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Under the current market trend of trade liberalization and globalization, companies face increased competition for products and services due to lower entry barriers. This borderless world has induced hyper competition which will make the less competitive SMIs fail. To become a significant player in this modern era, SMIs need to undergo a paradigm shift. SMIs need to be developed and nurtured into an efficient and globally competitive supporting sector, which is capable of producing high value-added critical parts and components for other leading industrial sectors, not just a purely export orientated producer. Fortunately, Malaysia has taken concrete steps in the right direction, as evidenced from the Productivity Report 2006. Malaysia has achieved a productivity growth of 3.7%; while the productivity of SMIs, an integral part of future industrialization development in the 9th Malaysia Plan (9MP) and 3rd Industrial Master Plan, has continued to grow at 5.3% in 2006. These achievements were made possible by the facilitation and support from the government and the continuous initiatives from SMIs themselves to improve their productivity and competitiveness through continuous research and development (R&D) in products, services and processes.
The Promotion of Investment Act 1986 defines R&D as any systematic or intensive study undertaken in the field of science or technology with the object of using the study results for the production or improvement of materials, devices, products, produce or processes. R&D as well as technological innovations is essential in the Malaysian government’s strategy of sustainable development and knowledge-based economy. Recognizing these factors, the government has accorded a high priority to the scientific and the technological development of the country.
BUDGET 2008
Under Budget 2008, the government aims to step up efforts to intensify research, development and commercialization activities, particularly the commercialization of home-grown R&D. A sum of RM12 billion is provided for the implementation of various higher education projects and programmes, including enhancing R&D and commercialization activities (R&D&C) in four Research Universities. More Technology Licensing Offices (TLOs) which are competent in coordinating R&D activities and patent applications will be set up in other research centres and public universities. Currently TLOs have been established at institutions, such as SIRIM and Universiti Sains Malaysia. It is estimated that over the next five years, Malaysia will have about 23,000 research personnel and more than 5,000 R&D scientists and skilled workforce available.
Additionally, the Science Fund and the Techno Fund is allocated RM230 million and RM300 million respectively. The Science Fund supports R&D projects which can generate new knowledge in strategic basic and applied sciences, and develop new products or processes necessary for further development and commercialization in specific research clusters (RC). The Techno Fund is a competitive funding to commercialize new, cutting edge and breakthrough technologies in Agriculture, Biotechnology, Information and Communication Technology (ICT), and Industry Clusters that create new businesses and economic wealth for Malaysia. The outcome of research under the Science Fund which has commercial potential can be considered for additional funding under the Techno Fund. To further promote commercialization, as well as provide further incentives to researchers, the rate for royalty payment to researchers will be increased to 80% and the balance for research institutions. Presently, the royalty distribution of commercializing R&D is 50% to research institutions and the balance being shared between the research institutions and the researchers.
The agriculture sector is earmarked to become one of the country’s major sources of economic growth. For this, a sum of RM6.5 billion is allocated for the agriculture sector. Several new sources of growth have been identified, such as the pioneer project of virgin coconut oil processing, commercializing nira nipah products, development of the aquaculture industry under 39 high-impact projects, mechanization and automation for farmers. To simplify and expedite the disbursement for agriculture R&D, a sum of RM300 million will be transferred from the balance of the 9MP ceiling of the Science Fund and Techno Fund to the Ministry of Agriculture.
For the biotechnology industry, the government has made a provision of RM236 million in the 2008 budget. Efforts are made to continue to establish research institutions housing modern facilities and state-of-the art equipments. Among the projects is the acquisition of technology, development of biodiversity research centre and biotechnology commercialization centre as well as anti-cancer compound research. In addition, to encourage cooperation between biotechnology companies and local universities, Bionexus status companies are allowed to use the laboratories and research facilities at local universities, thereby optimizing the capacity of research laboratories and facilities at local universities. The Malaysian Biotechnology Corporation (MBC) is responsible to oversee, promote and coordinate the development of Malaysia’s biotechnology industry.
