Dr Hii Hnn-Hui 10th September 2003 Diagnosis and Prescriptions of National Innovation System: Case of Malaysia Dr Hii Hnn-Hui 10th September 2003 1

Agenda Modest Commercialisation Rates: Root Causes Key Findings of Commercialisation Survey Current Gaps in the National Innovation System Strategic Roadmap: Way Forward for Malaysia

Commercialization Activity in Universities Commercialisation is on the Rise in Universities.. Commercialization Activity in Universities MIT University of Texas University of Alberta National University of Singapore Considered one of the most successful universities globally for commercialization technologies, it annually churns out 400-500 new inventions 100 licenses 25 start-ups Earmarked around USD 14M to rev up its commercialization efforts Since 1987 the university has spawned 34 start-ups Licenses more than 89 technologies to a variety of companies One of the most successful universities in Canada for commercializing technology NUS Enterprise was established in 2001 to commercialize university research 300 patents have been granted to date More than 100 licenses issued Generated more than USD 21M in annual licensing revenues Generated USD 2.2M in annual licensing revenues Generated USD 3.1M in annual licensing revenues Generated USD 700K in annual licensing revenues Overall, Technology Commercialization Contributed More Than USD 40 Billion And Directly Supported 250,000 Jobs In North America Source: Association of university technology managers survey; NUS enterprise brochure

Malaysia’s Commercialisation Rate Still Modest Strong interest in commercialization among Malaysian researchers… …has yet to translate into high results Percent of respondents answering yes in the National Survey Of Public Research Commercialization conducted by MOSTE in 2003 Low number of patents… Malaysia Australia US S. Korea 82% Patent applications per million population 8.8 546 623 1561 80% 78% Modest commercialization success… Only 5.1% of 5232 R&D projects implemented during the 7th and 8th Malaysian plan were considered commercialized However, the commercialization has not resulted in any significant licensing revenues for the universities No R&D output from universities/institutes has been commercialized yet on a national scale “ I would like to learn more about how I can commercialize my findings “Research leading to commercialization is important” “I should generate tangible outputs from public research” Source: MASTIC; BDU; A.T. Kearney analysis

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

9. DIFFUSION OF NEW S&T KNOWLEDGE 8. INNOVATION INFRASTRUCTURE Root Cause Analysis #1 WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE 2. COMMERCIAL AWARENESS 4. MANPOWER 6. REWARD & INCENTIVES 8. INNOVATION INFRASTRUCTURE 10. FEASIBILITY STUDIES Funding mechanism NOT conducive to commercialisation.. 1. Lack of pre-seed funding 2. Commercial outputs not an explicit criteria in IRPA 3. Lack of accountability due to lenient progress monitoring 4. Perception that IRPA is relatively easy to get Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #2 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER Researchers not aware of the commercial potential of their findings.. 1. Commercialisation not a key concern in their work 2. Do not have a desire to pursue commercial applications 3. Do not have the requisite skill-sets for detecting a commercial opportunity 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #3 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE Lack of good Research Management practices in universities and PRIs.. 1. Shortage of commercialisation expertise 2. Shortage of Project Manager with sound commercial skills 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #4 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS Manpower constraint.. 1. Severe lack of S&T personnel, affect smooth adsorption, utilisation, generation and diffusion of innovations (15.3 S&T worker per 10,000 FY00) 2. Lack of S&T personnel with commercialisation training and exposure 3. Lack of good Technology Transfer officers in universities and PRIs WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #5 10. FEASIBILITY STUDIES Research focus mainly publications driven.. 1. Lack of commercially oriented research 2. Researchers’ duties spread over (teaching, supervision, publications etc.), not much time for commercialisation 3. “Publish or parish” culture persists 4. Interested in publications mainly 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #6 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS Lack of clear incentives and rewards to stimulate commercialisation.. 1. Pay and reward system inappropriate to stimulate creativity for research and commercialisation 2. Little incentives for commercialisation 3. Braindrain effect taking toll WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #7 10. FEASIBILITY STUDIES Paucity of networking mechanism linking the key parties together in commercialising research findings.. 1. Researchers find it hard to seek and entice collaboration partners 2. Limited links to industry 3. Poor marketing of research findings to business community 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #8 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS Innovation infrastructure suffers from systemic weakness, pockets of excellence exist.. 1. Lack of ‘Centres of Competence’ in S&T and Engineering 2. “Hardware is good, Software is modest..” WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #9 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES Limited diffusion mechanism for accelerating adoption of technologies.. 1. Lack of good Technology Transfer Agencies 2. Shortage of Technology Brokers 3. Both lacking in the market and not linked into universities and PRIs 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

8. INNOVATION INFRASTRUCTURE 9. DIFFUSION OF NEW S&T KNOWLEDGE Root Cause Analysis #10 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES Feasibility studies on marketable outputs seldom conducted.. 1. Commercial partners rarely involved in initial planning of R&D project 2. Researchers seldom conduct market feasibility studies prior to commencement of R&D 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

How do we test these hypotheses? National Survey of Public Research Commercialisation conducted in Feb-June 2003 Sample: 23 Universities and Research Institutes Objectives of Survey To determine the barriers to successful commercialisation To gather feedback on Role of Government in enhancing commercialisation

Sampling Frame

Agenda Modest Commercialisation Rates: Root Causes Key Findings of Commercialisation Survey Current Gaps in the National Innovation System Strategic Roadmap: Way Forward for Malaysia

