Firms In E E Sector Of Penang Economics Essay

Invention is the successful development of new thoughts, creativeness and makes profitableness. Innovation plays an of import function in many sectors. Innovation brings new, higher quality of goods and services which lead the consumer to a higher living criterion. To houses, invention helps interrupt into new markets, better the bing markets, and raises returns for investors and stockholders. [ 1 ] Besides that, invention may make new types of occupations and brings more chances for the employees. To the state, invention may impact the growing of economic system and lead to long term prosperity.

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Malaya is considered as one of the low invention state. Malaysia is still under the transforming period and does non hold equal figure of skilled human capital. To enlarge talent pool, authorities of Malaysia has made a batch of attempt on it. For illustration, the development of 10th Malaysia Plan, the key is to switching the economic system towards a high-income economic system with focal point on invention, creativeness and productiveness. Therefore, Malaysia have outgo ( RM Million ) is 0.6 % of its GDP on R & A ; D in twelvemonth 2009. [ 2 ] This is still low in comparing to other state such as United States, Korea, Japan and Taiwan. For the Global Innovation Index 2009 to 2010 by INSEAD, Malaysia ‘s overall is ranked at 28 out of 132 states. [ 2 ]

Section 2: Current Issues

Incidence of invention is low in Malaysia as compared to what it should be based on its degree of development. Throughout the revolution of clip, Malaysia began its passage into a middle-income state by bit by bit broadening its economic science activities. During twelvemonth 1980s and 1990s, it transitioned from an agricultural based economic system into one of the universe taking electronics exporters. [ 3 ] The sector was the primary driver of export growing during the passage period and is presently Malaysia ‘s prima industrial sector in footings of investing, value added, exports and employment as shown in the figure 1 below. There is a demand to switch the resources based economic system and production based economic system to sustainable economic where cognition go the impulsive force for economic growing. Harmonizing to Ministry of Science, Technology and Innovation ( MOSTI, 2007 ) , the state has to travel into invention base economic system in order to travel higher.

Policies to develop and beef up Malaysia ‘s invention are orchestrated around Vision 2020, which serves as the state ‘s roadmap for economic development. There are a few establishments in Malaysia that are related to implement invention enterprises such as Malaysia Science, Technology, and Innovation Ministry ( MOSTI ) , Ministry of International Trade and Industry ( MITI ) , Ministry of Finance ( MOF ) , Ministry of higher Education ( MOHE ) and Small and Medium Enterprises ( SME ) Corporation. [ 4 ]

For case, the Multimedia Super Corridor ( MSC ) is a outstanding enterprise being taken by Malaysia to develop a world-class IT industry. The MSC is Malaysia ‘s flagship scientific discipline and hi-tech research undertaking. While Malaysia faces tremendous challenges in going a high-income state by 2020, the state can construct on its built-in strength in its resource base, first-class substructure and diligent work force to drive the state frontward. [ 5 ]

In add-on to the steady addition in investing into R & A ; D Fieldss by the public and private sectors, the national degree of invention remains desiring. However, study shows that the major failing of the invention system is the deficit of technically skilled manpower engages in R & A ; D, although the standard indexs of the authorities ‘s committedness towards human capital attempts, such as the proportion of entire outgo incurred on instruction, compare really favourably with Singapore, Japan and USA. [ 3 ] Besides, Malaysia does non hold any specific instruments to engineer positive spillovers from the legion multi-national companies ( MNCs ) that operate in its fabrication sector. This is likely due to Malaysia does non hold a strong technology-based SME sector that can be a stable beginning of supply. Based on the chart 9 below, it can be observed that the sum of Malaysia ‘s Outgo on R & A ; D from the 5th Malaysia Plan to the 9th Malaysia Plan. It can be seen that there is a rapid addition from twelvemonth to twelvemonth to bespeak the finding of the authorities to force this state to a higher degree.

