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News & Events

[ 28-03-2014 ]
New institution to push business innovation

KUALA LUMPUR: The government is planning to establish an institution to encourage greater innovation among local businesses, especially small and medium enterprises (SMEs), as well as to enhance their productivity, said Prime Minister Datuk Seri Mohd Najib Abdul Razak.

During the panel discussion at National Economic Summit and Dialogue here last Friday, Najib said local SMEs are not acting as fast as they should, as the increase in business productivity was only at 2%.

"In another word, Malaysian businesses are not innovating. It is not that they don't want to, but more of they have no idea what to do to innovate," said Najib, acknowledging that this as one of the major challenges for local economy.

He cited Germany as an example, where an institution was set up to undertake innovations on behalf of the companies, including research and developments, new business processes or develop technology to make the business more productive and competitive. "This will be our next focus. We are looking at establishing a similar institution here so that the Malaysian businesses can refer to this institution for innovation," Najib said.

"In fact, Sirim Bhd is supposed to do this, and they are doing it, but not to the extent that makes a huge difference as the numbers are not positive yet," he added.

Najib was responding to a question from a panelist, Tan Sri Dr Fong Chan Onn, former dean of the Economics Faculty, University of Malaya. The prime minister further said that the government is also looking at enhancing the contribution of SMEs to the national economy by setting up a task force council, assisted by Bank Negara Malaysia and SME Corporation.

On another note, Fong said it is difficult for Malaysia to compete with other financial hubs such as London, New York, Hong Kong and Singapore, as well as the high-tech economic centres including Boston, the Silicon Valley and Cambridge Cluster. Hence, the country should position itself as a hubs for oil and gas, Islamic finance and healthcare sectors.

Fong urged government-linked companies (GLCs) not to overcrowd the local market, as there is still room for entrepreneurs in Malaysia. For instance, he said, the Malaysian-founded JobStreet Corp Bhd, which was listed eight years ago, is now selling its online job portal business to Australia's SEEK Ltd for RM1.7 billion.

"Malaysia is not short of entrepreneurs. We don't expect you (the GLCs) to help them, but please do not overcrowd them," said Fong.