Malaysia Spent Below 1% of GDP on R&D Expenditure

World Bank senior economist Smita Kuriakose, pointed out that R&D expenditure in Malaysia increased to about 1.4% of GDP in 2016 from below 0.7% in 2006, but has since declined to slightly below 1% as at 2018.

For comparison, Singapore, China, France and the US' R&D spend in 2020 was more than 2% of their respective GDP, while Germany and Japan's R&D spend was above 3% of GDP. South Korea led the basket of nations, with an R&D spend of almost 5% of GDP. 

In terms of expenditure by research orientation (in Malaysia) between 2014 and 2018, the percentage of basic research increased from 16.9% to 39.3% of total expenditure and experimental research increased from 7.5% to 24.5%. The portion of spending on applied research, on the other hand, declined from 75.5% in 2016 to 36.2% in 2018.

University research centres, which also receive government funding, are also seeing a larger proportion of funding coming from the private sector, which could be a result of these research centres having insufficient funds from the government.

World Bank country manager (Malaysia) Firas Raad said with multiple actors namely ministries, agencies and research organisations, and the varying nature of research, the landscape of research institutions is highly complex. This situation, he said has led to a lack of coordination in facilitating and encouraging research commercialisation, and the transfer of new knowledge and technology. Other key challenges most cited in the field include funding inconsistencies, mismatched incentives and differing expectations between academia and industry.

While the GDP growth rate has proven resilient in recent years, declining oil and gas output coupled with economic shocks, including the recent Covid-19 pandemic, have dented the growth momentum.

Khairy Jamaluddin said the key challenge for Malaysia now is how to facilitate and accelerate the transition to this innovation-based growth model in the country. A sustained increase in private investment, coupled with improvements in productivity will be necessary to maintain a sustainable economic growth trajectory that enables Malaysia to reach high-income status.

As such, World Bank recommended for greater coordination and long-term strategic planning across the research and innovation ecosystem in Malaysia, which is paramount now than before. The transition to a more innovation-based growth model is urgent in the current uncertain global context. We need commitment of no less than 3% of GDP for Malaysia to progress with focus on applied research in resource-based industries, medical physics, robotics, automation, electronics and cybersecurity. We also need a more merit-oriented ecosystem for research to flourish.

 

Reference:

1.     Assessing the Effectiveness of Public Research Institutions (2020), World Bank Group

2.     Malaysia R&D spend has been declining since 2016 — World Bank, The Edge, 19 Nov 2020

3.     Better coordination in R&D crucial, The Malaysian Reserve, 24 Nov 2020