Asia-Pacific Technology Transfer Through Foreign Direct Investment
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Strengthening innovation-driven inclusive and sustainable development Asia-Pacific Tech Monitor Vol. 33 No. 2 Apr - Jun 2016 Technology transfer through foreign direct investment Policy approaches in the Asia-Pacific region Plus • Technology News and Events • Tech Ventures & Opportunities • Business Coach The Asian and Pacific Centre for Transfer of Technology (APCTT), a subsidiary body of ESCAP, was established on 16 July 1977 with the objectives to: assist the members and associate members of ESCAP through strengthening their capabilities to develop and manage national innovation systems; develop, transfer, adapt and apply technology; improve the terms of transfer of technology; and identify and promote the development and transfer of technologies relevant to the region. The Centre will achieve the above objectives by undertaking such functions as: n Research and analysis of trends, conditions and opportunities; n Advisory services; n Dissemination of information and good practices; n Networking and partnership with international organizations and key stakeholders; and n Training of national personnel, particularly national scientists and policy analysts. The shaded areas of the map indicate ESCAP members and associate members Editorial Advisory Board Dr. Wang Yan, Deputy Director-General, China Science of University Corporate Relations, University of Tokyo, and Technology Exchange Center (CSTEC), Beijing, Japan P.R. China Dr. Jeong Hyop Lee, Research Fellow, Science and Dr. Günter Clar, Director, Regional Strategies & Technology Policy Institute (STEPI), Seoul, Republic Innovation, Steinbeis-Europa-Zentrum, Stuttgart, of Korea Germany Prof. Rajah Rasiah, Chair of Regulatory Studies, Faculty Prof. Sushil, Department of Management Studies, of Economics and Administration, University of Malaya, Indian Institute of Technology Delhi, New Delhi, Kuala Lumpur, Malaysia India Prof. Sivanappan Kumar, School of Environment, Dr. Syahrul Aiman, Senior Research Scientist, Research Resources and Development (SERD), Asian Institute of Center for Chemistry, Indonesian Institute of Sciences Technology, Pathumthani, Thailand (LIPI), Jakarta, Indonesia Director, Trade and Investment Division, United Nations Prof. Dr. Toshiya Watanabe, Policy Alternatives Research Economic and Social Commission for Asia and the Institute (PARI), and Deputy Director General, Division Pacific (UNESCAP), Bangkok, Thailand Editorial Board APCTT-ESCAP Mr. Nanjundappa Srinivasan Dr. Satyabrata Sahu Dr. Krishnan Srinivasaraghavan Asia-Pacific Tech Monitor CONTENTS Vol. 33 No. 2 v Apr- Jun 2016 The Asia-Pacific Tech Monitor is a quarterly periodical of the Asian and Pacific Centre for Introductory Note 2 Transfer of Technology (APCTT) that brings you up-to-date information on trends in Technology Market Scan 3 technology transfer and development, technology policies, and new products and Technology Scan: Renewable Energy Technologies 8 processes. The Yellow Pages feature the Business Coach for innovative firms, as well as Special Theme: Technology Transfer through Foreign Direct technology offers and requests. Investment: Policy approaches in the Asia-Pacific region Web: www.techmonitor.net • Fostering innovation dynamics among SMEs through foreign technology investment 13 ASIAN AND PACIFIC CENTRE KyungJin Hyung FOR TRANSFER OF TECHNOLOGY C-2, Qutab Institutional Area • Technology transfer through foreign direct investment Post Box No. 4575 The implications of IPR protection in the Asia-Pacific region 20 New Delhi 110 016, India Rozilee Asid and Noor Aini Khalifah Tel: +91-11-3097 3700 Fax: +91-11-2685 6274 • The role of FDI in fostering growth in the automobile E-mail: [email protected] sector in India 25 Website: http://www.apctt.org Saon Ray and Smita Miglani • Transfer of technology by FDI to local SMEs 32 Opinions expressed by the authors A story from Indonesia are not necessarily those of APCTT. Tulus T.H. Tambunan The designation employed and • Knowledge and technology transfer of outward FDI the presentation of material in the by Thai multinational enterprises to Cambodia, Laos, publication do not imply the endorsement of any product, process Myanmar and Viet Nam 40 or manufacturer by APCTT. Chawalit Jeenanunta, Nattharika Rittippant, Pornpimol Chongpisal and Ryoju Hamada The contents of the Tech Monitor may be Tech Events 47 reproduced in part or whole without change, provided that the Tech Monitor and the Tech Ventures & Opportunities 48 authors concerned are credited as the Managing your business source and a voucher copy of the publication that contains the quoted • Start-up Venture Creation 49 material is sent to APCTT. • Technology Transfer 52 • Venture Financing 54 This