A number of strategies have been introduced in recent years which aim to foster innovation, highlighting that this is a priority. Recent programmes include the National Innovation Strategy (2010); Digital Malaysia (2011); and the National Science, Technology and Innovation Policy (2013).

The Global Science and Innovation Advisory Council was set up in 2011 to improve and optimise Malaysia’s capabilities within science and innovation, chaired by the Prime Minister.

A few standout programmes include the National Corporate Innovation Index; the Magic Corporate Entrepreneurship Responsibility Circle; the Digital Free Trade Zone; and High Impact Programme 2.

Significant resources have been set aside for initiatives to develop ‘human capital’ - i.e. the education and skills of Malaysian citizens.

In small and medium-sized businesses:

• In 2017, the Government provided funding of RM137.7 million to develop human capital within small businesses.

In higher education:

• Implementation of the National Higher Education Strategic Plan (NHESP), aimed at widening access and improving the quality of education, including research and innovation.
• MyBrain15 – Funding support focused on creating 100,000 high-calibre graduates (with Masters and PhDs) by 2023.

In science, technology and innovation:

• The establishment of Malaysia’s first National Science, Technology, Engineering and Mathematics (STEM) Centre (announced in 2018), to produce more teachers who are passionate about these subjects and encourage more students into STEM subjects and professions.

Funds support the entire breadth of the innovation process, from research and seed funding to commercialisation and scaling.

A number of funds and initiatives have also been launched specifically to foster innovation, including a five-year tax exemption for venture capital (VC) companies; the Business Growth Fund – RM150 million for public sector research and tax deductions for R&D activities for the private sector; TechnoFund; InnoFund; and CIP.

In October 2014, 1DANA launched as a one-stop portal for all grants and funding offered by the Government for research, development, commercialisation and innovation, under JKPDA, which aims to streamline the funding landscape and reduce duplication.

Malaysia is the first ASEAN (Association of Southeast Asian Nations) country to roll out a regulatory framework to facilitate equity crowdfunding: announced in 2016, six peer-to-peer (P2P) financing platform operators were launched to widen funding avenues for small to medium-sized businesses. The platforms had in 2018 raised RM12.6 million and funded 19 companies.

Meanwhile, Bursa Malaysia – the Malaysian National Stock Exchange – launched the Leading Entrepreneur Accelerator Platform (LEAP) Market, the first of its kind among ASEAN countries, a stock exchange platform aimed at increasing funding for small and medium-sized companies from the capital market.

• Many initiatives have launched to boost economic growth, principally through attracting foreign direct investment (FDI) and developing small and medium-sized businesses. For example:
• A tax exemption for multinational corporations (MNCs) in strategic, business or shared services to set up regional hubs in Malaysia.
• The SME Masterplan (2012-2020), which aims to boost the growth and performance of small businesses, raising their contribution to GDP to 41 per cent by 2020. (SMEs make up 98.5% of businesses in Malaysia.)

Regulation has not always kept up with the pace of innovation, and there are unclear regulations in some emerging areas. Regulators are sometimes slow and hesitant to design standards to embrace emerging trends as they permeate various industries (whether cryptocurrencies such as Bitcoin, ride-hailing apps like Uber, or crowdfunding).

However, new policies have been designed to spur the growth of new industries/startups, such as the aforementioned ‘National Regulatory Sandbox’ – which allows innovators to test their products and ideas in a safe and conducive environment.

The sandbox aims to facilitate the creation and commercialisation of startups in five key sectors: smart cities, agrotech, digital health, clean energy and mobility.

Efforts have been made to strengthen connections with the global ecosystem, from academia, the public sector and private businesses. For example:

• Global Science and Innovation Advisory Council – enhancing strategic international alliances.
• UK-Malaysia collaboration via the Newton Fund.
• MaGIC’s Corporate Entrepreneurship Responsibility (CER) platform, an initiative to facilitate greater corporate and private sector involvement to develop the entrepreneurship ecosystem.