KUALA LUMPUR: Malaysian companies must innovate and increase their value proposition through research and development (R&D) to compete in the market, as only 3.5 per cent of Malaysian firms have introduced new products in the last three years, said Malaysian Investment Development Authority (MIDA).
Its executive director strategic planning (manufacturing) Choo Wai Meng, citing The World Bank Report titled Aiming High – Navigating the Next Stage of Malaysia’s Development released in February, said the figure was significantly lower than the regional comparatus of 20 per cent and aspirational comparatus of 33 per cent.
“Malaysian firms are not innovating using R&D like in the top economies and that makes us vulnerable to technological systematic shifts that affects the global market,“ she said in her closing remarks during the R&D Business (RD4B) programme organised by MIDA today.
She also stated that Malaysia may face creative disruptions because the country has nearly exhausted its growth potential due to capital accumulation, and that failure to innovate new products will result in its products being unable to compete due to market saturation.
“Malaysian companies stay as imitators in the long run would have consequences and Malaysian companies cannot compete on low-cost factors anymore, it must turn to knowledge and innovation-based business growth.
“Through R&D, it could nurture a knowledge-based economy, which is driven by intellectual assets that provides economic returns, and it is hard to achieve innovation-based business growth impact if it is dependent on foreign technologies and expertise,“ she said.
Meanwhile, The World Bank report also revealed that in recent years, while R&D expenditure in proportion to gross domestic product (GDP) has been increasing, it is still considerably lower than in transitional and aspirational countries.
In Malaysia, most R&D activities are conducted by business entities rather than research institutes or higher education institutions, with business R&D in proportion to GDP higher than that of transitional comparators but lower than that of the aspirational comparators. — Bernama