Funding Your IP – some light at the end of the tunnel – Part 1

Marie Julie Wan Ullok provides some pointers on the funding available for IP development by local entrepreneurs

There is no doubt that exploiting or even creating one’s intellectual property portfolio requires substantial investment. Successful R&D projects or marketing efforts, for instance, require support in every respect, not least financially. This begs the question: where can a company, wishing to exploit an innovative idea or business plan, go to for financial assistance? What available options are there for companies wishing to exploit their IP? The Malaysian government is keen to encourage innovation in R&D projects, international competitiveness and expansion amongst local businesses. In this regard, the government has initiated numerous schemes with the intention of providing financial support to businesses with such objectives.

 

In a two-part article, the various sources of public funding will be explored. Part I of this article aims to highlight some of the available grants for such needs. Applications for such grants invariably require the fulfilment of certain criteria, and it is of the utmost importance to ensure that any such application is effective to maximise an applicant’s chances of obtaining a grant.

 

 

MOSTI - ScienceFund, TechnoFund, Enterprise Innovation Fund

The Malaysian Ministry of Science, Technology and Innovation (MOSTI) is a source of a number of grants. Applicable to the pre-R&D and R&D stages, the ScienceFund aims to generate more researching expertise within the country by supporting R&D projects which can develop new products or processes for further development and commercialisation in specific research clusters, including Information & Communication Technology (ICT), Biotechnology, Nanotechnology, Advanced Material & Manufacturing, and Alternative Energy. The amount of funding is based on the merits of each application.

 

The outcome of research with commercial potential can be considered for additional funding under the TechnoFund. This consists of two types of funds, viz. Type A: Pre-Commercialisation; and Type B: Intellectual Property (IP) Acquisition. Applicants can apply for a combination of Types A and B, or A only. Type A covers pre-commercialisation activities such as the development and market testing of commercially ready prototypes, the development of pilot plants/clinical trials, IP preparation and registration (but not maintenance), and regulatory and standard compliance. Type B, meanwhile, comprises the acquisition of IP, which includes technology transfer, for further development up to the pre-commercialisation stage. Applicants must show that their prospective IP is an outright purchase (IP licensing does not qualify) that requires further development.

 

Finally, the Enterprise Innovation Fund (EIF) aims to assist individuals, sole-proprietors, micro and small businesses to develop new or improve existing products, process or services with elements of innovation for commercialisation. The EIF is only open to Malaysian applicants, and the project sought to be funded must be undertaken in Malaysia. The maximum funding for an individual is RM20,000 for the duration of 12 months, whilst the maximum for a small enterprise is RM250,000.

 

 

 

Biotech Corp - Seed Fund, R&D Matching Fund, International Business Development Matching Fund

The Malaysian Biotechnology Corporation (Biotech Corp) is an agency under the purview of MOSTI, and is wholly owned by the Ministry of Finance Inc. The Biotech Corp is the source of three types of commercialisation grants. The Seed Fund is applicable to start-up companies and individuals or researchers who are in the early stages of setting up biotech companies. The maximum funding is RM2.5 million per company. The R&D Matching Fund, meanwhile, aims to provide matching funds for R&D projects which can develop new or improved products or processes or technologies. The maximum funding per project is RM1.0 million. Both grants must be utilised within 2 years of approval. The International Business Development Matching Fund aims to promote the expansion of BioNexus Status Companies globally. The maximum funding is RM1.25 million. The maximum disbursement period is 4 years from the date of approval.

 

MTDC - Commercialisation of Research & Development Fund, Technology Acquisition Fund

 

The Commercialisation of Research & Development Fund (CRDF) is administered by the Malaysia Technology Development Corporation (MTDC) and aims to encourage local participation in R&D and accelerate the commercialisation of R&D undertaken by local research institutes and universities. The CRDF provides partial grants for the commercialisation of qualified R&D projects ranging from 40-70% of the approved project cost, or RM2 million, whichever is lower, for prescribed activities, namely, Phase 1: Market Survey & Research; Phase 2: Product/Process Design & Development; Phase 3: Standards & Regulatory Compliance and IP Protection; Phase 4: Demonstration of Technology. The proposed activity must be for the commercialisation of tangible products which are capable of being manufactured. Further, with the exception of approved R&D companies and projects which are in joint venture with local universities, the proposed project must involve technical collaboration with local universities or research institutions.

