreatingmoreandmorebutnotsupportingthegrowthoncewehavesucceededwithcreation.ThisisshowninFigure3belowwherewetransposetheMalaysianPolicyLifecycleontotheBusinessVentureLifecycleofFigure2abovetoshowthatwedothesamethinginpolicyaswedointhebusinesseswefund.Wedoplentyatthebeginningandthenstopjustwhenthegrowingbabyneedsthemosthelp.Weseemtohavenofollowthrough,butweliketocreatenewthings.Foronceweshouldjustfollowthroughexistingpoliciestoitsultimateconclusionandensurecompletesuccess.Dontkeepreinventingnewthings,justfinishwhatwehavestarted.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
22/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 22
Thecaseagainstnewclustersornewsectorswherethereisntathrivingmarketplaceofcompaniesandinnovatorsisthattocreatenewsectorsmeansanother5yearsofalearningprocess,5yearsthatwedonthave.
WhatwedohaveisanalreadythrivingICTsectorandaBiotechsectorthatsonthetippingpointofcommercialsuccess.Wemustnotignoreyearsofspendingandcommitmenttothesesectorsjusttocreateyetanotherclusterorsector.Themarketisworking,thecompanieshavebeencreated,innovationsfunded,peoplehavetheexperience,nowisthetimetoreapwhatwesow.
2.2.3 SupportExistingSectorsWithStrongMarketPlayers
EP6:TheGovernmentshouldconcentrateonexistingsectorswithstrongmarketplayersandlargemarketpotentialandformulatepoliciestofurther
enhancethesesectors.TheGovernmentshouldmoveawayfromcreationandfocusmoreongrowthandenhancement.
WherethereisalreadyinexistencesomespecificsectoralstrengthslikeintheCreativeContentsectorortheagro-biotechsector,thenfurtherpolicyenhancementsareencouragedbecauseitisalreadymarketdrivenandadditionalpolicieswillfurtherthegrowthofthissector.
TheCreativeContentsectorhasshownmuchpromiseandevenhasmadeanimpactgloballyprimarilywiththesupportofMDeC.Itisabubblingcauldronofyoungenthusiasticcompaniescreatingcontentonaglobalstage.However,itneedstobefurthernurturedandsupportedtoensurewecreatelargerglobalsuccessstories.Similarly,inothersectorswhereweseemarketsuccessandmanyplayers,thosesectorsdeservefurtherinputandsupport.
2.2.4 SummaryThepointwewanttomakeisthatpickingsectorsandindustriesarebestlefttothemarket.TheGovernmentsroleshouldbetocreatethebestecosystemforanysectororindustrytothriveandgrow.Itshouldnottakeontheroleofthemarketindecidingwhatitshouldfocuson.Wehavemadethismistakebefore;weshouldnotcontinuetorepeatit.Itstimewelearntfromexperience.WeneedtogobacktoonecorereasonforthisstudyandthedrivingforceoftheNEMthecreationofahighincome,highvaluesociety.Wethereforeneedtoleap-frogandnotjustcatchup.Whilstwearebusyflounderingintheditches,
regionalcountriesaroundusaremakingleapsandboundsIndonesia,Thailand,
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
23/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 23
IndiaandChina.SoonouronlycompetitorswillbeMyanmar,CambodiaandVietnam!Wetendtogetboredwithsectorsandkeeplookingfornewones.Creatingnewsectorsmeananotherdecadetobuildindustriesandcompaniesthatcan
contributetoahighincomeeconomy.Thehighincome,highvalueisnotincreationbutinexploitationwhereweexploitalltheIPthathasbeencreatedandhelpexistingcompaniestogrowbigandsucceed.Everytimewecreateanewsectorwespendmoreandmoretimeandmoneyjusttogrowthemtotherightsizebeforetheycancontributetotheeconomy.Wecannotleapfrogbycreating,weleapfrogbyexploiting.
2.3 MicroActions
R3:WerecommendthatinformulatingpolicytheGovernmentpayasmuchattentiontothemicroissuesandnotjustthemacroissues.Whilethemacroissuesdeterminewhatshouldbedone,themicroissuesarehowthese
policiesareimplementedintermsofhowitwillbedone.Malaysiasfailurehasnotbeeninpolicycreationbutinpolicyexecution.Weoftenknowwhat
needstobedone,butdonthaveclearsolutionsonhowitshouldbedone.
HencewemusthavenotjustPoliciesbutExecutablePolicies.2.3.1 Smallthingsmakebigdifferences
EP7:Whenformulatingpolicy,policymakersmustnotjustconsiderthemacroaspectsofpolicybutalsospendanequalifnotmoretimeseekingoutthelittlethingsthatmakeabigdifferencethesmallpolicymeasures
withoutwhichthelargemacropolicieswillfail.