Strong Evidence in 4 Key Factors 10. FEASIBILITY STUDIES 8. INNOVATION INFRASTRUCTURE 6. REWARD & INCENTIVES 4. MANPOWER 2. COMMERCIAL AWARENESS WHY COMMERCIALISATION OF PUBLIC RESEARCH IS MODEST IN MALAYSIA? 1. FUNDING MECHANISM 3. RESEARCH MANAGEMENT 5. RESEARCH FOCUS 7. INDUSTRY LINKAGE 9. DIFFUSION OF NEW S&T KNOWLEDGE Source : Dr H-H. HII

Key Findings #1: S&T Manpower B31: “There’s a lack of people with business building competence involved in commercialization initiatives…”. 77% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #1: S&T Manpower B29: “There needs to be a concerted effort to attract world class talents in the short and medium term to raise the standards of research in our country”. 79% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #1: S&T Manpower B30: “There needs to be a focused initiative to attract and retain overseas Malaysian S&T personnel in the long run”. 72% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #1: S&T Manpower B27: “There is a severe lack of S&T personnel with the required skills in our country”. 64% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #2: Linkages & Networking B8: “Marketing of my research findings to industry is not a requirement in my job ”. 60% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #2: Linkages & Networking B9: “Dissemination of research results in academic journal is my main purpose”. 88% Strongly Disagree/Disagree (-) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #2: Linkages & Networking B32: “It is difficult to find partners for collaborative research ”. 51% Strongly Agree/Agree (~~) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #3 Infrastructure B21: “We need to build a critical mass of Center of Excellence in our country to raise the productivity and quality of our research outputs.” 91% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #3 Infrastructure B20: “There is a need to forge industrial clusters in Malaysia to generate systemic networking leading to innovations.” 88% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #3 Infrastructure B22: “In terms of R&D and Commercialization infrastructure, we have good hardware (institutions & funding mechanisms) but poor software (culture & manpower quality).” 70% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #4 Diffusion of S&T Knowledge B26: “We do not know what technology transfer mechanisms are available.” 51% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #4 Diffusion of S&T Knowledge B25: “We do not have good access to Technology Transfer organizations.” 62% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Findings #4 Diffusion of S&T Knowledge B24: “There is a lack of good Technology Brokers in the market.” 68% Strongly Agree/Agree (+) Source : Analysis of Questionnaire Responses, Dr H-H. HII

Key Challenges Faced in Commercialisation Top 4 Challenges: 1. Finding the right management team; 2. Access to funding; 3. Support for business plan and marketing plan; 4. Market penetration

Intensity of Commercialisation

Researchers’ Feedback on Commercialisation

Agenda Modest Commercialisation Rates: Root Causes Key Findings of Commercialisation Survey Current Gaps in the National Innovation System Strategic Roadmap: Way Forward for Malaysia

Simplified Commercialisation Process National Innovation System Output Infrastructure Funding Manpower Patents Licenses Spin-offs Input Universities Industry IP Lawyers Government Policy

Malaysia’s National Innovation System POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS

Malaysia’s National Innovation System POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Agenda Modest Commercialisation Rates: Root Causes Key Findings of Commercialisation Survey Current Gaps in the National Innovation System Strategic Roadmap: Way Forward for Malaysia

Strategic Roadmap POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER 1.Formation of One-stop commercialisation agency within MOSTE to facilitate transfer of prototype technologies to Malaysian industry 2.Expand existing initiatives aimed at industry-academia collaboration #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Strategic Roadmap POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER Conduct Annual “Research Assessment Exercise” to monitor and upgrade the quality of R&D #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Strategic Roadmap POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER 1.Attract high-quality S&T manpower regardless of their nationality 2.Look into “dual ladder” career for academics showing great research potential #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Strategic Roadmap POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER 1.Harmonise the national guidelines on Intellectual Property 2.Enhance efficiency of Patent Office by increasing quality Patent Officers and Examiners #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Strategic Roadmap POLICY INFRASTR. MID-STREAM R&D COMMERCIALISATION Basic Research Applied Research Pdt / Proc Dev. Pilot Production Mfg. Technical Services Physical / Manpower Policy Tools Focus UNIVERSITIES NATIONAL INSTITUTES (mission oriented) MIMOS / SIRIM / MPOB / IMR / MINT.. TECHNOLOGY PARKS / INCUBATORS UKM-MTDC, UM-MTDC, UPM-MTDC, UTM-MTDC, UUM-MTDC, MSC INCUBATOR ETC.. STATE PARTICIPATED INDUSTRIES INDUSTRIAL COMPANIES MNCs IP LAWYERS FINANCIERS RESEARCH Instns. MOE MOSTE MITI MTDC MiGHT MDC SMIDEC ASSOCS. INVESTORS PATENT OFFICE BANKS ANGELS #2. RESEARCH QUALITY #3. S&T MANPOWER Create fund for Pre-seed stage activities to support: proof-of concept, upscaling, prototyping, market surveysm, IP assessments and so forth. #1. INDUSTRY-ACADEMIA-GOVT. LINKAGE #4. IP POLICY #5. SEED FUNDING

Business Development Unit terima kasih ! thank you Dr Hii Hnn-Hui Business Development Unit Ministry of Science, Technology and the Environment, Malaysia Tel: 88858095 Email: hhh@moste.gov.my 1