GOVERNMENT AND PRIVATE SECTOR SUPPORT IN DEVELOPING SMIs THROUGH RESEARCH AND DEVELOPMENT
Since 1988, the Government has implemented a centralized grant system of financing science and technology (S&T) research in public institutions and research agencies. The Ministry of Science, Technology and Innovation (MOSTI) is in charge of managing the fund and the implementation of S&T research and development programmes in Malaysia. Other private agencies such as Malaysian Technology Development Corporation (MTDC), Multimedia Development Corporation (MDeC) and SIRIM Bhd also provide assistance.
1. The Ministry of Science, Technology and Innovation (MOSTI)
In line with the National Science & Technology (S&T) Policy, a number of programmes are administered by MOSTI’s S&T Division to encourage SMIs to strengthen their technology base and improve their products.
(a)Intensification of Research in Priority Areas (IRPA)
The IRPA Program is designed to support R&D activities that are classified under the national R&D Priority Areas. Research organizations and institutions of higher education in the public sector are eligible under the IRPA Programme to receive R&D grants. But it should be noted that mission-oriented activities for research organizations are not qualified for grants under this programme. Private sector entities too can participate in the programme in association with the above-mentioned organizations on industry-wide research projects. However fully owned corporatized government institutions and Private Institution of Higher Learning (IPTS) needs the approval of MOSTI before they can get the IRPA funding.
IRPA grants cover direct research projects expenses, including emolument of contract personnel. They do not cover the emolument of permanent staff. The amount of the grant will be determined by MOSTI based on a review of the estimated total cost of the project and of its associated expenses. In the event that the grants do not cover all project expenses, additional funding sources are needed to cover the shortfall in funding. Constructions of infrastructure, such as buildings and laboratories, as well as purchases of equipment which are related to the buildings/laboratories, do not qualify for funding under the IRPA programme.
Further enquiries can be directed to:
The IRPA Secretariat
Science and Technology Division
Ministry of Science, Technology and Innovation
Level 2, Block C5, Parcel C
Federal Government Administrative Centre
62662 Putrajaya, Malaysia
Tel: 603-88858000 Fax: 603-88892994
Website: www.mosti.gov.my
Email:
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(b)Industry R&D Grant Scheme (IGS)
The Industry R&D Grant Scheme (IGS) was developed in the 1997 after regular requests from the private sector to the government for more direct, up-front grant support based on the concept of risk-sharing, in view of the high risk inherent in R&D investment. The aim of IGS is to increase private sector R&D and promote closer cooperation between the private sector and Public Research Institutions (PRIs) as well as public sector universities through collaborative linkage. It is hope that the IGS together with other existing incentives will lead to a positive surge in R&D investment as envisaged in national policies, particularly with regard to the role expected of the private sector.
Malaysian majority-held joint-venture companies including those companies with MSC-status are eligible to apply. Collaboration with local PRIs or universities is a requirement. Also the approved R&D proposals must be undertaken in Malaysia. The amount approved under IGS will be determined on the merits of each application, not exceeding 70% of the approved project cost.
For more information, please contact:
The IGS Secretariat
Ministry of Science, Technology and Innovation
Level 1, Block C5, Parcel C
Federal Government Administrative Centre
62502 Putrajaya, Malaysia
Tel: 603-8885 8065 Fax: 603-8889 3005
Website: www.mosti.gov.my
Email:
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(c) eContent Fund
The objectives of eContent Fund are to spur the development of the local ICT content industry for domestic and export market and also to develop a more resilient and competitive local content industry. The focus areas for content development under the 9MP are animation, games, e-learning, culture and heritage, e-commerce, simulation and virtual reality. These contents should be able to run on multiple platforms such as 3G/mobile phone, Internet, and other media such as PDA and TV etc.
The grant is awarded to local companies and individual Malaysians only. Two categories of companies are eligible to apply, namely micro enterprises which have annual sales not more than RM250,000 and employees not more than five, and SMEs with annual sales between RM250,000 and RM25 million, and employees between five to 150. The scope of funding is limited to content development only. However a maximum of 20% of total cost is allowed for procurement of infrastructure such as hardware, software, etc. Applicants are categorized into three groups, namely individuals, micro enterprises and SMEs. The maximum grant amount for individuals is RM200,000, micro enterprises get RM500,000 and SMEs qualifies for RM2 million.