Thenorminpolicymakinghasalwaysbeenaboutthebigpictureandsometimesgrandioseprojectsbutoftenthesamesmallissuespersistthroughoutyearsofpolicymakingtherebyhinderingthesuccessofanypolicy.WehavethesameprobleminMalaysia.Yearafteryearwehavethesameproblemswhetheritisthe7thMalaysiaPlanorthe10thMalaysiaPlan.Intheend
thesmallthingsdestroythebestlaidplans.Itmightnotbesexy,butsmallthingsmakeabigdifferenceinthesuccessofanypolicy.Simplethingslikethetimetakentoprocessagrantapplicationorthelackofknowledgeablepeopleinsomegovernmentagenciesoreventheuseofoutdateddocumentscanderailthebestintentionedpoliciesandultimatelyaffectthesuccessofthepolicy.Wethenblameeveryonefrompolicymakertoagencytothebeneficiariesforthelackofsuccess.Hencewehavenotjustlookedatsomemacroaspectsofpolicyasstatedearlierbutwehavespentmoretimeseekingoutthelittlethingsthatmakeabigdifferenceandhavehighlightedmanyoftheminourrecommendations.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
24/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 24
2.3.2 ExecutablePolicyMoreImportantThanMacroPolicyEP8:Policymustbeexecutableandactionable.Havinggrandioseplansdoesnothelptheeconomytogrow.Policymakersmustensurethattheirpolicies
canbesuccessfullyexecutedbecausemanyofourpoliciesfailnotbecauseoftheideabutbecauseofpoorexecution.Inthesameway,wehavealsomadesurethatallourpolicyrecommendationsareeasilyexecutable.Wehaveseenovertheyearsmanygovernmentpoliciesthathadgreatintentionswithfantasticplansbutcouldnotbeexecutableforvariousreasons.Wetakegreatpainstoensurethattherecommendationspresentedinthisstudyareexecutableandworkable.Theyarethereforenotjustconceptualideasbutimmediatelyexecutableactionsthatcanbedoneimmediately.Wedontjustdescribebutwealsoprescribeandweprescribeactionsthatareimmediatelyexecutable.2.3.3 AlwaysEngageMarketPlayers
EP9:Alwaysengagethemarketplayersandbeneficiariesforwhomthepolicyhasbeencreatedandwhowillbeimpactedbythepolicy.Nopolicy
shouldbeappliedunlessitreceivesthegoaheadfromthemarketplayersandbeneficiariesthemselves.Doingotherwiseisasurerecipeforfailureof
thepolicymeasuresconcerned.Webelievethatforpolicytoworkandforittobeeffectiveitmustbedoneinconsultationandincollaborationwiththemarket.Policyshouldneverbecreatedinavacuumandnorshoulditbecreatedbybureaucratsorconsultantsinisolation.Policymakersmustengagemarketplayersbecausetheyaretheonesimpactedbypolicyandtheyaretheoneswhocanensurethesuccessorfailureofpolicy.Furthermorepoliciesmustbeactuallywhatthemarketneedsandnotwhatbureaucratsthinkthemarketneeds.Therearesomanypoliciesthatarecreatedostensiblyforthemarketbutthemarkettotallydisregardsitbecausethatsnotwhatitneeds.Andoftentimesthemarketcriesoutforaparticularpolicy,sometimesforyearsbutbureaucratsdontheedthosecries.Thisisabig,bigmistake.Thebestpoliciesgivethemarketwhatitneedsandcontinuestolistentothemarketandprovidemarketneeds.Ourrecommendationsaremadeafterextensiveconsultationwithindustry.Hencepolicymakerscanbeassuredthatthisisindeedwhatthemarketwants
andneeds.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
25/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 25
2.4 GovernmentPolicyandRoleRethinkingNecessary
R4:WerecommendthattheGovernmentrethinkitsroleandhowitmakes
policy.Theoldwaysofcreatingpolicyandimplementingpolicieswithouttheinputofthemarketshouldbeeliminated.TheGovernmentmustalsoreview
howeacharmofGovernmentplaysacomplementaryandcoordinatedroleinimplementingpolicyandhelpingtoensurethesuccessofpolicyinitiatives.
ItisstillcriticalthattheGovernmentplaysacentralroleintheinnovationecosystem.MalaysiaisstillinitsinfancyininnovationandtechnologyEntrepreneurshipandstillneedsthenurturinghandoftheGovernment.PoliciesandsupportarestillanecessaryrequisiteforthegrowthofinnovationandEntrepreneurshipinMalaysia.Itmaytakeuntil2020beforetheGovernmentcanaffordtoplayalesserrolethatisprovidedtheGovernmentdoesalltherightthingstoday.EntrepreneursmustultimatelybeweanedofftheirGovernmentdependencebutuntiltheprivatesectorisstrongenoughtodothistheGovernmentstillhastoplayamajorrole.However,theGovernmentmustrethinktheirroleandhowtheymakepolicy.Theoldwaysofcreatingpolicyandimplementingpolicieswithouttheinputofthemarketshouldbeeliminated.TheGovernmentmustalsoreviewhoweacharmofGovernmentplaysacomplementaryandcoordinatedroleinimplementingpolicyandhelpingtoensurethesuccessofpolicyinitiatives.
InnovationisbynatureinterdisciplinaryandinvolvesmanydifferentGovernmentAgenciesandMinistries.However,turfprotectionandsilomentalitymeansthereisverylittlecoordinationbetweentheseorganisationsleavinginnovatorsandSITEsfrustratedandunabletogrowanddevelop.ThisgoesagainsttheGovernmentsownworktodriveamoreinnovationbasedeconomyandwillnotcreateahighincomeeconomy.2.4.1 PoliciesToBeMarketDriven
EP10:InthefutureGovernmenthastoensurethatitspoliciesaredrivenby
themarketandwhatitneeds,asthisistheonlycertainmethodbywhich
policyobjectivescanbefullyachieved.Policiesarecreatedtoenhanceeconomicreturns,providejobsandgenerallycontributetothewellbeingofsociety.Innovationpoliciesarecreatedsothatcompanieswillbenefitfromthesepoliciesandtheyinturnwillcontributetothewellbeingofthenation.However,asoftenhappenspoliciesdonotmatchthe
needsofitsbeneficiaries,inthiscaseinnovators,andinthosecasesthe
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
26/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 26
contributiontothenationneverreachestheidealsortargetssetbypolicymakers.Themainreasonwhythishappensisbecausepoliciesarenotmatchedwithmarketneeds.Theyarenotderivedfromextensivediscussionsand
consultationswiththeverybeneficiariestheyhopetohelp.ThisgulfbetweenwhatthemarketwantsandwhatGovernmentTHINKSitwantshastobebridgedifpoliciesaretobeeffectiveandiftheyaretoeverreachtheirobjectives.ThereforetheGovernmenthastoensureinthefuturethatitspoliciesaredrivenbythemarketandwhatitneeds,asthisistheonlycertainmethodbywhichpolicyobjectivescanbefullyachieved.Therecommendationsinthisstudyarederivedfromextensiveconsultationswiththemarketandeventherecommendationswerediscussedwiththemarkettoseektheiropinionsandconsensus.ItishopedthatallfutureGovernmentpolicieswillbesimilarlyderived.2.4.2 ManageInter-DisciplinaryNatureofInnovationEP11:TheGovernmenthastorecognisethatinnovationcanbemulti-
disciplinaryinnatureandhastocreatepoliciesandinstitutionsthatenablecrossministryoragencycoordination.
