R&D Investments: We are on the Decline!

Six decades ago, Malaysia was richer than South Korea and Taiwan. Today, the country is behind these two technology superpowers. Taiwan overtook Malaysia’s gross domestic product (GDP) per capita in the mid-70s, and not long after that, South Korea overtook Malaysia in the mid-80s.

A major reason for Malaysia lagging behind Taiwan and South Korea is the failure to invest adequately in research and development (R&D). This is reflected in the number of patents granted, as mentioned in the World Intellectual Property Indicators report. In 2022, a total of 6,876 patents were granted in Malaysia, out of which almost 85% were granted to non-residents. In contrast, South Korea granted 145,882 patents in 2022. Three out of four patents in that year were granted to residents.

Official figures show that Malaysia’s gross expenditure on R&D (GERD) has been declining in the past several years, even before the Covid-19 pandemic. The country’s GERD as a percentage of GDP dropped to just 0.95% in 2020. The lowest since 2010.For comparison, countries like South Korea, the United States and Japan spent 4.81%, 3.45% and 3.26% of their GDP in 2020 for R&D, respectively. Notably, China’s GERD per GDP stood at 2.4% in 2020, significantly higher than Malaysia despite having an almost similar GDP per capita.

Malaysia is well behind its GERD per GDP target of 3.5% by 2030. The intermediate target is 2.5% by 2025 which seems a mile away! There is a funding shortfall of RM40bil to achieve the 2025 target.

Malaysia’s long-delayed ambition to become a high-income nation relies on the country’s ability to effectively spend on R&D efforts in high-potential areas. Increased R&D efforts that would lead to greater technology adoption in the country are highly necessary, considering that Malaysia is set to become a super-aged country by 2056.

In the Madani Economy Framework, Malaysia is to be among the top 20 countries in Global Innovation Index (GII) by 2025. As for Global Competitiveness Index (GCI), Malaysia aims to rank in the top 12 within the next 10 years. Foreign investors examine these indices.

The easy supply of cheap foreign workers, particularly before the pandemic, has further allowed Malaysian companies to avoid R&D and automating a large part of their operations. Malaysian companies also face fundraising difficulties for R&D purposes, especially small and medium enterprises and unlisted companies.

R&D efforts are not just about investing a large sum of money. They will only yield best results if they are supported by qualified, world-class researchers. Unfortunately, in the case of Malaysia, brain drain has become a major challenge in pushing for greater R&D.

The ongoing decline in interest among schoolchildren in science, technology, engineering and mathematics (STEM) studies will only worsen the situation in the future.

There is a shortage of STEM graduates in Malaysia to serve the needs of the industries. The country’s target was to have 500,000 STEM graduates by 2020, but we now have only 68,000 such graduates. The highest number of unemployed graduates here is from the STEM stream. Currently, about 15% of form four students took pure science subjects, namely physics, chemistry, biology and additional mathematics. The percentage has fallen from about 19% back in 2019. This is alarming. We need more students to take pure sciences if we want to create more scientists, data analysts and researchers for the future. STEM culture has to be fostered among children from a very young age.

In 2020, Malaysia saw a decline in the number of researchers per 10,000 labour force at only 31.4 persons, as compared to 74 persons in 2016. This was the lowest level since 2010. Malaysia’s researchers and R&D personnel in the labour force fall way below that of Japan, South Korea, Taiwan, Singapore, and China.

Many things are on the Government’s plate. STEM and R&D take countries forward. We don’t have much time and children lose their future when a Government dithers on reformasi!

Reference:

Reversing declining R&D investments, Ganeshwaran Kana, The Star, 26 August 2023