- Political patronage, increasing government hand in private business stifling SMEs
- Universities should conduct market analysis for relevancey before starting new research
THERE are two ecosystems for private businesses in Malaysia: One with a social agenda defined by specific exclusionary governmental policies, while the other is for “everyone else,” according to a panellist at a discussion hosted by Steinbeis Malaysia and Digital News Asia (DNA).
This has made the Malaysian business landscape an uneven playing field, argued Alliance Cosmetics Sdn Bhd founder and chief executive officer Tan Thiam Hock.
“From the macro viewpoint, small and medium enterprises (SMEs) are the backbone of a country, and it’s the same for Malaysia where we have 400,000 to 500,000 SMEs,” he said.
“But it’s an uneven playing field as government is involved in private business. This has led to people linked to the elites investing in large private corporations," Tan contends, with the consequence that, "This has forced those who aren’t connected fighting over the small economy pies that are left behind,” he forcefully argued in the roundtable discussion titled What’s Choking The Road To Success?, jointly hosted by Steinbeis Malaysia Foundation and DNA at Universiti Sains Malaysia (USM) in Penang on May 25.
The session, moderated by DNA founder and chief executive officer (CEO) Karamjit Singh, included Vigilenz Medical Devices Sdn Bhd CEO S. Choudhury, Steinbeis Malaysia executive director Dr Abdul Reezal Latif, USM vice chancellor Professor Dr Omar Osman, and Pemandu and palm oil and rubber national key economic areas (NKEA) director Ku Kok Peng.
Pemandu is the Performance Management and Delivery Unit of the Prime Minister’s Department.
Steinbeis Malaysia’s Reezal concurred that government has become more involved in private business, saying that the ecosystem has to be a level playing field in order for private businesses, especially SMEs, to have a chance to thrive.
He added that Steinbeis Malaysia is in the midst of carrying out several projects to assist SMEs in obtaining certification for their products or services.
“We’re also about to embark on this idea of an ITC or Industrial Transfer Centre, something like Malaysia’s Urban Transformation Centre (UTC),” said Reezal.
However, Pemandu’s Ku claimed that politics aside, the Malaysian Government is trying to make things as “transparent as possible.”
“Basically, institutionalising things is how we do it. It’s not 100% perfect but we’re working on it,” he added.
Instilling entrepreneurship into academia
Speaking on bridging the gap between SMEs and academia, USM’s Omar Osman (pic above, holding the mic) said universities should work together with businesses to ‘commercialise’ research graduates.
“We’re producing 500 PhDs per year. If we don’t help turn them into entrepreneurs, there will be an oversupply of PhD graduates.
“We need more people like Reezal, who wasn’t afraid to fail in his own entrepreneurial journey,” said Omar.
“Our research graduates are as good as those in any other country. However, it is also important for society to not ostracise or stigmatise failure,” he added.
Not surprisingly, Reezal agreed, adding that universities should do an analysis on what the market needs before embarking on new research projects.
“There are many products that come from universities, but you need to see if they are needed by the market,” he said.
Arguing that Malaysia spends very little on research and development (R&D), Ku said the public and private sectors need to work together more deeply to level up R&D spending in the country.
“In 2012, Malaysia spent 1.1% of its gross domestic product (GDP) on R&D. A typical high-income country spends 2.4% while a middle-income nation spends 1.2%. This means we actually spend less than a typical middle-income country.
“But fortunately for us, the private share in R&D is 64%, which isn’t too shabby because even in South Korea, it’s about 70%,” he said.
Ku added that Agensi Innovasi Malaysia (AIM) set up a special committee – Jawatan Kuasa Pelaburan Dana Awama (JKPDA) – in December 2012 to oversee R&D funding in Malaysia.
“The purpose of this committee is to streamline the funding landscape so as to avoid the duplication of R&D project funding.
“Within these three years, RM1.3 billion of public funds has been saved,” he claimed.
Finally, Vigilenz Medical’s Choudhury (pic) said that determination is the key when it comes to being an entrepreneur.
“I think most Malaysians have that kind of determination, and universities play a great role in cultivating such determination,” he said.
“Because, apart from personality, it’s about the thinking process,” he added.
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