Contact details:
The eContent Fund Secretariat
Ministry of Science, Technology and Innovation
Level 5, Blok C5, Parcel C
Federal Government Administrative Centre
62662 Putrajaya, Malaysia
Tel: 603 8885 8025 Fax: 603 8888 4238
Website: www.mosti.gov.my
Email:
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2) Malaysian Technology Development Corporation (MTDC)
MTDC was set up in 1992 under the directions of MOSTI to spearhead the commercialization of research results of universities and research institutions (RIs). It also functions to identify and transfer emerging and strategic technologies for the adoption of Malaysian industries to spur the growth of technology-based enterprises in the country. Two of the funds administered by MTDC to speed up the marketing and production of commercially viable R&D results are as follows:
(a)Commercialization of R&D Fund (CRDF)The purpose of CRDF is to provide financial support to universities, RIs and eligible companies to undertake full commercialization of indigenous technology and R&D results, thus enhancing the national competitiveness and capability of the Malaysian industrial sector. Basically the fund is divided into four groups – CRDF 1 and CRDF 2 are meant for universities and RIs; CRDF 3 and CRDF 4(a),(b) and(c) are for SMEs, large corporations and public listed companies.
- CRDF 3: Commercialization of public sector R&D results undertaken by SME via Start-up Company
Funding Quantum:
The quantum of funding approved under CRDF 3 is up to a maximum of 70% or RM500,000 whichever is lower depending on the merits of each application.
Eligible Expenses:
- Feasibility study (if applicable)
- Rental (space & equipment)
- Cost of technology
- Cost of training
- Purchase of equipment (lab/testing/QC equipment)
- Insurance/Maintenance/Repair of equipment
- Cost of raw material
- Intellectual property protection (IPP)
- Standard & regulatory compliance
- Utility cost
- Marketing & promotion
- Staff allowance (technical/management
Project Duration:
The project duration under CRDF 3 is one year for project implementation and product roll-out, and one year for project monitoring/impact study.
- CRDF 4(a): Commercial production of any locally generated R&D results by SME
Funding Quantum:
The quantum of funding approved under CRDF 4(a) is up to a maximum of 70% or RM4 million whichever is lower depending on the merits of each application.
Eligible Expenses:
- Feasibility study (if applicable)
- Rental (space & equipment)
- Cost of technology
- Cost of training
- Purchase of core equipment related to commercialization
- Modifications/Fine-tuning related costs
- Process Optimization costs
- Intellectual property protection (IPP)
- Standard & regulatory compliance
- Marketing & promotion related costs
Project Duration:
The project duration under CRDF 4(a) is two years for project implementation and product roll-out, and two years for project monitoring/impact study.
Eligibility Criteria:
To be eligible for CRDF 3 or CRDF 4(a), the company must meet the following basic criteria:
- SME or Start-up company is incorporated in Malaysia (excluding subsidiary of an existing company);
- The company must be at least 51% owned by Malaysian;
- The proposed technology to be commercialized must be from one of the Priority Technology Clusters;
- The management, marketing, and technical team must have relevant qualification and/or experience;
- The R&D and commercial ready prototype must have been completed successfully; and
- The proposed project must be for the commercialization of a tangible product.
Note: Under CRDF 3, the company must operate from university/RI-based technology centres. Under CRDF 4(a), all Malaysian incorporated SMEs are eligible. (Graduated University/RI’ Spin-off & Start-up companies, Post CRDF & IGS grant recipient are also eligible).
(b)Technology Acquisition Fund (TAF)
The TAF has been established to facilitate the acquisition of strategic and relevant foreign technologies, harnessing foreign expertise to fast track domestic technology development capacity and ultimately bypassing the expensive and risky development stages.
