New platforms are facilitating Malaysian SME and industry networking

Under the 11th Malaysia Plan (11MP), which lays out Malaysia’s economic path until 2020, manufacturers are being encouraged to undertake more research and development (R&D) to improve their products and processes. Since many Malaysian manufacturers are small, the government is also increasing the opportunities available to small and medium-sized enterprises (SMEs) for collaboration.

Assistance Hub

The Steinbeis Malaysia Foundation was set up as part of the Malaysian Innovation Agency in 2014 to help smaller companies looking for expertise not only in R&D, but also in business advisory, devising financial plans, intellectual property and raising equity funds. Modelled after Germany’s Steinbeis Foundation, Steinbeis Malaysia has its own database of experts largely drawn from local universities, but also including independent researchers. The organisation acts as a bridge between academia and industry, putting each in touch with the other. “SMEs have been relying on the government for grants and funds,” Abdul Reezal bin Abdul Latif, Steinbeis Malaysia’s executive director, told OBG. “SMEs need to try to slowly move away from government assistance. Rather than companies buying off-the-shelf solutions, they can work together and innovate.”

Steinbeis Malaysia, which is a non-profit organisation, works in a number of areas, such as assisting food and agricultural companies interested in exporting to markets in Japan, South Korea and Germany, working with SMEs to successfully publicly list and helping smaller palm oil companies deal with sustainability certification. It is currently working with about 100 companies nationwide, according to Abdul Reezal.

The initiative is designed to facilitate the effective transfer of knowledge and technology, deepening links between academia and industry and ensuring government-funded research contributes more effectively to the economy. Scholars from public universities, such as University of Malaya and the National University of Malaysia, as well as organisations like the Halal Development Corporation and the Collaborative Research in Engineering, Science and Technology programme are part of the Steinbeis network. Steinbeis Malaysia can also tap into Steinbeis’ worldwide network, which covers 50 countries.

Securing Financing

As a non-profit focused on facilitation, Steinbeis does not give out funding, but does offer matching grants in the form of the Steinbeis Innovation Voucher. Eligible companies must be at least 51% Malaysian-owned, qualify as an SME under Malaysia’s National SME Development Council’s definition and work in an industry that is one of the 12 identified National Key Economic Areas. The government is also encouraging SMEs to step up R&D with a series of tax incentives under the 2016 budget. SMEs will get an automatic double deduction for research expenditure up to RM50,000 ($12,400). Under the 11MP, the Research Incentive Scheme for Enterprises also provides grants for researchers over a specified period, and is now being expanded to firms.


Meanwhile, universities are collaborating with industry in areas such as biotechnology and green technology. In line with the country’s National Biomass Strategy 2020, the University of Nottingham in Malaysia launched its Centre of Sustainable Palm Oil Research adjacent to Havys Oil Mill in Negri Sembilan. The school’s research team has developed an integrated anaerobic-aerobic bioreactor, which improves the treatment of the highly toxic discharge known as palm oil effluent. Four universities, led by the University of Malaya, are also collaborating on a project to produce jet fuel from seaweed. The biofuel project, in close collaboration with aircraft manufacturer Airbus, is designed to lay the foundations for a more sustainable aviation industry and is due for completion in 2017. More innovative SMEs are crucial to absorbing graduates who end up working in other areas or leave the country for jobs.

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The Report: Malaysia 2016

Innovation chapter from The Report: Malaysia 2016