An All-out Effort

Malaysia has been moving up the Global Innovation Index. How does this contribute to further developing Malaysia as a preferred R&D hub?

In 2018, Malaysia came in 35th place overall, moving up two positions YoY. Among ASEAN and upper-middle income countries, Malaysia is ranked second after Singapore and China, respectively. Malaysia’s improvement in these rankings reflects the country’s strength in tertiary education, knowledge diffusion, and creative goods and services. In particular, Malaysia ranks among the top five for graduates in science and engineering, ease of protecting minority investors, high-tech imports and exports, and creative goods exports. We seek to attract more companies, particularly large MNCs, to set up their R&D activities here. Malaysia has five public universities that were granted research universities (RU) status to promote R&D activities, enhance commercialization, increase post-graduate and post-doctoral student intake, and improve the country’s global standing. MIDA has been stepping up its efforts to drive stronger R&D linkages between the industry and tertiary and research institutions. It is a tax-efficient way to invest in R&D whereby industry partners can access these universities’ expertise while enabling the academia to produce more research with higher commercial potential. The Public-Private Research Network (PPRN) by the Ministry of Education closes the technological knowledge gap, increases productivity, and strengthens Malaysian economic development through innovation and commercialization programs. The emphasis on R&D as reflected in the 11th Malaysia Plan 2016-2020, focuses on translating innovation to wealth by strengthening relational capital to foster stronger linkages, collaboration, and trust among stakeholders. Under the Industry4WRD initiative, one of the Strategic Enablers includes “Technology.” Under this enabler, we aim to intensify research, innovation, commercialization, and entrepreneurship (RICE) programs and activities in Industry 4.0 technologies and processes that support advance priority sectors.

How does MIDA facilitate investors to connect with the local infrastructure?

MIDA has facilitated over 5,000 companies from more than 40 countries to make Malaysia their location for manufacturing and related services operations. MIDA also undertakes several initiatives to facilitate domestic investments and advocate the development of supply chains between Malaysian companies and MNCs and large corporations. These include supply chain initiatives such as the Industrial Linkages program in aerospace for companies to explore business and investment opportunities through strategic partnerships and joint ventures; the establishment of the Investment Coordination Platform (ICP) to facilitate companies to grow their businesses and investment portfolio; the introduction of MIDA’s i-Services Portal, a single market place to link investors and companies; and the outreach programs such as the 2018 nationwide forum series on industrial parks.

What are your key objectives for 2019?

Last year, MIDA recorded a significant increase of 169.3% for approved FDI in the manufacturing sector worth a total of MYR58 billion, compared to MYR21.6 billion in 2017. We continue to focus on strengthening growth and increasing productivity, creating new generations of jobs and reducing dependency on foreign labor as well as attracting high levels of quality FDI and direct domestic investment. With the launch of Industry4WRD, Malaysia’s key objectives for 2019 in this context revolve around growing local companies with the MNCs and providing reinforcement into Industry 4.0 adoptions. Structural efforts have been taken to mitigate foreign labor dependency and transition labor intensive sectors into automation and digitalization. This effort will continue as one of the key objectives for 2019. It will also contribute to productivity growth. Labor productivity in the manufacturing sector improved from 2.2% in 3Q18 to 2.5% in 2Q18. While this is positive growth, greater improvement is needed to reach a productivity level of 3.7% by 2019. Industry-ready talent is another focus area for 2019. Initiatives are being undertaken to review and revamp the current education system to ensure the curriculum is in line with the development and progress of technology.