COMMERCILIZATION ISSUES AND CHALLANGES

R&D being the National Agenda POLITICAL WILL R&D being the National Agenda ‘Being a global player is unavoidable for a country that wants to develop’ - Abdullah Malaysia has the political will to ensure that R&D is the national agenda to drive the K-economy of the country (O.5% of GDP (6%). The government has provided a lot of national grants (at least RM 1.7 billion from 2006-2010) to promote R&D&C But is the amount ENOUGH to promote commercialization of research products

Challenges in Innovation-led economy that affects R&D Political will Create policies that support R&D, innovation and entrepreneurship Human capital Sufficient number of innovative, creative and relevant human capital (Knowledge-workers) Originality and IP Must show originality and creativity in offering solutions to problems with the generation of intellectual properties/ patents Change in the R&D approach Harness the human capital to create an environment of innovative culture Work with the end in mind Funding Funding to drive R-D-C-E Funding to buy existing technology (market-driven)

Innovation-led economy New R&D challenges Challenge for R&D in the country would be how to move towards the requirements needed to succeed in the Innovation-led economy: Technology-driven (10-15 years) Dependent on our researchers Own original scientific discoveries that will enhance the competitiveness and provides the leading edge for the country. Set new trends in technology and create our own technology platforms Ability to combine scientific discoveries and technology platforms to create new innovations that can create an impact to society and the global market; undergo translational research Market-driven (3-5 years) Dependent on our business community/government Dependent on funding Buy existing technology and innovate Innovation-led economy Technology driven Market driven

GROUP DISCUSSION IDENTIFY CHALLENGES OF INNOVATION AND COMMERCIALIZATION IN MALAYSIA. WHAT IS THE ROLES OF GOVERNMENT OR INSTITUTIOANL TO OVERCOME THE ABOVE CHALLENGES?

Challenges Availability of funding Collaboration Internal structure External institutional arrangement Other

1. Availability of funding Lack of pre-seed and seed funding, market funding, prototype funding; Lack of funding and incentives to support private sector research and commercialization; No angel investors; Poor venture capital availability (no active involvement of private VCs). The 57 registered VCs lack the risk taking attitude and merely operate as VCs; No evidence of private VC extending investment to seed and start-up Deals;

funding No strategic map for VC industry; Poor financing by banking sectors for start-ups and new ventures; Poor model of relying on government VC funding; Existing seed funding seldom reaches IPO and revenue generating stage; and Difficulties in accessing funds at expansion phase especially through soft loans, equity arrangements, and expansion funds

collaboration Limited university-industry linkages Limited industry sponsored research activities Limited R&D activities especially among SMEs Lack of coordination between government- university-industry Less focus on establishing linkages with nascent companies Lack of government linked companies support and linkages with research agencies and universities

Lack of collaboration and linkages for demand driven innovation collaborative R&D activities among industries are still low (Chandran et al., 2009b). lack of absorptive capacity as well as weak systems of knowledge assimilation, due to lack of human capital development. 99% of businesses in Malaysia, are in a weak position even to absorb suppliers, customers, and universities as well as research institutions R&D know-how. Industries do not view universities or research institutions as an important source of innovation They fail to understand the nature of science and always want to focus on quick returns out of their R&D investment.

LACK OF INTERNAL SUPPORT AND STRUCTURE Poor R&D management practices in public and private sectors Lack of structural and systems flexibility in universities/research institutions/private sectors Lack of effective monitoring of commercialization success in both public and private sector Poor technology transfer office within universities and research institutions Not enough champions and leaders Inadequate organizational culture Poor communication systems Lack of income generating agendas within universities and research institutions

External institutional arrangement Overlapping roles of agencies causing lack of focused efforts Lack of institutional support to manage the risk of ineffective allocation and usage of funds because of overlapping roles of agencies Lack of effective one-stop center for information dissemination on commercialization efforts Missing centers to ensure the promotion of industry sponsored research Lack of agencies in managing and assessing the impact of R&D funding and management of various government funds

Others Ineffectiveness of tax breaks in promoting VC and R&D efforts Troublesome procedures in filling grants/funds (no support agencies) Failure in market mechanism in seed and commercialization stage Lacking technical support by incubators - most incubators only provide facilities and commercial incubation (except MSC, USAINS, SIRIM, MTDC and FRIM) All mechanisms to promote commercialization emphasize incentives in terms of funds and ultimately lacking technical assistance and improving expertise and skills for commercialization