Let’s innovate Malaysia now4

Thursday, 27 August 2009 | Filed under Innovation

Innovation has a powerful effect on a country’s economic well-being.

This can plainly be seen in the world’s most inventive and most innovative nations which are also the world’s richest and most powerful nations.

And size of population does not matter in a country’s capacity for innovation.

Switzerland, Finland, Sweden, Netherlands and Denmark are in the top 10 global ranking of the Economist Intelligence Unit 2004-2008 innovation performance study, and all have a population smaller than Malaysia’s.

The five European countries also are listed in the top 10 rankings of the World Economic Forum’s Global Competitiveness Index 2008-2009.

They dominate the world in many economic sectors – ranging from timepieces, furniture and design, and telecommunications to biotechnology and food processing.

Nearer home, in East Asia, the countries high up in the Economist innovation rankings and the Global Competitiveness Index are Japan (no. 1), Taiwan (2), South Korea (11), Singapore (16) and Hong Kong (21).

Malaysia is ranked 31st, up three notches from 34th in the 2002-2006 Economist’s study, and came in at 21st in the competitiveness index.

But the Economist’s study forecast that Malaysia’s innovation performance index ranking could fall to 35th position during the 2009-2013 period.

Why?

Let us look at the comparative position of some of the main drivers of innovation in the country.

 
• Malaysia achieved 4 patents per million population in the Economist study for 2004-2008. Japan had 1,274 patents per million population. Taiwan (293 patents), South Korea (148), Singapore (111) and Hong Kong (67) performed far better than Malaysia in patents output.
 
• Malaysia’s gross expenditure on R&D as a proportion of GDP in 2006 was 0.64 percent although it targets to increase gross expenditure to 1.5 percent by 2010, according to the Malaysian Economic Planning Unit (EPU).

Singapore, on the other hand, spent 2.31 percent of its GDP on R&D in 2006, and it is targeting 3.0 percent of its GDP on R&D by 2010.

The figures for Japan in 2006 were 3.32, South Korea (3.22), Taiwan (2.58) and China (1.42).

Since the late 1990s, mainland China has boosted its R&D spending by 50 percent. Now, China wants to raise that spending to 2.5 percent of GDP annually.

That is 2.5 percent of a GDP currently valued at US$4.5 trillion or US$112 billion or RM400 billion to be spent on R&D annually.

Finland, the Nokia country with only 5.2 million people, invested 3.4 percent of its GDP in R&D, one of the highest percentages in the world.

 
• In 2002 Malaysia contributed 10,538 scientific papers to the world, earning the country 55th position, far behind the United States (5 million papers), Japan (1.07 million), China (264,400), South Korea (102,300), Taiwan (101,500) and Singapore (33,000). Even Thailand beat us with 14,600 papers. By 2008 Malaysia’s ranking in contribution to world science had dropped to 57th spot.
 
• Malaysia had a ratio of 17.9 researchers to every 10,000 labour force in 2005. The figure placed Malaysia well below those in Singapore (87.4), South Korea (89.8) and Japan (202.8). Malaysia was even behind South Africa (20.7) and Turkey (25.3), says the EPU.
 
• Malaysia has 26 percent household broadband penetration currently and aims to increase it to 50 percent by 2010. South Korea and Singapore have 100 percent broadband penetration while Hong Kong has 83.8 percent penetration and Taiwan 76.8 percent.

In 1996, when Malaysia launched the Multimedia Super Corridor to fast-track the country into the knowledge economy, we were at par with other East Asian countries in broadband penetration.
Today, it is clear we have not progressed in innovation as far as we had wanted despite the early start.

The warning signals are up. If we don’t move quickly, in a short while we will be in decline.

Very urgently we must focus on building the ecosystem that encourages innovative thinking and creative solutions to drive Malaysia’s competitiveness.

Building the ecosystem

This country is not short of talents who have the calibre, the vigour and the ideas to take us to the next level of development.

What we need to do is to put in place an ecosystem that will encourage, recognise and celebrate creativity and innovation in all spheres of our country.

The private sector and the government must team up to identify the outcomes that are desired and design the strategy to develop the human capital, cultural capital, social capital and institutional support essential to build the ecosystem.