Onecommoncomplaintofmarketplayersisthatinnovativecompanieshavea
difficulttimenavigatingthevariousregulatoryproceduresandrequirementsbecausetheyhavetodealwithmultipleministriesandagenciesandoftentheseinstitutionsdonothavetheabilityormandatestocoordinatepolicywitheachother.Thiscausesnumerousproblemsforcompaniesandcanholdbackthegrowthofsuchcompaniesformonthsifnotyearsinthecaseofpharmaceuticalorhealthcarecompanies.Sometimesittakessuperhumanefforttonavigatethemultipleinstitutionsandinsomecasescompaniesjustgiveup.TheGovernmenthastorecognisethatinnovationcanbemulti-disciplinaryinnatureandhastocreatepoliciesandinstitutionsthatenablecrossministryoragencycoordinationtohelpthesecompanies.AsanexampleaneutraceuticalproductforhumanhealthderivedfromplantsbyaUniversityresearcherhastonavigateMOSTI,MinistryofHealth,MinistryofAgriculture,MinistryofHigherEducationandiffundsareneededMinistryofFinanceortheiragencies.Onecanbarelyfathomthetypeofissuesandproblemsthatcancropupatanyjunctureinthejourneythroughtheseministriesandagencies.YetthereisanagencycalledBiotechCorpwhichcanhelpyetdoesnothavethepowerormandatetodothis.InsuchcasesaOne-StopCentre(liketheMIDA
model)thatisadequatelyempoweredcandowonderstospeeduptheprocess
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
27/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 27
sothatcompaniesfocusongrowthandnotonpushingpapersfromoneministrytothenext.OncetheGovernmentrealisesthisitshouldacttoensurethesmoothestpathpossibleforallcompaniesinnavigatingthismaze.
2.4.3 ReformBureaucracyAndRewardSuccessAndMeritocracy.EP12:Governmentmustreformitsbureaucracytoensurepoliciesare
implementedbasedontransparencyandmeritocracyanditmustseekoutandrewardsuccessfulministries,agenciesandotherinstitutionsbasedon
meritforachievingorexceedingtheirKPIs.WhiletheGovernmentisseekingoutpolicychangestofurtherinducetheinnovationcapabilitiesofthenationanditsEntrepreneurs,itshouldalsoreformbureaucracyandensureminimalproblemsforinnovators.Thismayinvolvemanypartiesandstakeholdersallworkinginconcerttowardsonegoalthebettermentofthenation.Ifbureaucracyreformisnotmade,wewillalwayscontinuetohaveproblemsandwillneverseethetruepotentialofMalaysianinnovators.Indoingso,GovernmentmustalsoseekoutandrewardsuccessfulministriesandagenciesandotherinstitutionsbasedonmeritforachievingorexceedingtheirKPIs.Weakerorfailedinstitutionsontheotherhandshouldnotbeallowedtocontinueasthiswillweakentheecosystem.
Alldecisionsmustbebasedpurelyonmerit.AnythinglesswillleadtocontinuedfailuredespitethebestintentionsoftheGovernment.
2.4.4 SummaryInsummary,theMacroRecommendationspresentedabovearethefirststeptowardsmakinggoodpolicythatwilltrulyassistandhelpMalaysianinnovatorsandentrepreneursincontributingtothenation.
Wecancontinuetolookforthebestpolicies,continuetocreatemoreandmorepolicypapersandstudiesbutifwedontdotherightthingsthenwewillnotsucceed.Otherdevelopingnationsarecatchingupwithus.Somewhowerebehindushaveovertakenus.Ifwedontdotherightthingnow,wewillbeleftbehindinthefastmovingandrapidlychangingworldofinnovationandbusiness.Inthenextfewchapterswewillbeprovidingmorespecificrecommendationsthataredirectlyapplicableandeasilyimplementablewithaslittlefussorproblemsaspossible.Theserecommendationshavebeenformulatedtoprovideforrealchangesthatwillhaveimmediateimpactoninnovationandentrepreneurshipleadingtoimmediatebenefits.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
28/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 28
Thesearenotjustgrandioseideasandplansthatarehardtoimplementandoftendonotseethelightofdaybutmaysoundfantastic.Ourrecommendationsmaynotcreatemuchfanfarebuttheyaredesignedtosolveimmediateandfutureproblemsandtoleadtoabetterecosystemforallplayers.Wearepaving
thefootpathforinnovators,becausethatsreallyallthatsneeded.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
29/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 29
Chapter3: ContributionOfFundingMechanismsToInnovation
Thissectionlooksatoneareathatisofgreatconcerntocompaniesfunding.ThemainfundingmechanismscurrentlyaregrantsviaMDeC,Cradle,MOSTI&
Matrade;projectfinancingviaMalaysianDebtVentures(MDV),venturecapitalviagovernmentbackedVCfundslikeMavcap,KumpulanModalPerdana,etcandloansviaSMEBank.However,asBCGisdoingacomprehensivereviewofthefundinglandscape,wehavefocusedonlyonthefundingareasthatSITEshaveindicatedtobetheirbiggestconcern.TheBCGstudyisdoingamacroreviewmostlyfromtheperspectiveoftheGovernmentandtheFundManagerswhileourstudyisfromtheperspectiveofthebeneficiariesthemselves.HencewhiletheBCGreviewistopdown,ourstudyisfromthebottomup.
ThefundmechanismthatisofthebiggestconcerntoSITEsisthegrantmechanism.ThisisbecausethedearthofVCfundingmeansmostSITEshavecometorelyongrantsastheprimaryfunderofchoice.WedidnotfocusonVCbecausetheirimpactonSITEsissmallandfortheSITEsthemselvesthegrantsystemisoffargreaterimportance.However,therecommendationsthatwemakehereapplyequallytothesoftloansprovidedbytheGovernmentorDFIs.Henceallpolicy
recommendationsthatwemakehenceforthalsoapplytootherfunds
especiallysoftloans.
3.1 GrantMechanismbigpictureThefollowingTable3.1providesabigpictureofthemainproblemsfacedbyentrepreneursandtherecommendationsthatwillbeprovidedherein.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
30/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 30
3.2 StandardTimelinesandDocumentation
R5:Werecommendthatallfundprovidersprovidestandardtimelinesandusestandardiseddocumentsfortheprocessingofallfundingapplicationsto
enhancetheevaluation,processinganddocumentationofallapplications.Oneofthemostseriousproblemswiththegrantmechanismisthelackoftransparencyandstandardisationonthetimetakentoprocessapplications.Timetomarketisimportantforinnovationhenceprocessingtimeforfundingapplicationsiscritical.Unacceptabledelaywillkillinnovation.Currentlyitcantakeanywherefrom3monthsto12monthsforapplicationstobeprocessed.Oftenapplicantsareleftinthedarkandareunabletoevenplan
theirR&Deffortsandcorporateplanningbecauseoftheinabilitytopredicttimelinesforapproval.Thisisnotidealtopromoteinnovation.Furthermore,becauseoftherapidchangesintechnology,delayscanresultinlostopportunitiesandobsolescenceoftheR&Dproposal.HencewearerecommendingthatALLgrantprovidersadoptastandardClientCharterwithstipulatedtimelinesthattakesintoconsiderationtheinterestsoftheapplicant,thetimenecessarytodoconductproperevaluationsandduediligencesandanacceptablewaitingperiodforinnovators.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
31/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 31
3.2.1:ClientCharter&Ruleof4
EP13: SpeedUpProcessingviaaClientCharterWerecommendthatALLfundingapplicationsbeprocessedandfirst
disbursementsoccurwithin4-5monthsofapplication.Allfundingproviders
mustadoptastandardClientCharterthatindicateshowapplicationswillbeprocessedandthetimelinesforeachstageoftheprocess.Wefurther
recommendastandardisedtimelinecalledTheRuleof4foradoptionby
ALLproviders.WerecommendsettingupaClientCharterwiththeRuleof4forallgrants.
