Addressing Innovation Challenges in Malaysia through Demand-Driven Initiatives

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Challenges in the Malaysian economy, such as a technological knowledge gap hindering SME productivity, can be overcome by creating a knowledge-friendly ecosystem. Focus on demand-driven research initiatives, like the PPRN project, to provide innovative solutions for SMEs and drive economic growth through enhanced collaboration between academia and industries.

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DEMAND DRIVEN INNOVATION PROJECT BY PPRN Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 1 Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia

CHALLENGES OF MALAYSIAN ECONOMY (Diego Comin, 2013) GDP Manufacturing Sector 31% - 25% (2000) (2012) Investment & Productivity -50% Compared to 1990s Malaysia has the potential for SMEs to increase their productivity and move companies up the value chain Main impediment? industry has technological knowledge gap Impact to industry Unable to adopt state of the art production methods No market for technological knowledge This makes it hard to adopt and develop frontier technologies offer new products and services enter in new geographic markets increase efficiency of production methods Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 2

How to Overcome the Knowledge Scarcity Create a knowledge-friendly ecosystem An environment where knowledge is produced and diffused from those that have it to those that need it Universities & higher education institutions Who has it Companies/Industries Who needs it Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 3

SHIFT #7 : INNOVATION ECOSYSTEM MALAYSIA ASPIRATION Innovation as a major driver of national economic growth. Incubation, development, & commercialisation of ideas Academia operating in isolation quadruple helix partnership Facilitate innovation ecosystems in selected strategic areas that are critical to the nation s economic growth. the development of University-Driven Research Demand-Driven Research Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 4

SELECTED INITIATIVE Focus on demand driven research, via PPRN to provide solutions to SMEs This is done to facilitate meeting with industries by design and no longer by chance. It is hoped that the collaboration will move the companies up the value chain and enhance the bringing of solution to the market place. Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 5

PUBLIC PUBLIC- -PRIVATE PRIVATE RESEARCH NETWORK RESEARCH NETWORK PPRN PPRN An initiative by Ministry of Education (MOE) as one of the strategies to increase productivity and strengthen Malaysian economic development through commercialization programs. innovation and 69,000 lecturers IHL resources 24,000 PhD PPRN will optimize & leverage resources and expertise available at IHLs and RIs Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 6

Scope of Projects How does it work? Product development & innovation Develop new products, services or software or parts of them for a company Innovate existing products of the company to the market need Company describes technological problems or areas where there is potential for productivity gains. Process development & innovation Implementation of a new or significantly improved production processes, delivery method or services Streamline production to make it more efficient and to make better use of state-of- art technology Develop processes to scale up production PPRN will find a team of experts/scientists that will provide/develop state of the art technology to solve problem. Value enhancement in supply chain Sourcing components Warehouse & logistic Help develop Information Systems solutions Company and PPRN will co-finance development cost. Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 7

Application criteria Open to all Malaysian Small Medium Enterprise companies (SME) 1 Projects need to be technological in nature 2 Projects that essentially involve management or marketing solutions will not be considered 3 Projects that essentially require the purchase of off-the-shelve solutions will not be considered 4 Product/services must be at commercial stage i.e ready in market but may need improvement in term of process or product itself 5 No field restriction for projects 6 Priority to project that can be completed within 6 to 12 months 7 Companies should be ready to co-finance their project 8 8 Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia

Project not within PPRNs scope 1. Explorative/fundamental research e.g. - to study on the best raw material that are suitable for activated carbon using a specific technology that yet to develop - to study and develop materials to be used for the filtration media other than advances technology membrane 2. Solutions that not technological in nature e.g. - to improve texture of cakes, cookies or any product, services that required skills/training 3. Management or marketing solutions e.g. how to use/utilize social media for marketing or to develop database for company human resource management 4. To purchase off-the-shelve solutions/ already available in market e.g. ready made machines, existing software or services like Microsoft Softwares, AutoCAD etc. 5. Certification for product/services e.g. HALAL, SIRIM, nutrition analysis etc 6. Application for facilities e.g. request to convert normal room to cold storage room for products 9 Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia

Funding mechanism Commitment PPRN:company* Component for PPRN funding Matching grant Research materials /prototyping/testing 90:10 70% Up to RM50k / project PPRN micro enterprise 70:30 small 25% Research materials/tools Facilities Infrastructure In-kind Researchers company 50:50 medium Institutions 5% * Size of company is based on new definition of SME by SME Corp Malaysia which in effect from 1 January 2014 Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 10

Guideline for new SME definition (in effect from 1 January 2014) SECTOR SME MICRO SMALL MEDIUM Manufacturing <RM50 million <200 employees <RM300,000 <5 employees RM300,000-<RM15 million 5-75 employees RM15 million- <RM50 million 75-200 employees Services <RM20 million <75 employees <RM300,000 <5 employees RM300,000-<RM3 million 5-30 employees RM3 million - <RM20 million 30-75 employees Primary Agriculture <RM20 million <75 employees <RM300,000 <5 employees RM300,000-<RM3 million 5-30 employees RM3 million - <RM20 million 30-75 employees Construction <RM20 million <75 employees <RM300,000 <5 employees RM300,000-<RM3 million 5-30 employees RM3 million - <RM20 million 30-75 employees Mining & quarrying <RM20 million <75 employees <RM300,000 <5 employees RM300,000-<RM3 million 5-30 employees RM3 million - <RM20 million 30-75 employees NOTE: A business will be deemed as an SME if it meets either one of the two specified qualifying criteria, namely sales turnover or full-time employees, whichever is lower. SOURCE : SME Corp. Malaysia, October 2013 Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 11

Incentive for Researchers Working experience with industry - Criteria for promotion 25% professional fee - Of total PPRN funding Management of fund Project monitoring Researcher Interim & Final project report Company Productivity achievement Will be paid through research Institution Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 12

PILOT STUDIES Take-off Innovation Project 16 - 18 Jun 2014 KPM-MTDC 2 pilot projects Demand-Driven Innovation Project (DDIP) by PPRN 17 - 20 November 2014 KPM-MTDC- SME Corp-PUNB Conducted in 2 pilot projects: Findings: Malaysian companies try hard to improve their technology Can benefit from external help Much research/knowledge is sitting in universities and research institutes Can be used to provide solutions to companies technological problems This is cheap and efficient Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 13

PPRN PROJECT 2015 (i) 341 companies have been registered for application (ii) 154 projects have been successfully matched - 98 companies - 21 IPT & RI (17 IPTA & 4 IPTS) (iii) 50 projects not within the scope of PPRN *Number of project is based on the approved technological issues. Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 14

Differences between Fraunhofer and Steinbeis Models PPRN taps on a great pool of local knowledge PPRN relies mainly on technology diffusion but can lead to innovations Fraunhofer almost exclusively innovates Steinbeis acts more like management consultant PPRN covers all economic sectors/areas not just a few PPRN focusing on short and medium term project PPRN is designed thinking about Malaysia s needs and works following Malaysian rules PPRN provides platform of bidding Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 15

CONCLUSION PPRN can solve technological problems of many Malaysian companies Facilitate their move up the value chain This is a more efficient way to bring knowledge to society DISTINCT from product development Tap on large existing pockets of knowledge Align incentives of researchers to conduct more applied research in the fields that are more helpful to companies; to focus on market demand Increase demand for skilled and semi-skilled workers Make growth more inclusive Sharing Knowledge, Innovative Solutions For Malaysia, By Malaysian, In Malaysia 16