Innovation In Malaysia – In the business world, one of the most important elements an organization needs to possess in order to achieve and maintain success is ‘innovation’ (Kylliainen, 2019). However, not many know how innovation can play such a crucial role for the future of an organization. So, let us get into this one step at a time. Generally, according to Oxford Learner’s Online Dictionary (2020) ‘Innovation’ is “the introduction of new things, ideas or ways of doing something”. However, in the business context, innovation can act as a catalyst that can help a business grow and adapt in the marketplace (4 Important benefits of innovation in business, 2018). In addition, as said by Dr. Satnam Singh, Director of Innoverce365 a Pioneer of Innovation Management in Asia which successfully launched their inaugural Innovation Circle Workshop in Kuala Lumpur:
Innovation management in organization is where you bring your people, processes and technology together and link them together as well. Generally you go to a marketplace to find unmet needs where you engage your people and use their collective knowledge to find useful solutions. It also gives your team focus to deliver easy-to-use solutions in an effective manner and also gives your team the opportunity to release their own natural creativity and engage them, so we can beat the competition.
Innovation has become a trend in research and development (R&D) as it has, for many years, helped society in developing into a new modern era. For instance, one of the most brilliant creations done by mankind based on innovation is the development of steam engine technology in the 18th century which has helped society in many ways (How does innovation lead to growth, 2017). With such a large number of possibilities that comes with innovation, many countries across the globe have recognized the importance of innovation and how it plays as one of the key elements in the growth of a country’s economy. One of these countries is Malaysia. Malaysia is considered as an upper middle-income country with a population of 32.3 million (Malaysia population, 2020), Gross Domestic Product (GDP) of US$358.58 billion (Malaysia GDP, 2020) and GDP per capita of US$28,176 (in Purchasing Power Parity terms) in 2018 (Malaysia GDP per capita PPP, 2020).
Ever since the 1980s, Malaysia has been recording quite impressive economic growth rates, and has successfully realized its potential in becoming a major supplier of manufactured products with the help of the Foreign Direct Investment (FDI) (Narayanan & Lai, 2018). Here, innovation in Malaysia has been playing a crucial role in the growth of Malaysia’s economy and industries as it has introduced Malaysia to the implementation of many concepts that involves value innovation and market innovation; ‘investment’ (the manifestation of innovation itself) which in turn, is driven by profit expectations that can be promoted through incentives (Ferlito, 2018).
Since the second half of 1960s, Malaysia is one of the countries that implements incentives in order to promote both foreign and domestic private investment. These incentives solely focus more in the endeavour of enhancing the nation’s four main strategic sectors; manufacturing, agriculture, biotechnology and principal hub. This fact can be related to the statement made by Narayanan and Lai (2018) in which innovation in Malaysia economy gained new momentum with the launch of New Economic Model (NEM) in 2010. NEM has helped where, instead of relying on cheap immigrant labour to keep exports competitive, a robust manufacturing sector, based on independent innovation capabilities, was required to push the economy up the value chain in a sustained manner.
Countries around the world that recognize the importance of innovation has invested a lot of public funding to support its application through R&D. This also includes Malaysia where the creation, research, development, and commercialisation stages of R&D receive various types of funds (MOSTI, 2014). Most of them are managed by the Ministry of Science, Technology & Innovation (MOSTI), although grants are provided by other ministries. For example, the Ministry of Higher Education (MOHE) offers different types of grants for universities’ research activities while the Ministry of Energy, Green Technology and Water, the Ministry of Agriculture and Agro-based Industry, and the Ministry of Finance have financing schemes for R&D. Similarly, the SME Corporation, under the Ministry of International Trade and Industry (MITI), administers subsidy schemes for SMEs whereas the Malaysian Investment Development Authority manages incentives for R&D investment. Other than that, R&D and commercialisation receive funds from public agencies; Multimedia Development Corporation, Malaysia Technology Development Corporation, and Malaysian Biotechnology Corporation.
With the efforts done in applying the concept of innovation within R&D for the development of the nation’s main economy and industrial sectors, Innovation in Malaysia has achieved in maintaining its rank at the 35th, since 2018, among all countries in the Global Innovation Index (GII) 2019 Rankings with a score of 42.68% behind Latvia (43.23%) with Switzerland (67.24%), Sweden (63.65%) and the United States of America (61.73%) as the top 3 in the rankings. Furthermore, based on countries of South-East Asia, East Asia & Oceania (SEAO), Malaysia maintained at 8th for six consecutive years since 2013. In addition, Malaysia has also maintained 2nd, behind China, since 2018 based on the Upper-Middle Income group (Dutta, Lanvin, & Wunsch-Vincent, 2019).
Source: Global Innovation Index 2019 – WIPO
Even though Innovation in Malaysia needs a lot of time to catch up with other countries, especially those from high-income group, regarding national development, as well as lacking sufficient investment capacity to scale new businesses, according to Accenture (NYSE: ACN) Wise Pivot C-level survey, it does have potential in improving, developing and transforming itself into a more innovative, modern and advanced nation in the future.
Author: Aizatul Aisyah Binti Mohd Idris
Illustrator: Nur Arfa Iwana Binti Sarikhuddin
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