In 2020, the effects of the Covid-19 pandemic — during which minimising interactions and physical distancing are promoted — were exceptional. But at the same time, developments in the tech industry were tremendous.
The exponential growth of technologies has disrupted traditional industries at an ever-increasing pace. Furthermore, the pandemic has basically put these changes into hyperspeed. Never have we had the opportunity to rewrite entire sectors, redefine the problems they address and reinvent their solutions. There is an urgent need to create resilient local industries to ensure businesses survive come what may, and continue to support national growth.
It is crucial that Malaysia accelerates its capacity for innovation to remain competitive in a world on the cusp of super connectivity. Deep technologies such as semiconductors and sensors have brought digitalisation to our doorstep which, in turn, has enabled information to be transmitted at the speed of light. Digitalisation has also increased automation, particularly in activities that involve considerable lengths of time, high risks and complications.
A country’s pursuit of a strong growth trajectory may be based on a variety of economic models. For example, countries may embark on a high-tech model, a finance-hub model or a resource-based model, to varying degrees of success.
As Malaysia’s aspirations lean towards high-tech national advancement, it must choose to invest in high-tech, high-value, technology-based and inclusive economic activities which, in turn, lead to rapid development through a strong science and technology base, as is the case for countries such as South Korea, Japan and Taiwan. The resulting ecosystem is one that comprises government and private sector participation in cultivating and developing talents, encouraging investments in R&D and start-ups, dynamic marketing and commercialisation, and strong governance.
For both national security interests and commercial purposes, this pursuit leads to Malaysia’s technological sovereignty. It takes consolidated efforts and careful preparation to build Malaysian-based tech giants. The mastery of deep technology will determine whether Malaysia will join the ranks of developed countries or remain a middle-income developing nation. The first step towards this goal involves seizing the innovation opportunities that lie before us.
Common enablers for Malaysia
There are ample opportunities for the nation to grow further through innovation. For example, local value-added content comprises only 44% of Malaysia’s electrical and electronics (E&E) exports, compared with China’s 70% and Indonesia’s 68%.
In the E&E sector, electronics and semiconductors have been identified as common enablers across all potential growth areas for technology disciplines and industries. The backbone and backend of the adoption of the entire digitalisation process appears to be in the electronics and semiconductor industry, so much so that it has led to the well-known tech war between the two giant tech countries, China and the US.
Semiconductors that contain up to 30 billion transistors are new electrical and electronic devices that power deep tech. We have seen a techno-nationalist race in deep tech semiconductors between the US and China over the past few months. Representing 2.3% of the global market share and more than 50% of its E&E exports in 2019, Malaysia is already in the semiconductor race.
Unfortunately, we have remained at the lower end of the value chain because of insufficient financial resources. As a result, we have not been able to move as quickly as more advanced nations such as South Korea or Taiwan. To improve our position, however, Malaysia can engage in the “More than Moore” ecosystem, exploiting diversity and increasing
the value chain. The importance of semiconductors cannot be overemphasised as they enable advances in key technological applications, including communications, computing, healthcare, defence systems, transport, clean energy and a myriad of other applications.
How will this new focus affect Malaysia’s existing value chain? The national applied R&D centre Mimos Bhd, founded in 1984, is the country’s forefront provider of information and communications technology (ICT), industrial electronics technology and nano-semiconductor technology. It pursues discoveries fundamental to microelectronics and ICT — the vital elements in digitalisation and automation.
In 2005, Mimos’ mandate was renewed as the national R&D centre for cutting-edge frontier technology. The government’s commitment to semiconductors was reflected in investments in experimental and manufacturing efforts, which translated into RM81 billion, or a 6.3% contribution to GDP, and 560,000 employees in 2019. Semiconductor manufacturer SilTerra Malaysia Sdn Bhd is an example of a company spearheading the country’s entry into chip manufacturing, an essential component of digital lifestyles.