 

Also administered by the MTDC, the Technology Acquisition Fund (TAF) facilitates the acquisition of strategic, relevant and emerging technologies by Malaysian companies in order to improve their level of technology, production processes and global competitiveness. Activities which are eligible for funding include technology licensing, the acquisition of patent rights, prototypes and design, and the engagement of foreign experts to assist the upgrading of products and processes. Further, in an effort to allow greater access to financing for women entrepreneurs, there is a specific TAF set up for women entrepreneurs.

 

 

 

SMIDEC - Market Development Programme, Grant for Product and Process Improvement, Grant for Enhancing Product Packaging, Design and Labelling Capabilities of SMEs

 

The Market Development Programme is administered by the Small and Medium Industries Development Corporation (SMIDEC), a major governmental agency responsible for co-ordinating the development of small and medium enterprises (SMEs). Under this programme, companies can apply for a matching grant of up to RM100,000 to cover expenses incurred in activities to bring an SME’s goods abroad, viz. participation in trade missions, preparation of promotional materials, improvement of packaging and design for overseas markets and establishing international sales offices. Amongst other factors, an applicant for a SMIDEC-administered grant must have an annual sales turnover that does not exceed RM25 million or not more than 150 full-time employees, and at least 60% of the equity must be held by Malaysians.

 

Two other notable grants administered by SMIDEC are the Grant for Product and Process Improvement and the Grant for Enhancing Product Packaging, Design and Labelling Capabilities of SMEs, through which assistance is given in the form of a matching grant where 50% of the approved project cost is borne by the Government and the remainder by the applicant. The maximum grant allocated per company is RM500,000 for the former, and RM200,000 for the latter. The expenses eligible covered under the latter grant include costs of trademark and patent registration.

 

MATRADE - Brand Promotion Grant, Market Development Grant

 

The Brand Promotion Grant, administered by the Malaysian External Trade Development Corporation (MATRADE), endeavours to promote local brand names in the international market. Companies with at least 60% Malaysian equity that own a trademark for the brand and have an annual sales turnover not exceeding RM25 million can obtain either (i) a 100% reimbursable grant for the development and promotion of the brand, subject to a maximum grant of RM1 million for SMEs; (ii) a 50% reimbursable grant subject to a maximum of RM2 million for non-SMEs; or (iii) a combination of a 100% reimbursable grant and a 50% reimbursable grant for SMEs only, subject to a maximum of RM2 million. The grant covers the costs of developing and promoting one brand per company. To encourage international brand promotion, no more than 10% of the grant may be spent on domestic promotion. Expenses which are eligible for funding include the development of a brand and marketing strategy and costs incurred in designing/redesigning logos, product packaging and labelling.

 

Also administered by MATRADE, the Market Development Grant aims to assist the manufacturing, trading and services sectors to develop export markets. Matching grants of up to RM100,000 are provided to Malaysian-owned SMEs. Companies can obtain a 50% matching grant on the approved costs of eligible activities, which include international promotion of brands, participation in trade missions/fairs and participation in international tenders.

 

 

 

MITI - Grant for Product and Process Improvement

The Ministry of International Trade and Industry (MITI) provides assistance via its Grant for Product and Process Improvement. The scheme offers a matching grant for SMEs to improve and upgrade their existing product, product design and processes. Under this scheme, SMEs are entitled to claim for the costs of consultation services by technical experts, technology acquisition and training related to technology and skills development. The maximum grant is RM500,000.

 

 

 

MECD - Franchise Development Assistance Scheme

The Ministry of Entrepreneur and Co-operative Development (MECD), meanwhile, administers the Franchise Development Assistance Scheme which, among others, offers financial assistance in the form of grants not exceeding RM100,000 for each franchise product. The Scheme is directed at providing incentives to individual entrepreneurs and Malaysian companies to franchise the product or business in question at either the domestic or international level.

 

In the next issue of Legal Insights, Part II of this Article will explore the other forms of financial assistance and/or incentives provided by the government.

 

Marie Julie Wan Ullok

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