The objectives of the TAF are as follows:
- To promote technology upgrading through the introduction and utilization of technologies in the manufacturing and physical development of existing and new products or processes;
- To enhance the competitiveness level of Malaysia companies to compete globally; and
- To increase wealth creation and technology content of Malaysian companies via acquisition of foreign technology.
TAF is targeted towards Malaysian incorporated manufacturing companies (SMEs and large corporations). Public listed companies or their subsidiaries are not eligible to apply. The eligibility criteria for TAF are similar to those of the CRDF. In addition, the proposed technology to be acquired must have been proven and commercially produced in the country of origin. This technology acquired must then be immediately adopted in the company’s manufacturing activity, improving the current production capacity or process. Companies are allowed to claim the cost of training and acquisition of technology, equipment and machinery. There are 2 categories of TAF: TAF 1 and TAF 2.
Priority Technology Clusters
Project proposals eligible for consideration must be listed in the following Priority Technology Clusters:
- Biotechnology
- Agriculture
- ICT
- Industrial (Advanced Materials, Advanced Manufacturing, Nanotechnology, Alternative Energy, Waste to Wealth)
Forms of Assistance: Acquisition of Technology
- Technology Licensing
Technology acquisition through licensing is to enhance the design and production of new and existing products and processes. The technology to be acquired includes design, blueprints, manufacturing know-how, training, technical support and proprietary equipment.
- Acquisition of Patents Rights, Prototypes and Designs
Acquisition of proprietary information to facilitate transfer of technology to enable the development of new processes and products. For manufacturing purposes, all acquisition must include manufacturing rights from technology provider.
TAF 1
Funding Quantum:
The quantum of funding approved under TAF1 is up to a maximum of 50% or RM2 million whichever is lower depending on the merits of each application.
Project Duration:
The project duration under TAF1 is 2 years for project implementation and product roll-out, and 2 years for project monitoring/impact study.
TAF 2
TAF 2 is basically a separate scheme set up to allow greater access to financing for Malaysian incorporated majority woman/women manufacturing, manufacturing-related services or K-based companies (SMEs and large corporation). It provides partial grant to further promote efforts by women entrepreneurs to enhance their technology level and production processes. TAF 2 is designed to integrate more women-owned companies into the main stream of manufacturing, and enhance the competitiveness levels of women-owned companies. The terms and assistance offered are similar to TAF 1. The CEO/MD/ED must be a woman, holding a minimum equity of 10% in the company and actively participate in the operation and management of the company.
Funding Quantum:
- Up to a maximum of 50% or RM500,000 whichever is lower depending on the merits of each application for 100% woman owned company; and
- Up to a maximum of 25% or RM250,000 whichever is lower depending on the merits of each application for majority woman owned company.
Project Duration:
The project duration under TAF 2 is a maximum of 1 year for project implementation and product roll-out and 1 year for project monitoring/impact study.
For more information, please contact:
CRDF / TAF
Government-Industry Technology Services (GITS) Department
Malaysian Technology Development Corporation (MTDC)
Level 8 - 9, Menara Yayasan Tun Razak
Jalan Bukit Bintang
55100 Kuala Lumpur, Malaysia.
Tel: 603-2161 2000 Fax: 603-2163 7549
E-mail:
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Website: www.mtdc.com.my
3) Multimedia Super Corridor (MSC) Malaysia R&D Grant Scheme (MGS)
Since its inception 11 years ago, the MSC Malaysia has been the catalyst to attract international renowned ICT companies to undertake research, develop new multimedia technologies and applications, and export from this base. This thriving dynamic ICT hub in our own backyard is the ideal platform for domestic ICT SMEs to transform themselves into world class companies. The Multimedia Development Corporation (MDeC) is entrusted to manage the MGS and oversee the progress and completion of funded projects.
The MGS was set up to support vibrant R&D initiatives by local companies leading to innovative ICT/multimedia products that possess significant commercial potential. This will increase the creation of Intellectual Property (IP), enabling companies to gain international recognition.