Simplyput,TheRuleof4,meansthatateverystepoftheapplicationprocess,theprovidermustapplyeither4weeksor4daystoperformanyparticulartaskfromnotificationtoevaluationtoduediligence.Thetasksareexplainedbelowanda
flowchartisprovidedtoclarifytheflowofatypicalprocessinagrantapplication.Weareassumingthatthereare2committeesorpartiesthathavetoapproveeach
application;aninitialEvaluationCommitteethatperformsthetechnicaland
commercialevaluationoftheprojectandapprovesorrejectstheapplication.Ifapproved,itwillbesenttothefinalApprovalCommitteeforapproval.Thisisto
ensuretransparencysothatdifferentgroupsofpeopleareinvolvedintheapproval
process(seeourrecommendationbelowonevaluationprocess).
Step1:Anapplicantmakesanapplicationforthegrant.
Step2:Within4weeksfromdateofapplicationthefundprovidermustinform
applicantwhetherhisapplicationhasbeenrejectedorapprovedforpresentationtotheEvaluationCommittee.
Step3:Withinafurther4weeksfromdateofacceptanceforpresentationto
committeetheproposalmustbepresentedtotherespectiveEvaluationCommittee.
Noticeofapprovalorrejectionmustbesenttotheapplicantwithin4daysoftheapprovalcommitteemeeting.
Step4:Withinafurther4weeksfromdateofapprovalbytheEvaluationCommitteetheproposalmustbepresentedtotherespectiveApprovalCommittee.
Noticeofapprovalorrejectionmustbesenttotheapplicantwithin4daysoftheApprovalCommitteemeeting.
Step5:Ifapproved,theLetterofOffermustbesenttotheapplicantwithin4daysoftheApprovalCommitteemeeting.
Step6:Within4workingdaysoftheapplicantsacceptanceoftheLetterofOfferTheprojectfilemustbesenttotheLawyersandFinancialdepartmentforDue
Diligence.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
32/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 32
Step7:Within4weeksDueDiligencemustbecompletedandapplicantmustbe
notifiedoffinalapprovalorrejection.
Step8:Within4daysofsatisfactorycompletionoftheDueDiligence,theFundingAgreementmustbesenttotheapplicant.
Step9:Within4workingdaysofthesignedAgreementthefirstdisbursementmustbecompleted(i.e.mobilisationfunds).
PostApproval:
Disbursementsoffundsuponmeetingmilestonesmustbedonewithin4workingdaysofreceiptofallnecessarydocuments.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
33/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 33
Fig3.1:FlowChartofClientCharter
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
34/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 34
3.2.2 StandardClientCharterforAllGrants
EP14:StandardisetheClientCharterforALLGrants
Toensurestandardisationandeaseofmonitoringnotjustforgrant
providersbutalsoforSITEs,werecommendthattheGovernmentinstituteastandardisedClientCharterasproposedinEP13aboveforALLgrantproviders.
Standardisationwillhelpallpartiestoensurethehighestlevelsofserviceandwheresuchservicefallsbelowthestandardimmediateremedial
measurescanbetakentoensurethatgrantprovidersandapplicantsdonotsufferunwantedproblemsorrepercussionsfromdelays.
3.2.3:StandardisedDocumentation&DueDiligenceEP15:Standardisealldocuments
Werecommendthatallfundproviders(grants,loans,etc.)worktogetherto
setupasinglestandardiseddocumentaryformatandprocessforall
applications.Thisisespeciallysoinrelationtocorporateandpersonalinformationanddocuments,certificationpapersandduediligencereports.
Thiswilleasethesharingofinformationbetweenallorganisations.
EP16:SetupadatabaseforalldocumentationWealsoproposethatanelectronicdatabasebesetupforthestoringand
sharingofallthesedocumentsandinformation.Thisshouldbeatechnology
baseddatabasethatallowsstoringofallsharedinformationthatcanbeelectronicallyaccessedbyauthorisedpersonnelatthegrantprovidersand
otherauthorisedpartiesliketheMOFandPMO.
Thedatabaseshouldalsoallowthestoringofduediligencereportssothat
timeandcostscanbesignificantlyreducedwithouttheneedtodoextensiveduediligenceseverytime.Onlyupdatedduediligenceneedstobedone(i.e.
foranynewloansorlegalissues).Thechartbelowprovidesasnap-shotviewofaprocessthatcanbe
implementedusingthestage-gatesystem.FurtherdetailsofobjectivesandtasksforeachgateisfurtherdetailedinAppendixA.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
35/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 35
Currentlyforallthegrants,therearenostandarddocumentationprocesses,nostandarddocuments,nosharedresources,nosharingofduediligencesandallfundprovidersworkinsilos.EvenforcertifiedcompanieslikeMSCStatusorBionexusor1Innocert,theircertificatesbearnorelevancetofundproviders.NomatterwhatcertificationonehasorevenifaSITEhasbeenprocessedand
approvedbyoneprovider,theyhavetogothroughtheprocessalloveragainwithanotherprovider.Forexample,ifaSITEhasreceivedaCradleCatalystgrantofRM150,000andbeenthroughtheirextensiveevaluation,documentationandduediligenceprocess,iftheythenapplyforaMOSTITechnofundgrantorasoftloanwithMDVorSMEBank,theyhavetofillupcompletelynewsetsofdocumentseachtimeandprovidecopiesoftheircertificatesetc.,alloveragain.Thisprocessofdocumentationandformfillingisawasteoftimeandresourcesforallparties.
Thefunderthenwillexpendmoretime,moneyandresourcescheckingthevalidityofdocumentsandconductingduediligencesalloveragainiftheyapprovethefundingrequest.Withtheavailabilityoftechnologyallthisduplicationcanbesignificantlyreducedifallprovidersshareresourcesandifdocumentationisstandardised.EventhelinkuptoSuruhanjayaSyarikatMalaysiaandtheInlandRevenueDepartmentaswellastheInsolvencyDepartmentcanbedigitisedusingtechnologysothatcompletionofdocumentsandcheckingofvalidityandverificationcanbedonemuchfaster.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
36/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 36
3.3 LackofCommercialEvaluationsandExpertise
R6:Werecommendthatallfundprovidersincorporatecommercialisation
evaluationandensureadequateexpertiseforALLevaluations,R&DaswellasCommercialisationGrantsandFunds.