One of the factors that control that degree of disbursement in R & A ; D is determined by the volume of research. Limited figure of researches straight reflects weak demand for R & A ; D disbursement. R & A ; D outgo as per centum of GDP in Malaysia is comparatively low compared to Japan, South Korea, Singapore and Hong Kong. Besides outgo, the sum of R & A ; D research workers in Malaysia besides is a cardinal point to better invention. Increasing the figure of R & A ; D research workers is a large challenge and tougher than pumping in more R & A ; D disbursement since developing research accomplishments and capablenesss takes much longer clip. A balance betterment of the support and R & A ; D research workers is important else it will take to uneffective ingestion of the disbursement and low value merchandise development. [ 3 ]

Harmonizing to the Malayan Economic Planning Unit ( EPU ) , Malaysia ‘s gross outgo on R & A ; D as a proportion of GDP in 2006 was 0.64 per centum although it targets to increase the gross outgo to 1.5 per centum by 2010. Singapore, on the other manus, spent 2.31 per centum of its GDP on R & A ; D in2006, and it is aiming 3.0 per centum of its GDP on R & A ; D by 2010. Besides, the figures for Japan in 2006 were 3.32, South Korea ( 3.22 ) , Taiwan ( 2.58 ) and China ( 1.42 ) severally. [ 3 ] These figures show the low invention degree of Malaysia as compared with other high invention states.

Section 3: Case Surveies

( I ) Firms in E & A ; E Sector of Penang Cluster-Malaysia

Penang adopted a scheme like industrial bunch in 1970s has been harvesting economic benefits particularly the electrical and electronics ( E & A ; E ) sector. This invention system involved assorted histrions at regional or national aid invention related activities in houses. The growing of the E & A ; E in Penang as a bunch can be summarized in different stages. The first stage was in 1970s when it started off with the acceptance of export-oriented fabrication following the Investment Incentives Act of 1968 and the FTZ Act of 1971. [ 6 ] With the formal gap of export processing zones since 1972 export-oriented houses began to relocate in big Numberss here. [ 6 ] In add-on to little domestic market, the promotional function of UNIDO and World Bank which encouraged developing economic systems to take advantage of the dispersion attempts of multinationals was besides of import. [ 6 ] Besides that, Malayan Government along with fiscal inducements offered to pull MNCs to put up mill in Penang. Other than the attractive investing of Free Trade Zones and Licensed Manufacturing Warehouse, Malayan Government besides offered a particular 10 old ages pioneer position inducement to investors in electronics industry.

There were jobs occurred after some growing in the mid 1980s. The 2nd stage development for Penang started when IMP1 was launched and the export treating zones regained active publicity from authorities. [ 6 ] In 1990s, after the Asiatic Financial Crisis, some of the TNCs move out of bunch. Therefore, authorities promote with inducements and plan to retain MNCs. Besides that, 9th Malaysia program launched to concentrate more in developing specific bunch based planning for greening of the industry.

After gone through the Asiatic Financial Crisis, there comes the competition from other regional such as China that has strong bases of E & A ; E fabrication companies. To work out the job, authorities decided to ‘upgrading ‘ the houses up to the value concatenation and innovate. Based on the MIDA study, the investing in sanctioned fabrication in E & A ; E industry Malaysia 2008, the domestic investing is RM440.9 million and foreign investing is RM17332.1 million. The overall investing from twelvemonth to twelvemonth is increasing until 2009- 2010, the growing of E & A ; E is slowed. Several indexs considered for acquiring an thought of current degree of introducing capableness. The investings in R & A ; D and Numberss of scientists or research workers are of import to acquire an thought of support invention.

( two ) Outgo in R & A ; D

A simple study focal point on the technological signifier of invention is done to look into the consciousness of the invention degree in Malaysia among pupils. The authorities function in developing advanced coevalss is indispensable particularly in country of research and development. Presently there is a displacement toward demand led research which is by ask foring the private sectors to take part in R & A ; D at the early phases. [ 7 ] In this instance, the authorities disbursement on R & A ; D is important as it has direct affect on the registration on Science and Technology related field every bit good as the quality.