We will need to draw up the right policies, programmes and incentives.

And we will need to involve everyone.

The chain must be complete. The commitment must be consistent.

The culture of creativity and innovation must be practised all the time and everywhere in the country.

The right conditions

Countries with the right conditions stand a better chance of moving ahead through innovation than those countries that still hold to traditional and obsolete methods of governance.

The ‘right conditions’ is the key. Innovation can only happen in places where there is encouragement for new ideas.
Without the right conditions the most talented and most creative brains will migrate to places where they are able to do their best work.

About 30,000 Malaysians with tertiary education are currently working in Europe.

Tens of thousands of other Malaysians are contributing their skills and knowledge in countries such as the United States, Canada and Australia.

At the same time, Malaysia’s Brain Gain Programme has failed to gain traction.

Between 2000 and 2007, expatriate skilled labour attracted to Malaysia fell from 85,000 to 35,000, a decrease of almost 60 percent while the number of foreign unskilled workers rose by nearly 300 percent from 800,000 to 2.1 million.

Foreign students, who are usually among the brightest young people from their countries, are required to leave after their graduation from Malaysian tertiary institutions.

So Malaysia is losing talents at the top end while continuing to bring in lowly educated manual workers at the bottom of the labour chain.

No priority for intellectual property

Malaysia has a long distance to go in creating the culture and platform to drive innovation.

The low level of Malaysian ownership of patents speaks volume of the low level of interest among Malaysians and Malaysian-owned companies in creating original products and original designs.

Contrast our performance with that of the number one corporate innovator in the world, IBM, which has a worldwide portfolio of more than 40,000 patents.

Ericsson, the world’s biggest telecommunications equipment supplier, has 25,000 people around the globe working day and night on R&D. That number is more than half the researchers Malaysia had in 2005.

Intellectual property is a measure of a country’s ability to create wealth year after year and across the world, and it is no surprise that the developed world has the most number of patents.

Most companies in Malaysia treat intellectual property merely as a means of protection for their products. They do not see the potential in creating wealth out of IP.

Instead, our people have been making their money from landed property, manufacturing and the stock market.

The manufacturing base has largely been established by our people producing goods on original equipment manufacturing or OEM arrangement.

Facilitating innovation drive

Innovation, however ground-breaking, does not always result in commercial success. The present level of intellectual property being commercialised in Malaysia is at a very low rate of 3.4 percent.

Creative thinking and marketing savvy are necessary.

Without these drivers, innovation that happens will not be systematic, sustainable and financially profitable.

In other words, innovation should be industry-led.

The private sector is full of people very driven to succeed. They work at it every day. They have developed the skills and the capacity to compete and win.

They know what the market wants; know how to respond to market needs and how to open up new opportunities.

To be certain, the process of innovation must also involve the people who run the government’s approval system. Government agencies must support and facilitate the private sector to enable it to be at its competitive best.

They must understand the competitive nature of business. They must know the speed at which the private sector must move in order to remain in competition.

They must play a facilitating role. Working closely with the private sector is often not good enough.

The government must lend active support to build Malaysian companies to enable them to succeed, to empower them to compete globally.

It is important for the government to understand that if the private sector loses a battle overseas, it is the country that loses.

The government must ensure at all times that there is compatibility between the public and private sectors.

It should be Team Malaysia winning for Malaysia.

This has not happened yet. The private sector is not seen to represent the country abroad.

The journey starts at the top

The journey to innovation starts at the very top.

The chief executive of a company must commit its resources to the building of innovation.

We must educate the public, especially the parents, that creativity is more than painting and drawing cartoons.

We must focus on creating a more vibrant and productive innovation ecosystem that will pull together all our resources, our talent pool, our cultural diversity and creativity.

We must make the development of creativity and innovation a national agenda.

Time is not really on our side.

Outside our borders, new economies are making quantum leaps that are astonishing in their inventiveness and threatening in their competitiveness.

Outside our borders, the economic divide between countries that are innovating and countries that are not is widening.  The statistics are disturbing.

Unless we get really serious about cultivating creativity and promoting innovation, the transformation to a knowledge-based economy will not readily happen. And unless that transformation happens, it will not be long before our competitiveness declines.