Thereiscurrentlyalackofexpertiseinperformingpropercommercialevaluationoffundingapplicationsandsomefundsprovidecommercialisationevaluationwhileotherseitherdontorareweakerinthisarea.
3.3.1 LackofCommercialEvaluationsinGrantsEP17: IncorporateCommercialEvaluationforallGrants
WerecommendthatALLR&Dgrantsincorporatecommercialevaluationsasonecriterionforapproval.Commercialvalue,marketneedsandtheabilityto
exploittheR&DtoshoweconomicorsocialvaluemustbeasetcriteriaforapprovalofallR&Dgrantsinthefuture.ManyoftheR&Dgrantscurrentlydonothaveseriouscommercialevaluationaspectswhenbeingevaluated.ThisleadstomanydiscoveriesandpatentsbutnocommercialisationandhencenoROIforthegovernment.ItmustbemadeclearthateventhoughtheR&Dmayhavetechnicalmeritsitdoesnotnecessarilyhavecommercialmerit.Anaturalexclusionwouldbeforpureresearchprojects,normallyconductedby
IHLs,whichonlyseektodiscoverorproveatechnologyelement.ThesewouldincludeprojectsfundedbyMOSTIundertheScienceFund,whicharemainlyfortheIHLs.Suchprojectsdonothavetheelementofdevelopmentintheirresearch,henceknowledgediscoveryandnotcommercialisationistheobjective.InsuchcasesthereisnoneedforcommercialevaluationasacommercialROIisnotrequired.HoweverinthecaseofallotherR&Dgrantswherethereisastrongdevelopmentelement,commercialvalueiscritical.InthesesortsofR&DprojectstherealreturnforthegrantisaproductorserviceorprototypethatcanbeexploitedforcommercialreturnstherebycreatingROIfortheGovernment
andfortheresearcherorcompanyundertakingtheR&D.Inthiscasetheevaluationmustincludeapurecommercialevaluationbesidestheusualtechnicalevaluation.Therefore,weproposethatallR&DgrantsincludecommercialevaluationtoensurethattheapplicantsaredoingR&DthatwillleadtopotentialexploitationandultimatelytoeconomicvalueandROIforthegovernment.
3.3.2 LackofExpertiseinProcessingApplicationsEP18: Include4IndependentEvaluatorsforallapplications
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
37/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 37
WerecommendthatALLgrantsincorporateaminimumnumberof
independentevaluatorsfromIHLsandindustryforeveryapplication.WerecommendthattheEvaluationPanelcomprisesatleastaminimumof4
independentevaluatorswhoarenotpartofthegrantmanagerspersonnelorteam.
Thereshouldbe2independentTechnicalEvaluatorswhocanbeeitherfromindustryorIHLswhowillevaluatetheprojectbasedonitstechnicalmerit
andanother2independentindustrybasedCommercialEvaluatorswhowill
evaluatethegrantonthebasisofpotentialcommercialvalueandthepotentialforcommercialreturns.Oneofthecommercialevaluatorscanbea
venturecapitalistbutwhilethisisdesirable,itisnotcompulsory.Thegrantmanagercanincludetheirownpersonnelaspartoftheevaluationpanelbut
theycannotconstitutethemajorityofthepanelandtheirdecisioncannot
overridetheexpertpanelsdecision.Applicantsbelievethatinmanygrantprocessesthereisalackofexpertiseamongevaluators.ThisisbecauseinsomecasesjuniororyoungstaffwithnoexperienceorspecificexpertisemakejudgementcallsonprojectevaluationsandinothercasesGovernmentpersonneloradministratorswithnotechnicalandcommercialexperienceandexpertisemakesuchdecisions.TherearealsocertaingrantswheretheapplicantneedstoexplaintheirprojecttoAccountManagersorAnalystsandrelyonthemtopresenttheirprojecttotheevaluationpanelsandagainthisissueoflackofexperienceandexpertisebecomesaseriousflawintheoverallprocess.Itisimperativethattheapplicant
isallowedtopresenttheirapplicationdirectlytotheevaluationpanelbecauseattheendoftheday,itistheapplicantwhowillensuresuccessfulimplementationandcompletionoftheprojectandthereforethefundingpanelisassessingnotjusttheprojectbutalsotheapplicantandhis/herabilitytodeliver.EP19:ApplicantstoPresentDirectlytoEvaluators
WerecommendthatforALLgrants,theapplicantsshouldbegiventhe
opportunitytopresentdirectlytoboththeEvaluationandApproval
CommitteessothattherelevantcommitteescanevaluatenotjusttheprojectbutalsotheApplicantsthemselves.
Whilemostproviderswillhaveseverallevelsofevaluation,itistheinitialevaluationsthatcouldbeanissue.Iftheprovidersdoindeedprovideproperevaluationthenitwouldnotneedtochangehowever,abettermethodologyorformatisalsopossible.InthisaspectweproposethatallgrantevaluationsfollowtheMSCMalaysiaMultimediaGrantScheme(MGS)approvalprocess,whichincludesnotjust2technicalevaluatorsbutalso2commercialevaluatorsfromindustryaspartoftheEvaluationCommittee.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
38/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 38
TheMGSmethodologyhasbeenusedformorethan10yearsandhasproventobebothtransparentandsuccessfulinproducingR&DthatleadstobothahighlevelofcommercialisationandstrongROIonGovernmentinvestments.
Toensurebothsufficientandacceptablelevelsofexpertiseinprocessingapplicationsandalsotheadditionalneedforcommercialevaluationswerecommendthefollowing:
3.3.3 StandardisedVotingMechanismForApprovalToensurethatthereisproperdecisionmakingwithinthepanelwealsorecommendthefollowingvotingmethodforALLgrantproviders.EP20:StandardisedVotingMechanism
AtleastTHREE(3)membersoutofthefourtechnicalandcommercialevaluatorsmustrecommendtheprojectforapproval.Intheeventthatthere
aremorethan4panelmembers,thenaMAJORITYmustapprove.Inacasewheretherearemorethan4panelmembers,ifeitherTWO(2)technicalor
TWO(2)commercialevaluatorsrejecttheproject,thentheprojectmustbe
rejectedasitcarrieseithernotechnicalmeritornocommercialvalueandthismeansitwillleadtozeroreturnsandnoROIfortheGovernment.