Eligibility includes companies with MSC status and are at least 51% Malaysian-owned. Priority is given to proposals that lead to the development of R&D products and services across the multimedia value chain and the MSC Flagship Applications. Past and current recipients of any government R&D grants need not apply.
The amount approved under the MGS is dependent on the merits in each application and will not exceed 50% of the total project cost, with a funding period of up to 2 years. A non refundable processing fee of RM5,000 is payable upon submission of the final application documents.
For more details, kindly refer to:
Multimedia Development Corporation Sdn. Bhd.
Technology Policy and Research
2360 Persiaran APEC
63000 Cyberjaya
Selangor D.E., Malaysia.
Tel: 603-8315 3000 Fax: 603-8318 8786
Email:
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Website: www.msc.com.my
4) Standards and Industrial Research Institute of Malaysia (SIRIM) Bhd
SIRIM Bhd, wholly-owned by the Malaysian government, is Malaysia’s largest provider of technical and quality services. Since its corporatization in 1996, SIRIM has become more market-orientated. It is focus on discovering and developing new technologies to enable industries to move up the value chain and aimed to expand from simply using technology to solve technical problems to discovering technology that will help industries to reinvent their products and business. With over 800 researches and experts at its disposal, SIRIM is given the mandate to assist SMIs in improving their operations.
Services provided by SIRIM in research and technology division include contract research, product development, technology transfer, process optimization incubation, materials research, skills development and consultancy.
Listed below are the facilities for R&D under SIRIM:
- Advanced Manufacturing Technology Centre
The centre provides a wide range of services to the industries through its 3 programmes: Electronics and Intelligent System Development Programme, Industrial Automation and Robotics Programme, and National CAD/CAM Programme.
- Environment & Bioprocess Technology Centre
The core focus of the centre is Bioprocess and Chemical Engineering, Environmental Engineering, Energy and Cosmeceuticals. It compliments AMREC by focusing on the process technology aspects of material technology.
- Techno-Economy and Commercialization Centre
Accelerates the development of existing SMEs and supports the development of technology-based enterprises by facilitating the commercialization of technology innovations. The Centre acts as a bridge to bring research to the industrial marketplace through the stimulation of technology transfer, technology venture and diffusion of new technologies and innovations under its ideation. The Centre has incubation facilities in the Klang Valley, and in the states of Pulau Pinang, Melaka, Pahang, Johor, Terengganu, Sabah and Sarawak to support its technology venture development programmes.
- Advanced Material Research Centre (AMREC)
AMREC undertakes upstream applied and fundamental or frontier research in advanced materials. The Centre also functions to stimulate local production of high value-added components and equipment, which are based on advanced materials. The Centre, through its research programmes, spearheads the generation of new materials and carries out product prototyping for commercialization in the near future.
- National Centre For Machinery And Tooling Technology
The National Centre for Machinery and Tooling Technology is a state-of-the-art industrial support centre that provides end-to-end machinery and tooling solution. Located in Rasa Industrial Park, Hulu Selangor, the Centre provides customized solutions in commercial manufacturing processes in the area of design, prototyping and fabrication of machinery and equipment, as well as parts and components, molds and dies and jigs and fixtures. The Centre's establishment is one of the government’s long-term strategies and action plan to turn Malaysia into an industrialized nation by the year 2020.
To know more about SIRIM Bhd, kindly contact:
SIRIM Bhd
No. 1, Persiaran Dato’ Menteri
Seksyen 2, Peti Surat 7035
40911 Shah Alam
Selangor D.E., Malaysia.
Tel: 603-5544 6000 Fax: 603-5510 8095
Email:
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Website: www.sirim.my
CONCLUSION
With customers becoming more knowledgeable and educated, the demand for sophistication will rise and this will put increase pressure on research and development. Companies lagging behind in R&D will find it hard to sustain their business, and even face elimination if the situation deteriorates. To avoid finding themselves left out of this contemporary market, SMEs need to be able to leverage on new knowledge and innovative technologies to stay competitive with higher value added products and services. The R&D grants and incentives offered by both the public and private sector in Malaysia are immensely helpful in building resilient, sustainable and dynamic SMIs.
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