Malaysia Outlines Aggressive S&T Efforts in 2005 Budget

Seekers for evidence of the increasingly global nature of competition on the research and innovation levels need look no further than some recent announcements stemming from Malaysia. As part of its 2005 budget plan, the Malaysian government aims to create a new matching grant program for private R&D in January, triple financial support for its Small and Medium-sized Industry Fund, encourage government-linked companies to investment up to 10 percent of profits into research efforts over the next five years, and increase government support for research through the Ministry of Science, Technology and Innovations.

The economic development component of the Ninth Malaysian Plan, introduced by Prime Minister Dato’ Seri Abdullah Ahmad Badawi on Sept. 10, outlines several significant investments and initiatives. Highlights include:

• Targeting information and communications technologies (ICT), with a goal of creating 100,000 high value-added jobs in multimedia alone. "Various measures will be implemented to develop new sources of growth in the ICT sector, including training skilled manpower, developing technopreneurs, increasing international promotions and providing specific incentives to investors."
• Asking the legislature to allow 100 percent foreign ownership in venture capital companies to increase funding and expertise to promote investments in the ICT sector;
• Tripling the Small and Medium Industry Fund 2 from RM 1.5 billion to RM 4.5 billion (approx. $1.2 billion US) for "soft loans and matching grants" to assist small and medium enterprises (SME) to increase technological capability, market penetration and training;
• Increasing the New Entrepreneurs Fund 2 by RM 550 million to RM 2 billion (approx. $526 million US);
• Establishing a National Innovation Council to help refocus government and industrial R&D toward more advanced and commercializable technologies in four main areas: biotechnology, ICT, advanced materials and advanced manufacturing;
• Adding additional incentives to encourage commercialization of public sector research through royality sharing, equity ownership, increased flexibility in industry-partnered research, and extending service after compulsory retirement; and,
• Offering a 70 percent tax credit for equity investment in emerging tech firms.

[Note: For comparison, Malaysia has a population of about 25 million, roughly one-twelfth the size of the U.S. On a per capita equivalency basis, the U.S. government investment would be a $6.3 billion new entrepreneur fund.]

An English translation of the Prime Minister's Budget speech is available at: http://www.pmo.gov.my/WebNotesApp/PMMain.nsf/hv_PMKiniSemasaNew/962E479E589E396B48256F0C0001BD31