Chart 10 ( a ) ( from appendix ) shows that the national disbursement on R & A ; D is sing rapid increased since 1992. The outgo has seen a singular addition from RM550 million in 1992 to RM 2843 million in 2004. However, when the R & A ; D outgo is analyzed as the per centum of GDP, it really decreased since 2002, from the extremum of 0.69 to 0.63 in 2004 as shown in chart 10 ( B ) . The private sector remained as the chief participant in these outgos since 1996 which constituted an mean per centum of 60-70 % . [ 8 ] The R & A ; D outgo as per centum of GDP is really low as compared to other developed states such as USA ( 3.7 % ) , South Korea ( 3.2 % ) , Taiwan ( 2.4 % ) . These informations support our determination in a study where most participants found the major factor that causes low invention among Malayan is limited support. ( chart 3 from appendix )

This state of affairs is so contributed to another major failing of the state ‘s invention system – the deficit of skilled work force to prosecute in R & A ; D sector. Harmonizing to the study we have done, most of the participated technology pupils revealed that they have no purpose of prosecuting in R & A ; D field when given the opportunity. ( Chart 8 from appendix )

Section 4: Decision and Improvements

There have several Numberss of cardinal stipulations need to be satisfied so that invention can able to take topographic point. First of wholly, it required the endowment of work force, where it rests on people ‘s accomplishments and creativeness, particularly creativeness to develop new thoughts, their capacity to absorb cognition, and their entrepreneurship and accomplishment to turn thoughts into consequences. To hike up the figure of gifted work force, it required the aid from instruction system. As we know, instruction is indispensable in enabling cognition capableness to take part in the market. However, it consumes cherished clip to foster endowment. Hence, authorities ‘s bureaus have the responsible to be after scheme in promoting endowment to come and remain in Malaysia. Furthermore, in-migration and employment limitations may necessitate to be reviewed to pull immigrants. Government besides should offer returning migrators plans that welcome them and their households to remain.

Besides that, engineerings play of import function in invention, which transforming the thought into consequences. Technological development requires uninterrupted investings by technological capablenesss. There have three chief technological capablenesss which including investing, production and linkage technological capablenesss. Investing related to investing during undertaking operation, production related to treat such as quality control and merchandise and linkage related to interchange cognition and engineering between houses and other economic agents. By carry throughing technological capablenesss and good substructure, invention shall be achieved.

Government of Malaysia had taken this job by supplying fiscal support. These include Technology Acquisition Fund, Industrial R & A ; D Grant ( IGS ) , MSC R & A ; D Grant Scheme ( MGS ) , Demonstrator Application Grant Scheme ( DAGS ) , and Commercialization of Research and Development Fund ( CRDF ) . Besides that, authorities besides introduced revenue enhancement inducements to houses to promote them to set about R & A ; D activities such as Investment revenue enhancement allowance on the capital outgo incurred in in-house R & A ; D, freedom of import responsibility on machinery and equipment, stuffs, natural stuffs and constituent parts and samples used for R & A ; D intents and dual tax write-offs for disbursals incurred in sanctioned research undertakings.

In decision, authorities of Malaysia should be after more effectual schemes and policies in constructing an advanced society. As portion of citizen of Malaysia, we should hold the duty to assist our state to accomplish Vision 2020 which is portion of edifice advanced and originative state. Besides that, private sectors besides need to collaborate together with public sector particularly, so that Malaysia has the fight in the planetary market topographic point and fall ining the conference of high income state and developed state


[ 1 ] hypertext transfer protocol: // 1271308532887/mem_april2010_chapter3.pdf

[ 2 ] hypertext transfer protocol: //www.innovation

[ 3 ] Benchmarking Malaysia ‘s Innovation Capacity, 17 July 2009

[ 4 ] MOSTI- Reinventing Science, Technology and Innovation Strategies for Wealth Creation

[ 5 ] Ritchie, B.K. , Innovation systems, corporate quandary, and the formation of proficient rational capital in Malaysia, Singapore, and Thailand. International Journal of Business and Society, 2001. 2 ( 2 ) : p. 21-48.

[ 6 ] hypertext transfer protocol: // % 203.pdf

[ 7 ] hypertext transfer protocol: //


[ 8 ] MOSTI facts and figures 2006, Ministry of Science, Technology and Innovation.


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