Moving out of the middle-income trap means, among other things, building an economy that has the capacity to innovate and use innovations to compete in the market place. So being able to convert ideas into products is a key to success. What is our record in this regard?

Introduction
To reach developed nation status by 2020, the Government has projected that the country needs to grow by 6% annually. And this growth has to be productivity-driven. Not only must we be able to put bricks and mortar together, but we must also be able to work smarter and be more creative and innovative.
An innovation-driven economy must have the ability to commercialize ideas that individuals or R&D centres produce. It also must have the capacity to commercially exploit patented ideas and resources for public use.
 
Where do we stand?
The latest World Economic Forum (WEF) Global Competitiveness Report ranked Malaysia the 21st most competitive out of 142 economies it surveyed. However, in the Innovation Sophistication category, we were ranked 24th for quality of scientific research institutions, and 32nd for utility patents granted per million population.
 
In the category of Technological Readiness, we ranked 28th for firm-level technology absorption; 40th in internet users per 100 population, 60th in Internet bandwidth (Kb/s) per capita, and 62nd in Broadband internet subscriptions per 100 population.
 
Earlier this year, the Institute of Management Development (IMD) released the results of its survey of the competitiveness of 59 economies. Malaysia ranked 35th in the category of business expenditure on R&D as % of GDP; 38th in total expenditure on R&D as % of GDP; 42nd in terms of total R&D personnel nationwide in business enterprises, and 45th in terms of scientific articles published.
 
These are not impressive figures. We must improve our record in the creation and commercialization of intellectual property.
 
What do we have to do?
 
There are a number of key issues we need to address if we want to become an innovative-driven economy.

Two other observations. SMEs are often the source of a lot of good and innovative ideas, but not enough SMEs are undertaking R&D. This has to change.

Second, we also need to recognize that there is a big untapped group of budding innovators – let’s call them grassroots or garage innovators – who need and deserve professional help. We should identify them and help take them to the next level of development and commercialization. 
 
Addressing these challenges
 
The Government has taken a number of policy measures to get the economy moving in this direction. Government and GLC procurement policies, for example, are being changed to support local innovative products and services.
Universities have also been assigned the role of R&D centres to collaborate with the private sector.
 
A key move has been the establishment of Unit Inovasi Khas (UNIK) in the Prime Minister’s Office. UNIK’s mandate is to formulate policies and strategies to promote innovation in the country. With the setting up of UNIK’s implementation arm Agensi Inovasi Malaysia (AIM), we now have the institutional structure to undertake an organised and sustained programme of innovation initiatives. These initiatives are designed to improve the innovation eco-system and create New Wealth from innovation in Malaysia. 
 
Universities have a special responsibility
 
There is an expectation these days that institutions of higher learning should serve not only as centres of learning, but also as founders and incubators of ideas that can be transformed into commercially viable products. So it is not surprising to see universities forming start-up companies to market their research.
 
A number of universities and technical institutes overseas have succeeded admirably well in this regard, and can boast of being the source of an impressive list of patents, industrial designs, trademarks and copyrights.
 
But regrettably, this has not been the case in Malaysia. Only 0.5% to 0.8% of the R&D output of our universities gets commercialized, whereas in developed countries the ratio is 5% to 10%.
 
We have quite some way to go before universities here can claim to be centres of a technopreneur culture. 
 
University-Industry collaboration is key
 
In these circumstances, there is the need for intervention programmes to promote innovation-led entrepreneurship. This has to be done in a way that will have a lasting and institutionalized impact on society. The Government is banking on improved collaboration between academia and industry to identify ideas and products than can be developed and brought to market.
 
It is also putting in place a regulatory framework that will provide the funding support for these activities.
 
We are confident that these measures will produce results in the near future, and remain optimistic that we can transform Malaysia into an innovation-led economy.