OncetheEvaluationPanelhasapprovedtheproject,itwillthenbesenttothe
ApprovalCommitteeasrecommendedinEP21below.
3.3.4 SetUpSharedDatabaseofExpertsEP21: SetUpSharedDatabaseofExperts
Werecommendthatanelectronicshareddatabaseofexpertsbesetupunder
UNIKwithaccessgiventoallfunders.Wheneverafunderidentifiesanexperthis/herdetailsandexpertiselevelsareinputintothedatabasesothatitcan
besharedwithallfunders.Astheaboverecommendationsrequireexpertsinmanydifferentareasbothintechnicalandcommercialareas,toensurethatallfundershaveadequatenumbersofexpertsandaccesstotheseexpertsinallsectorsandgeographicalareaswerecommendthatUNIKsetupashareddatabaseofexpertsthatcanbeaccessedbyallfunders.
3.4 LackofTransparency
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
39/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 39
R7:Werecommendthatallfundssetupastructureandprocessestoensure
thetransparencyofallevaluationsandapprovalsoffundingapplications.
3.4.1 NoTransparencyInProcessingApplications
EP22: Haveboth,IndependentEvaluationandApprovalCommittees
Foradditionaltransparency,wealsorecommendthatoncetheEvaluation
PanelhasapprovedtheprojecttheprojectthenbesentforapprovaltoahigherlevelApprovalCommittee.Thiscommitteecanconsistofpersonnel
fromthegrantmanagersbutmustalsoincludetechnicalandcommercialmembers.
ThispanelcanoverturnthedecisionoftheEvaluationPanelifitfeelsthereisinadequatemeritintheprojectbutshouldnottakesuchadecisionlightlyas
theEvaluationPanelisthecorrectpaneltomakesuchevaluations.Butitwillretaintherighttoafinaldecision.Itisalsorecommendedthatwhenreviewingeachproject,atleastonememberoftheEvaluationPanelthat
evaluatedthatprojectbepresenttoanswerqueriesonthedecisionsmadebytheEvaluationPanel.
TheApprovalCommitteeCANNOTapproveprojectsthathavebeenrejectedbytheEvaluationCommittee.
InthecaseofanappealorcomplaintbyanApplicant,ifthereisverygood
causeforthecomplaint,thenthegrantprovidercanatitsdiscretionconveneanewEvaluationCommitteeconsistingofnewmembersinthenumberssuggestedabovetoindependentlyreviewtheproject.Ifitisrejectedasecond
timenofurtherappealswillbeallowedandtheApprovalCommitteeCANNOT
considertheprojectforapproval.
Toensurecompletetransparencyoftheapplicationandevaluationprocess,theproposalontheindependentevaluatorsinEP18willprovideaninitialleveloftransparency.
Additionally,wealsoproposeanadditional2levelapprovalprocess.Thisisalreadyinexistenceinmostgrantprovidersbutjustservestocementthetransparencyoftheprocess.
3.4.2 PublishRecipientProjectsAndAmountsAsWellAsResourcesForadditionaltransparencyandtoshowthatprojectshavebeenevaluatedproperlybothprojectsandresourceallocationsthatcanbesharedhavetobemadetransparent.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
40/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 40
EP23: AllApprovedProjectsToBePublishedAndOpenToThePublic
Werecommendedthatallprojectsthatreceiveapprovalforfundingbe
publishedpubliclyonONEwebsite.ThismaybeaUNIKwebsiteorotherwebsiteunderPMO.Theinformationtobemadepublicwillincludethename
ofrecipient,amount,agency,projectinformation,periodoffunding,stageoffundingandotherrelevantinformation.Thiswillalsoservetheadditionalroleofeliminatingmultipleapplicationsandthesameapplicantreceiving
toomanygrants.Thedatabasewillalsoserveasaonestopdatabaseofall
approvalsthatcanbecheckedbyfundproviderstoensurenomultipleapplicationsattheveryearlieststages.
3.4.3 SetUpSharedDatabaseofPhysicalAssetsandResources
EP24: SetUpSharedDatabaseofPhysicalAssetsandResources
WerecommendthatanelectronicshareddatabaseofphysicalassetsandresourcesbesetupunderUNIKwithaccessgiventofunders,innovatorsand
otherfundrecipients.
Thisdatabaseshouldincludeallphysicalassetsandresources,includingbut
notlimitedto,labs,equipment,facilities,buildings,infrastructure,etcthatcanbeusedbyresearchersandinnovators.Wefurtherrecommendthatthis
databaseincludelocationalinformationofsuchassetsandresourcessothat
innovatorscanchooselocations,whichareclosestormostappropriateto
them.Additionally,FundersandEvaluatorsshouldcheckpriortoapprovingfundingneedsbyapplicantssothatthereisnoduplication.Inadditiontotransparencyontheprojectsapproved,SITEshavealsorequestedthatresources,especiallyphysicalresourcesandassetspaidforbytheGovernmentthroughvariousgrants,bepubliclylistedandsharedwithallinnovators.Itiscommonforrecipientstorequestthatgrantmoneybeusedforspecificassetslikelabs,equipment,facilities,buildingsandotherassets/resourcesthatarelocatedinvariouslocationsfromIHLstoResearchInstitutionstoprivate
companies.Theuseoftheseresourcesareoftennotmaximisedandnotsharedwithotherinnovatorsandsomefallintodisuseveryquickly.ItisthereforeonlyproperthatotherrecipientsofgrantsaswellasotherinnovatorsbegrantedtheuseofsuchfacilitiesataverylowcosttoensurethatresourcespurchasedwithGovernmentfundsaresharedwitheveryone.Itwillalsoeliminatetheneedforsuchresourcestobeduplicated.
3.5 LowReturnsFromR&DFunding
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
41/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 41
R8:ToensurethatinfuturethereisbetterReturnonInvestment(ROI)from
R&DFunding,werecommendthatcommercialevaluationandfundsforcommercialisationbeincorporatedinallR&Dgrantsandthatthereisa
propertrackingmechanisminplacetotrackandmeasurethecommercialsuccessorfailureofallR&Dgrantrecipients.