Another area that merits close attention is the mining and processing of rare earth elements (REE), which has been at the centre of many political, policy and environmental debates. From semiconductors to chips and even magnets for hard disk drives, speakers and turbines, REE is an essential component in all electronic products. Given Malaysia’s strategic location for the REE industry’s midstream value chain, we need to move forward with more evidence-based and sustainable policy initiatives to position the country’s high-value downstream sector for REE.
Other fields with great potential are artificial intelligence (AI) and blockchain. In the security and industry sectors, the integration of these advanced technologies will provide real-time automation to protect from extreme vulnerabilities.
National Policy on Science, Technology and Innovation
On Dec 2, 2020, the National Policy on Science, Technology and Innovation, or DSTIN 2021-2030, was launched by the Minister of Science, Technology and Innovation. DSTIN 2021-2030 is directly aligned with the Shared Prosperity Vision 2030 and the United Nations’ Sustainable Development Goals (UN SDGs).
DSTIN 2021-2030 provides the catalyst for Malaysia to shift from being a technology consumer to technology producer and to leapfrog to a high-tech nation status. Technology development will boost the quality of life, help us realise our full economic potential, embrace sustainability, conserve nature and the environment, increase productivity and develop future-ready talents.
Automation and the application of advanced technology will minimise our dependence on foreign labour and increase productivity through the application of new skill sets. In addition, DSTIN 2021-2030 will spearhead Malaysia’s journey to embrace the Fourth Industrial Revolution (4IR) and digitalisation, in tandem with these technological developments.
DSTIN 2021-2030 strives to improve governance and the ecosystem through the establishment of a technology commercialisation agency and a research management agency for integrated grant management. Similarly, the strengthening of research, development, commercialisation and innovation in DSTIN 2021-2030 would increase the allocation of experimental production to at least 50% of the overall research funding by 2025, equivalent to 2.5% of the gross domestic expenditure on R&D (GERD) of developed nations.
The policy will also see better tax incentives for research in the private sectors implemented by the government to ensure significant increases in private sector research participation. Most importantly, the enculturation and growth of science, technology, engineering and mathematics (STEM) and high-tech skills will ensure ample talent for the development of emerging technology industries and start-ups.
The early successes
Early successes of the policy are already evident. An initiative led by the Ministry of Science, Technology and Innovation (Mosti) — the National Technology and Innovation Sandbox — for example, has succeeded in testing the use of drones in the aerial spraying of fertilisers in the Federal Land Development Authority’s plantations, thereby reducing its longstanding dependence on foreign labour.
In addition, the application of precision farming improves the economics of farming and, in the long term, helps resolve food security concerns in Malaysia. The use of drones for this purpose has been expanded to fertiliser spraying on paddy fields and chilli farms, a task commonly performed by foreign labour.
In closing the circular economy loop and aligning with the UN SDGs, a company nurtured by the Malaysian Industry-Government Group for High Technology is producing a range of biodegradable packaging products for food, medical and industrial use made from agricultural biomass for the international market. Working closely with the local farmers’ association, the programme has successfully increased both the farmers’ income and their appreciation for the environment.
Another Mosti initiative addresses personnel safety and protection in Covid-19 quarantine centres through the use of service robots. These robots deliver food and medicine to patients at the Malaysia Agro Exposition Park Serdang and Hospital Universiti Kebangsaan Malaysia quarantine centres, avoiding disease transmissions and for the protection of medical service personnel and frontliners. The robots also collect used personal protective equipment to lower the infection risks of healthcare workers and hygiene service providers.
Long-term planning is involved in mitigating the Covid-19 pandemic, and DSTIN 2021-2030 will be important in bringing Malaysia to the next level. This can happen only if we seize the innovation opportunities that lie before us to avoid the ever-increasing pace of disruption.
Covid-19 has accelerated the process of disruption by technology, and Malaysia needs to respond by accelerating its innovative capacity to remain competitive. Common enablers such as the semiconductor and REE industries will be key to becoming a high-tech nation.
With a new national policy that maps out the steps to grow Malaysia’s science, technology and innovation sectors, our path to securing our future through innovation has been set in motion.
Datuk Dr Siti Hamisah Tapsir is secretary-general of the Ministry of Science, Technology and Innovation