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A Study on Knowledge Content in Key Economic Sectors in Malaysia Phase Iii (Myke Iii)

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A Study on Knowledge Content in Key Economic Sectors in Malaysia Phase Iii (Myke Iii) FINAL REPORt – PHASE 2 A STUDY ON KNOWLEDGE CONTENT IN KEY ECONOMIC SECTORS IN MALAYSIA PHASE III (MYKE III) Confidential 30 November 2016 Executive Summary Executive Summary 5 The global economy is undergoing rapid changes organisation); Dynamic Capabilities (Absorptive due to forces of globalisation, liberalisation (the capability; Adaptive capability; and Innovative Chapter 1: Introduction 8 opening of markets), regionalisation (trading blocs) capability); Process Improvement, Product market and digitisation (converging technology platforms). outcomes and Economic outcomes (productivity, Chapter 2: Knowledge Content of the Malaysian Palm Oil Industry 48 These forces have intensified competition for profits, sales, return on investment and market Chapter 3: Knowledge Content of the Malaysian Plant Crops Industry 66 resources, talent and markets. Increasingly, wealth share). (non-Palm Oil) creation in this dynamic global economic environment is dependent on the ability of industries to move Qualitative and quantitative research methods were Chapter 4: Knowledge Content of the Malaysian Forestry Industry 78 up the knowledge and innovation value chain. In used for the MYKE-III (Phase 2) study. For qualitative 2002, Malaysia launched the Knowledge Economy analysis, focus group and interviews of industry Chapter 5: Knowledge Content of the Malaysian Fishery Industry 94 Master Plan; and in subsequent 5 year economic captains, trade association leaders and senior Chapter 6: Knowledge Content of the Malaysian Livestock Industry 112 plans, significant resources were channeled into officials from various government agencies were transforming the various economic sectors and undertaken. In the case of quantitative analysis, a Chapter 7: Knowledge Content of the Malaysian Electrical & Electronic (E&E) 128 industries to be more information-intensive and sample of 4438 sample respondents were obtained Components Ecosystem knowledge-driven. from Department of Statistics, Malaysia. Chapter 8: Knowledge Content of the Malaysian Electrical & Electronic 144 (Final Products) Ecosystem To measure the level of knowledge content of A detailed analysis of the knowledge ecosystem of Malaysian industries the Knowledge Content in each of the industries revealed that there are key Chapter 9: Knowledge Content of the Malaysian Rubber Industry 156 Economic Sectors Phase III (MYKE-III) Phase 2 was strengths that enable the industries to build dynamic capabilities and knowledge content. Among the key Chapter 10: Knowledge Content of the Malaysian Plastics Industry 178 conducted over the period from 2015 to 2016. The study was conducted for the following industries: strengths include the following: Chapter 11: Knowledge Content of the Malaysian Chemical Industry 202 Agriculture (Palm oil, Plant crops, Forestry, Fishery, and Livestock); Electronics and Electrical l The industries receive strong support from the Chapter 12: Knowledge Content of the Malaysian Petroleum Industry 224 Malaysian government to become technology- (Components and Final Products); Food processing; Chapter 13: Knowledge Content of the Malaysian Pharmaceuticals Industry 244 Machinery & instruments; Chemical, Petroleum and and knowledge-intensive through provision of Pharmaceuticals; Rubber and Plastics; Wholesale various fiscal and non-fiscal incentives. Chapter 14: Knowledge Content of the Malaysian Food Processing Industry 264 and Retail; and Business Services (Business Development and Technical Services). l Significant resources are channeled from the Chapter 15: Knowledge Content of the Malaysian Wholesale Industry 280 nation’s annual budget for education and training. Chapter 16: Knowledge Content of the Malaysian Retail Industry 294 This study uses a novel knowledge ecosystem model There are more than 600 colleges, universities to assess the state of development of the knowledge colleges, universities and training institutes Chapter 17: Knowledge Content of the Malaysian Machinery and 308 ecosystems for the industry, which includes assessing that provide academic and skills development Instrument Industry the level of knowledge content and its contribution programs for the work force in Malaysia. Chapter 18: Knowledge Content of the Malaysian Technical Services Industry 328 to economic outcomes. The proposed knowledge ecosystem model consists of the following broad l Several public and private universities and Chapter 19: Knowledge Content of the Malaysian Business Development 342 components: Knowledge Enablers (Basic Skills GRIs have been established to undertake R&D Services Industry Development; Market Intelligence; Institutions – and develop innovations that are important for industries. Chapter 20: Conclusion 358 Government, Trade Associations and Universities; Science & Technology Knowledge; Advanced End of Final Report – Phase 2. 