publication has been issued without formal editing. • Managing Innovation 57 • Green Productivity 59 ISSN: 0256-9957 Tech Opportunities • Technology Offers 61 • Technology Requests 63 Introductory note lobalization of technology and production is becoming critical for Genterprises to achieve and sustain international competitiveness. One of the important channels of technology globalization is through Foreign Direct Investment (FDI) which not only brings in capital but often also facilitates transfer of advanced technology to the host country firms, thereby generating long- term and sustainable economic growth. FDI often comes with new technologies and innovations and is widely used by the transnational corporations (TNCs) to transfer and diffuse their technologies – including both hard and soft elements – to local firms in the host countries. The process thus helps enhance technological capability of domestic enterprises contributing to the country’s productivity and growth However there are many issues affecting FDI flows such as those related to strategies of the investing firms and the policies and business environment of the host countries. In this context, effective facilitation of FDI- driven technology transfer and diffusion would require proactive policy support that is capable of increas- ing the flow of knowledge, technology and resources to the receiving countries. The developing countries could effectively leverage FDI as a means to achieve technology transfer and diffusion through establishing an effective national innovation system (NIS) which would provide an interface between TNCs and local firms, support the absorptive capacities of domestic enterprises, and provide an appropriate regulatory framework covering intellectual property aspects. In addition, the countries need to ensure coherence be- tween their FDI and other relevant policies, particularly the science technology and innovation policy, to provide an enabling environment for effective technology transfer and diffusion. The Leaders of 193 member States of the United Nations have adopted in September 2015 the 2030 Agen- da comprising 17 Sustainable Development Goals (SDGs). The 2030 Agenda also provides for a Technology Facilitation Mechanism (TFM) which aims at increasing the creation and use of innovative technologies for achieving the SDGs. Towards this endeavor, FDI could play an important role in facilitating transfer of envi- ronmentally sound technologies (ESTs) that are vital for the developing and the least developed countries, particularly in the Asia Pacific. The mandate to achieve SDGs makes it imperative for member States to streamline their FDI policies and other strategies for acquiring ESTs on favourable terms towards meeting their SDG targets. The resulting spillover effects would stimulate wider diffusion of ESTs across manufactur- ing sectors in the host countries and in the region as a whole. This issue of Asia-Pacific Tech Monitor highlights key challenges, opportunities and strategies to develop and adopt appropriate policies and frameworks for promoting FDI-facilitated technology transfer, acquisi- tion and deployment in the Asia Pacific countries. The special issue also features few country-specific case studies from the region. Nagesh Kumar Head, ESCAP South and South-West Asia Office and Officer-in-Charge, APCTT Technology Market Scan INTERNATIONAL China is the only emerging middle-income in its 13th five-year plan. A wide range of country moving closer to this group of ad- measures has been unveiled, including Innovation in breakthrough vanced, industrialized nations. Looking at financial support, facility construction and technologies more recent history – patents filed since administrative assistance, for start-ups. 2005 – Chinese applicants account for more Japan and the United States lead a small http://news.xinhuanet.com than a quarter of patents worldwide in the group of nations that are driving innova- area of 3D printing and robotics – the high- tion in 3D printing, nanotechnology and Patent pledge financing est share among all countries. In the case of robotics, three frontier technologies that 2015 witnessed notable progress in China’s nanotechnology, Chinese applicants make hold the potential to boost future eco- IP pledge financing. Some 2,000 enterprises up close to 15 percent of filings worldwide nomic growth, a new WIPO report shows. secured 56 billion yuan with patent pledge – the third largest origin of patents. In con- all through the year. Sampling results on 20 Amid lackluster worldwide economic trast to the longer established innovating patent pledge projects showed that enter- growth, the World Intellectual Property countries, Chinese patent landscapes show prises involved generated 3.77 billion yuan Report 2015: Breakthrough Innovation a markedly