3.5.1 IncludeCommercialEvaluationforALLGrantsEP25:Werecommendthatallgrants,atallstagesoftheinnovationbusinesslifecycle,whetherPre-Seed,R&Dorcommercialisation,incorporates
commercialevaluationtoensurethattheR&Dorprojecthasrealcommercialvalue.Iftheprojectevaluationfailsthecommercialtest,thenthe
projectmustnotbeapproved.Thiswillensurethatonlyprojectswithreal
commercialpotentialarefunded.Pureresearchprojectsorbasicresearchprojectswillbeexemptedfromthisrequirement.
OnereasonforthecommercialfailureofmanyprojectsandhencethelowreturnsfromR&Dfundingisthatmanyprojectsneverhadanyrealcommercialvalueinthefirstplaceandhencewouldhavefailedanyway.Byonlyapprovingprojectswithcommercialvaluewewillbesignificantlyincreasingthepotentialforcommercialisationoftheprojectsandhencehavebetterreturnsfromthefundsprovidedtotheseprojects.
3.5.2 IncludeAllocationwithinGrantforCommercialActivitiesIfthecommercialevaluationispositiveandtheapplicationisapproved,thenitisalsonecessarytoincludefundstoensurethattheprojectcanactuallybecommercialised.Itwilldefeatthepurposeiftheprojecthascommercialmeritbutnofundsareavailabletoexploitthispotential.CurrentlythefailurerateforR&Dishighbecauseevenwhenprojectsreachthepre-commercialisationorprototypestage,applicantsareunabletoexploittheirinventionsbecausetheycomeuptoabrickwallwherethereisnomoneyavailableforcommercialisation.EP26: WerecommendthatforallPre-Seed,R&DandPre-Commercialisationprojectsa30%portionofthegrantbeallocatedfor
commercialactivities.(SeealsoEP31forfurtherdiscussiononquantum)EP27:DefinitionandExamplesofCommercialActivities:
Bycommercialisationactivitieswemeanallowingtherecipientstoperform
initialcommercialisationactivitiesincludingthefollowing,whichshouldbe
allowed:i) Hiringorobtainingtheservicesofexperiencedexecutiveswith
experienceinsellingsimilartechnologyorproductstotheindustryto
beserved;ii) AppointingtheservicesofBusinessCoaches,MentorsandIndustry
Advisors;
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
42/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 42
iii)Attendingexhibitions,tradefairs,technologyconventionsandothereventstogaintounderstandcompetitivelandscapeandalsotointeractandobtainmarketfeedbackfrompotentialcustomers.Grant
thereforetobeallocatedforfeestoaccesstheseeventsandtravel.Atthisstagehoweveritisrecommendedthateventsandtravelare
limitedtolocalonlyunlesstheentrepreneurcanjustifythebenefittobegainedfromattendinganoverseasevent.
iv) Obtainingservicesofexternalexpertse.g.IPregistration,MarketResearch(e.gFocusGroups),BusinessPlanning,LegalExpertsetc
v) Purchaseofmarketdataandcustomerdatabases.vi) Onlineandofflinemarketingactivities.vii)Capabilitydevelopmentprogramstoup-skillorre-skillpersonnel.
3.5.3 TrackingMechanismOnCommercialAspects
Toensurethatthegrantsarebeingutilisedtocreatecommercialvalueandarecontributingtothenation,theoutcomesandKPIsmustincorporatethemeasurementandtrackingofthevaluesthatarebeingcontributedbyeachrecipient.SomeprovidersalreadytracktheseoutcomesandcanprovidenotjustresultsbutalsoReturnonInvestments(ROI)ongrantallocations.Thisisnecessarytoensurethatallocationsaremeetingexpectations.ToensurethatthereiscompletetransparencyandtoenabletheevaluationofthesuccessofthefundsandtheAgenciesthatprovidethefundingtheseKPIs
andmeasurementsmustbepublishedforevaluation.EP28: KPIandTrackingofCommercialisationValues
WerecommendthatALLgrantsotherthanpureresearchgrantstracktheoutcomesofallgrantsprovidedovera24-monthperiodfromthedateof
completionofthegrantmilestonesforthefollowingoutcomes:
a) RevenuesderivedfromtheR&DorCommercialisationoftheprojectb) JobCreation-bothofknowledgeworkers(i.e.thosewithtertiary
educationorthosewithmorethan5yearsofexperienceANDearning
morethanRM4,000permonthinbasicsalary)andotherworkers.c) Improvementstobusinessperformancee.g.skillsformationor
enhancement,improvedproductivity,loweringofcostofsales,
internationalcertificationacquiredandimprovementsinproduct
qualityandstandardsetc.
d) Newinvestmentsacquiredfromthirdparties;e) InvestmentsmadeinIPandphysicalassetswhetherlocaloroverseas;f) Expansionofproductlinesornewerversionsofexistingproductsg) Establishmentofnewindustriesorsuccessfulcaptureofnewmarkets
whetherlocaloroverseas;
h) MergersandAcquisitions,Jointventuresorexpansionofsalesnetworksbothlocalandoverseas;
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
43/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 43
i) Socialcontributionifapplicablej) Contributiontocorporateincomeinotherways
EP29 PublishROIInformation
AllfundprovidershavetoprovideROIongrantallocationsonanannualbasisANDmaketheinformationpublicfortransparencypurposesandalso
asabenchmarkforfutureallocationsofmoneytotheproviders.As
mentionedintheMacroRecommendationsinChapter2above,futureallocationsofmoneybytheGovernmentaretobemadebasedonmeritand
basedonROIofeachgrantprovideroronotheracceptablesuccessKPI.
3.6 LackofCommercialisationFunding
R9:ThecurrentlowROIfromtheGovernmentsinvestmentintheinnovativesectorisduetothelackofadequatecommercialisationfundsinthemarket.WerecommendthattheGovernmentincreasesthequantumandpercentage
ofcommercialisationfundingbothintermsoftotalfundsmadeavailableeachyearandalsoforindividualR&Dgrantswhichinmanycasesdonot
haveanycommercialisationfundsandthereforeprovideinnovatorsno
potentialtoexploittheseR&D.
