GEORGE TOWN: Universiti Sains Malaysia’s (USM) fully-owned corporate portal Usains Holdings Sdn Bhd began life in 2000 with an operational budget of RM100,000 and three staff. Today, it is a multi-million ringgit operation with annual turnover exceeding RM60 million, offering research services and serving as a referral centre for the commercialisation of research.

Usains has made a name for itself not just locally, but also abroad. Its client base ranges from SMEs to multinationals, from Malaysian government agencies and conglomerates to international agencies like the International Atomic Energy Agency and World Health Organisation. Another prominent client was the Rockefeller Foundation.

Aside from contract research and commercialisation of research, Usains conducts development and innovation, consultancy, and testing services. It also offers services in the areas of executive health, professional development, and incubation.

These are carried out by five subsidiary companies — Usains Tech Services Sdn Bhd, Usains Tech Capital Sdn Bhd, Usains Infotech Sdn Bhd, USM Enterprise Sdn Bhd and USM Bio-Engineering Sdn Bhd. They are wholly-owned by Usains, which manages all properties, projects or enterprises. Each subsidiary operates as a private company and Usains itself is wholly-owned by USM.

Ten years ago, a public sector university going into business was unheard of, and there was no model for USM to follow.

“There was no university in the country which owned a company and was carrying out business. I had to use my judgment and we created a model — Usains,” said Prof Datuk Dr Gan Ee Kiang, Usains group managing director.

Gan, who joined USM in 1972, was dean of USM’s School of Pharmacy before being singled out to set up the organisation in 1996. Datuk Seri Najib Razak, who was then education minister, had called on universities to undertake corporatisation and play a more interactive role with industries, improve their financial standing and prevent a brain drain.
For the Usains model to succeed, the mindset prevalent in academia needed to change.

“Although we are fully owned by the university, we stay at arm’s length as we are answerable to our board of directors, which is chaired by an outsider though the vice chancellor is a board member.

“We wanted to steer away from the mentality of a university as people in the university tend to think differently from those in the corporate sector. The universities tend to be conservative and very unwilling to talk to the private sector,” Gan said.

To conduct the research, however, Usains needed the academics on board. It relies on more than 2,000 of the university’s academic and technical staff as consultants to undertake multi-disciplinary contract research projects as requested by clients, and pays them for their services. The projects they undertake run from several thousand ringgit to millions of ringgit.

Usains’ modus operandi of bidding for projects and outsourcing them to USM consultants has worked very well. The list of projects undertaken is a long one (see table for examples). They range from work for the government like highway and environmental impact assessment studies, to product research for the private sector.

Gan said the thinking when Usains was first set up was that if it was managed well, it could be a model for other universities. True enough, it is now the focal point of other universities keen to emulate it.

In 2002, Usains was given Multimedia Super Corridor (MSC) incubator status for its Kompleks Eureka, from which the group operates and manages USM’s incubator facilities and services. It was the first university incubator to receive the recognition from MSC.

Two years later, it was commended by the Economic Planning Unit for its active interaction with the private sector.

Its success is also seen in its revenue. From initial consolidated revenue of RM3.6 million in 2000, Usains achieved revenue of RM23.6 million in 2009. It has accummulated assets exceeding RM35 million. Usains’ staff strength, which has grown to 40, includes lawyers, accountants, a marketing team and business development unit.

From its 2009 revenue, Usains paid RM3 million to USM for services and facilities, and RM6.7 million to over 2,000 staff for consultancy services. It also generated an additional RM10.5 million for the university from USM projects managed by Usains group of companies.

“We do not make much profit as we also plough back between RM4 million and RM5 million into the university. Being the corporate arm of the university, we would like to think that we have contributed to the university’s growth, including its position now as the apex university of the nation,” Gan said.

Usains currently operates two offices at USM’s branch campuses in Nibong Tebal in Penang and Kubang Kerian in Kelantan. Gan said there are plans to open branch offices in Vietnam and Indonesia soon.

Penang’s being part of the Northern Corridor and its status as Malaysia’s “Silicon Island” have also opened up opportunities for Usains.

Usains Infotech is currently managing and operating a RM20 million centre of excellence (CoE) for integrated-circuit design funded by the Northern Corridor Implementation Agency (NCIA). The CoE is a university-industry collaboration which brings together industry leaders and university resources to act as a catalyst for the value-added growth of the electrical and electronics sector.

The CoE enables local entrepreneurs as well as MNCs to use the facilities at Usains for R&D under the pay-per-use mechanism.

Usains is also vying and has submitted proposals for the other six CoEs which the NCIA is in the midst of setting up in Penang.

Having proven that it can succeed in the business of research, Usains is now eyeing an initial public offering. Gan is extremely proud of its spin-off Mlabs Bhd, the first university-based R&D company in the country to be listed on the ACE Market of Bursa Malaysia.

Mlabs’ Multimedia Conferencing System is the world’s first multipoint-to-multipoint video conferencing system and was developed in USM by a group of researchers who embarked on a study to develop a new architecture and technology in multimedia video conferencing.

“Our next move will be seeking listing [for Usains] on Bursa Malaysia. We should qualify for IPO and hopefully become the first university arm to be listed in the country.

“We are dong well with profit before tax ranging from RM3 million to RM4 million and we are looking at a 10% increase annually,” Gan said.

He said there was a proposal to list Usains five to six years ago but Usains could not fulfil two conditions: one was that the intellectual property had to be owned by Usains instead of USM; the second was that USM could not hold a controlling stake in Usains.

“It is up to the board of directors as Usains is currently fully owned by USM, and hopefully, the university thinking has changed to allow Usains to go public,” Gan added.