Attaining High Income Through Innovation


Lee Tatt Boon explains the role of Intellectual Property in the Economic Transformation Programme


These days the Economic Transformation Programme is an extremely hot topic in the various media and seems to enjoy coverage almost every other day of the week. While some of us have some idea what it is about, others may not be as well informed about it, especially the part played and contributed by Intellectual Property ("IP").

So, what is the Economic Transformation Programme or in short, the ETP? The ETP is a new government programme that seeks to transform Malaysia into a high-income economy. Under the ETP, the gross national income per capita income is expected to increase from USD6,700/- (RM23,700/-) in 2009 to USD15,000/- (RM48,000/-) by the year 2020.

The USD15,000/- target is the high-income threshold set by the Malaysian Government based on the World Bank's current definition of high-income. The ETP was introduced in September 2010 and is part of the Government’s Agenda which includes 1Malaysia, the Government Transformation Programme, the New Economic Model; and the 10th Malaysia Plan.

To drive the ETP with the view of increasing the Gross National Income (GNI) to RM1.6 trillion, the Malaysian Government has identified 12 key national economic areas (NKEAs) which are expected to make significant contributions to Malaysia’s economic performance.

The 12 NKEAs are (1) Oil, Gas and Energy; (2) Palm Oil; (3) Financial Services; (4) Tourism; (5) Business Services; (6) Electrical and Electronics; (7) Wholesale and Retail; (8) Education; (9) Healthcare; (10) Communication Content and Infrastructure; (11) Agriculture; and (12) Greater Kuala Lumpur/Klang Valley.



In 5 out of the 12 NKEAs, innovation and research and development (R&D) seem to be the key success factor. For example in the Oil, Gas and Energy sector, the ETP aims to diversify the sector and ensure that the most innovative methods and technologies such as enhanced oil recovery (EOR) techniques are used to improve oil recovery from mature oil fields.

The Government also seeks expertise from specialist small field operators to exploit small or marginal fields that have less than 30 million barrels of recoverable oil.

Within the same sector, the ETP encourages the growth of alternative energy sources such as solar, nuclear and hydro power to overcome the decline in domestic natural gas production. Innovation and R&D will invariably be involved in such activities.

In the Oil Palm sector, the ETP is focused on improving upstream productivity and exploiting untapped downstream potential through R&D and acquisition of new foreign technologies.

From the examples of the 2 sectors mentioned, innovation through R&D is one of the critical factors to move up the economic value chain and great emphasis is placed on innovation and R&D. Innovation and R&D are intellectual property and hence the role played by IP in the ETP is extremely significant.



In recognition of the importance of IP in relation to the ETP, the Government introduced several measures to ensure that the IP-related NKEAs succeed in their contribution to transform Malaysia into a high-income economy.

For one, the Government introduced the Agensi Inovasi Malaysia Act 2010 (Malaysia Innovation Agency Act 2010) (the "Act") with the avowed aim of stimulating and developing the innovation eco-system in Malaysia. The Act came into force on 15 April 2011.

The Act establishes a statutory body, Agensi Inovasi Malaysia (Malaysia Innovation Agency) ("AIM"), which is entrusted with the responsibility to formulate national policies, strategies and directions relating to innovation.


The functions of AIM include:

  • organizing, cooperating and coordinating the performance of activities with the public and private sector to stimulate innovation in Malaysia;
  • promoting and facilitating activities and initiatives by the public and private sector in relation to innovation;
  • promoting the culture of innovation in the public and private and education sectors in Malaysia; and
  • advising the Government in matters relating to innovation.


For a start, AIM is tasked with the responsibility of creating the National Intellectual Property Central Depository, a register of all IP which materialise from any research finding or project, whether fully or partly funded by the Government. The database includes all existing IP, whether or not registered under any written law. This database is in addition to the patent database currently maintained by MyIPO.

The public and investors, whether foreign or local, will be given access to the IP stored in the National Intellectual Property Central Depository to enable them to learn about the inventions and innovations and to decide whether or not to invest in or to commercialise any of those IP.

The Act establishes an Innovation Fund which is to be administered by AIM. The Innovation Fund is to be used solely for the purposes of research activities and initiatives relating to innovation, including funding of selected innovation determined by AIM.

AIM has the power under the Act to acquire IP funded by the government or privately owned and to promote, develop and commercialise any of the IP registered with the central depository, subject in each case, to the consent of the IP owner.

In addition, AIM also has the power to appoint innovation ambassadors and agents, establish companies and to invest and borrow. The exercise of its powers of investment is subject to the approval of the Finance Minister whilst its borrowing powers may only be exercised with the approval of the Prime Minister and the Finance Minister.

The Act also confers the power on AIM to endorse, by way of certification, any product or service which qualifies as an innovative product or service in accordance with the criteria established by AIM. The duration of each certification is limited to a period of 2 years.



As a further initiative to promote the success of the ETP, the Malaysian Government is in the midst of drafting the National Innovation Policy, which amongst others will include:

  • regulating and standardizing the practice of IP agents;
  • reducing the costs of filing and maintaining of IP;
  • streamlining and simplifying the administration and management of an IP portfolio;
  • creating better awareness amongst universities, research institutions and the private sector of the protection, commercialisation and exploitation of IP;
  • changing the mindset of the people that innovation is not rocket science and creating a culture of innovation;
  • encouraging more filings of local IP;
  • establishing a one stop search engine that would facilitate prior art and patent search whereby applicants can check whether similar inventions have been filed before, locally or internationally; and
  • collaborating with other government or semi-government institutions, such as the Malaysian Industrial Development Authority (to be renamed Malaysian Investment Development Authority) and the Malaysian Biotechnology Corporation Sdn Bhd, in providing funding.


From the above, it can be seen that the success of the ETP to a large extent, rides on IP which has been recognised by the Malaysian Government as a significant source of comparative advantage of business and a major driver to transform Malaysia into a high-income economy.


LEE TATT BOON ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )



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