3.6.1 CreateabalancebetweenR&DandCommercialisationFunding
Policiesshouldbemoreholisticandbalancetheneedbetweencreationandgrowthandexploitation.Currentlythereisnobalanceintheprovisionofgrants.MostofthegrantsareonlyprovidedforR&Dbutverylittleforcommercialisation.InfactthelargestamountsareonlyforR&DorPre-Commercialisationforprototypesbutnotcommercialisationpurposes(e.g.MOSTITechnofund,MDeCMGS,BiotechCorpsBionexusgrant).TheonlypurecommercialisationgrantsavailableareCradleFundsCIP500whichprovidesRM500,000forcommercialisationactivitiesandMTDCsCRDF(CommercialisationofR&DFund)whichprovidesbetweenRM500,000toamaximumRM4milliondependingonthetypeofR&DandthesourceoftheR&D.BiotechCorpsSeedfundprovidessomecommercialisationfundingbutisnotafullfledgedcommercialisationfund.FundsizeisamaximumofRM2.5million.AsmentionedintheMacroView,pastgrantpoliciesandsupporthavebeenseriouslyimbalancedmostlytowardsventureorR&DcreationwhilepoliciesforventuregrowthandR&Dexploitationwereseriouslylacking.Thisledtothecreationofentrepreneurialstartupsbutmediocregrowthofthesestartupsandmanypatentsandinventionsbutpoorexploitationofthesecreations.
Wethereforerecommendthefollowing:
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
44/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 44
EP30:Allocate40%ofTotalAnnualGrantFundingtoCommercialisation,ExportandExpansionActivities
TheamountofcommercialisationgrantscurrentlydoesnotassistinthevaluecreationaspectofR&D.Henceweproposethatatleast40%ofallGovernmentgrantsaredirectedtowardsthecommercialisationofR&Dand
notjustR&Dcreation.
ThereforeweproposethatofthecurrentbudgetofRM2.5billioninthe10th
MalaysiaPlan,atleastRM1billionbeallocatedforactivitiesthatneedtobeconductedduringCommercialisation,ExportandExpansionstagesof
Growth.
Itisrecommendedthatthisallocationbedirectedto
A. IncreaseallocationstoexistingCommercialisationFunding(see
furtherEP31);AND
B. ToestablishnewCommercialisationGrantsandProgramsfor:i) AcquisitionofKeyExecutives(seefurtherEP32&EP33);ii) ExportRelatedSkillsEnhancementPrograms(seefurther
AppendixB)iii) GlobalMarketAccessProgram(seefurtherEP49);and
FurtherdetailsofalltheabovegrantsaredetailedinAppendixB
3.6.2 IncorporateCommercialisationActivitiesinallPre-Seed,R&DandPre-Commercialisationgrants
EP31:Allow30%oftotalfundingfromallexisting&futurePre-Seed,R&DandPre-CommercialisationGrantstobeallocatedforCommercialisation
Activities
Weproposethat30%ofallR&Dgrantsbeallocatedforcommercialisation
activities.This30%allocationistobespentonprescribedactivitiesonlywhereupto20%oftotalgrantfundscanbespentonobtainingpersonnel,
servicesofexpertsorcapabilityenhancementactivitiesandupto10%towardsotheractivities.
PleaseseeEP27aboveforsomeexamplesofcommercialisationactivities.AsdiscussedinEP25Inlinewithourviewthatallgrantevaluationshavebothtechnicalandcommercialevaluation,thereforeALLrecipientsmustshowcommercialisationcapabilityandcommercialvaluetoprovethattheycanexploittheirR&Dandcreateeconomicorsocialvalue.
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
45/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 45
Theoneexclusionwouldbeforpureresearchgrants,butaslongasdevelopmentispartofthegrant,commercialvalueandcommercialisationbecomesanecessity.Toenableexploitationandcommercialisationactivitiestotakeplaceevenduring
thelatestageofR&Dandespeciallyinthepre-commercialisationstage,werecommendthat30%ofallPre-seed,R&DandPre-commercialisationgrantsbeallocatedforcommercialactivities.
3.6.3 IncreaseHumanResourceAllocationsinCommercialisationFunding
MoneyandTalentDrivesInnovation.Thewaytoincentivizeinnovation,any
SiliconValleyventurecapitalistwilltellyou,istobringcapitalandtalenttogether.Formostofhistory,peoplehavebeenadeptatkeepingthemapart.
MattRidleyinTheRationalOptimist,2010
Theproblemwithcurrentfundingmechanismsisnotjustthelackofmoneybutthatevenwhenmoneyismadeavailableverylittleofitisavailableforthehiringoftalent.Yet,withouttalentnotjustR&D,butevencommercialisationisnotpossible.Takeasanexample,theCradleCIP500CommercialisationFundofRM500,000.CIP500allowstherecipienttospendthemoneyovera12monthperiodbutonly
30%ofthemoneyisallocatedtohumanresources.Whilethisisadmirableandisoneofthebestfundsaround,stillthisonlyprovidesRM50,000forayearorRM12,500onlyamonthforhumanresources.InthemarketareallygoodMarketingorSalesManageralonewillcostyouRM10,000amonthnotincludingbenefitslikeEPFandSocso.Hencewiththisallocationonecannothiremorethanonecapabletalent.Worsestillifyouneedotherbusinessdevelopmentassistancethenyouhavetoforgothemostimportanttalentthatthecompanycompletely.Weneedtorealisethatpeoplearethecreativeforceineverybusinessandsuccessisaboutpeople.Ifwebelievethistobetruethenwhyisitthatwedont
allocatemoremoneytothehiringoftalent?WealsobemoanthefactthatM&Ctalentdonotjoinmoreinnovativecompaniestohelpthemsucceed,butthefactisthattheyarenotcheap.Goodtalentcostsmoney.Toovercometheproblemoflackofexperiencedtalentwerecommendthefollowing:EP32: Allowupto50%OfTotalcurrentCommercialisationFundingtobe
allocatedForHumanResources.
Thisallocationcanbespentonrecruitmentactivities,paysalariesoffull
timestafforcontractedknowledgeworkers,businesscoaches,industry
-
7/31/2019 Fostering Creation of Next Generation Innovative Tech Co Malaysian Policy Report May 2011 Dr Siva
46/112
Fostering the Creation of the Next Generation of Innovative Technology Enterprises
Prepared for the Unit Innovasi Khas, Prime Ministers Office, Malaysia 46
expertsormentorsandcapabilityactivitiestoup-skillorre-skillhuman
resources.ControlscanbeplacedviareviewsofthetalentsCurriculumVitaetoensureexperienceandexpertiseintheseareastogetherwiththeprovision
ofproperdocumentationtoshowthatthetalenthasbeenproperlyhiredlikeEPFandSOCSOstatementsandthefilingofIncomeTaxscheduledpayments.
EP33: EstablishanewMatchingGrantforCompaniestoacquireHumanResourceTalents.
DuringtheExportandExpansionstagesofGrowthoneofthekeyrequirementsforsuccessisTalent.Thereforeinadditiontoincreasingthe
allocationforhumanresourcesincurrentavailableCommercialisationFunding,weproposeanewGranttobeestablishedspecificallytopayfor