370 Skills Development; and Knowledge Culture in 4 A STUDY ON KNOWLEDGE CONTENT IN KEY ECONOMIC SECTORS IN MALAYSIA MYKE III – FINAL REPORT (PHASE 2) 5 l There is a number of large local players; some l Attracting and retaining workers with basic skills l While a significant level of financial resources l Strategic Thrust 5: Knowledge Competencies of which undertake significant R&D activities to and competencies has been a challenge for many is provided by the Malaysian government for - develop a deep understanding of the strategic enhance the quality and quantity of products and industries. The firms are also unable to attract R&D, the level of R&D by the corporate sector evolution of the industry, including the associated services. and retain creative talent. Shortage of talent with in Malaysia is relatively low compared to that technological, market and socioeconomic advanced skills, specialist expertise and mentors found in more advanced countries. The local R&D dynamics. Core competencies for the various l The cost of labour and living in Malaysia is results in the high cost of training. ecosystem is also plagued by a lack of strategic education and training programs must be clearly relatively cheaper than other developed countries. focus, weak linkages between key stakeholders mapped, monitored and refined to ensure these Malaysia also has access to a large pool of cheap l Weak technical education and training and a poor knowledge sharing culture. programs meet the needs of a rapidly changing foreign labour from neighbouring countries that ecosystem, hence firms are unable to translate industrial structure. keeps the cost of production low compared to absorptive capability into adaptive and innovative To raise the level of knowledge content and other regional players. capabilities. competitiveness of the local industries, seven major l Strategic Thrust 6: Knowledge Learning and strategic thrusts are proposed in this report as Transfer - knowledge transfers must be managed l Malaysia has one of the largest English speaking l Mismatch between the skillset available and the outlined below. and not left to chance processes. This can be populations within the ASEAN region after needs of a fast changing industrial landscape. orchestrated through various programs, such as Singapore. This, coupled with other attractive l Strategic Thrust 1: Knowledge Environment - the Fraunhoffer and Steinbeis. incentives for foreign MNCs to relocate their l Most industries do not undertake fore-sighting and an alignment of policies and strategies to global operations to Malaysia, has resulted in a steady visioning; hence, firms do not have clear plans to industry trends, standards and best practices. l Strategic Thrust 7: Knowledge Leverage - flow of foreign direct invest (FDI) into the country. ‘future-proof’ the development of their industries knowledge needs to be shared and used to create This has resulted in a significant spill-over impact or mitigate the adverse impact of global forces l Strategic Thrust 2: Knowledge Institutional a multiplier effect within and across the different on access to technology, expertise and knowledge and uncertainties on their business operations. Systems - develop and optimize the industry industrial ecosystems. This can be achieved for local firms. ecosystem by focusing on the development through the establishment of “one-stop” portal or l A majority of firms tend to release products of robust institutional systems that enable all agencies that play a key role as a resource center l Malaysia is rich in natural resources. Additionally, and services to the market without developing stakeholders to develop, manage and implement for firms in the industry. the tropical climate in Malaysia is an important the foundational and driver conditions of the key programs in a timely manner; so as to ensure dimension of the cultivation of key cash crops that ecosystem; hence they experience high failure that knowledge enablers raise the dynamic In summary, the MYKE-III (Phase 2) captures the state are major revenue earners for the country and a rates and inherit a reputation of producing ‘inferior’ capabilities of local firms. of development of the knowledge ecosystems for the source of employment for a large segment of the or ‘imitation’ products. above-mentioned industries. The study identifies population. l Strategic Thrust 3: Knowledge Approach - adopt strengths and weaknesses in the ecosystems, l Firms do not invest in the appropriate technology a knowledge approach (strategic outlook) that providing also recommendations to strengthen the The knowledge ecosystems for the Malaysian and people to enable them to generate good stresses
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