One of the key findings discussed during the panel discussion at the launch was ‘New Actors Driving Innovation’, which indicated that small-medium-enterprises (SMEs) in Malaysia are taking a back seat in driving innovation, dropping to just 6% compared to 14% in 2014.
“Multinational companies (MNCs) meanwhile are seen by 26% of respondents as the key driver of innovation, an increase by 4% compared to 2014. This is in line with the global trend that sees MNCs as the key driver in global innovation,” said General Electric Malaysia CEO Datuk Mark Rozario.
Click here to view the results from the 2018 GE GIB on Malaysia's findings.
The panelists discussed the possible challenges faced by SMEs vs. MNCs:
Infuse innovation as a culture
Albern Murty, Chief Executive Officer of Digi Telecommunications, believes that the definition of innovation must be reviewed. To him, innovation is beyond a product, and Malaysia must infuse innovation as a culture in the whole ecosystem to move towards being an innovative country.
Citing Digi as an example, Murty said that to nurture innovation in a company, all the sections of the company must have an innovative mindset. For example, the finance department is looking at how to reduce cost innovatively. He said the company focused on nurturing the culture of innovation and customer obsession as these are not something that can be owned by anyone but belongs to the company.
Difficulties in acquiring funding
Jacob Isaac, Managing Director, New Technologies of Fusionex International, said that it is increasingly challenging for startups to obtain funding as it was no longer sufficient to come up with the perfect product, but also a viable business model to sell them. Investors are also becoming more prudent in investing in innovation. In addition, MNCs increased their investment in innovation by 50%, so “it’s not so much that SMEs are falling behind, but that MNCs are catching up.”
Difficulties in accessing specific sector
Dr. Fazilah Shaik Allaudin, Senior Deputy Director, Planning Division, Ministry of Health Malaysia, also observed a similar situation where startups would stop innovating due to lack of funding, talent, and skills. Besides, these startups also face difficulties in accessing specific sectors, such as healthcare, which has seen huge disruptions over the past few years.
In dealing with the market access issue, she said that the ministry has created an ecosystem to bring the government, academia and industry together to spur innovation.
From L-R: Albern Murty, Chief Executive Officer of Digi Telecommunications, Dr. Fazilah Shaik Allaudin, Senior Deputy Director, Planning Division, Ministry of Health Malaysia, Jacob Isaac, Managing Director, New Technologies of Fusionex International and Dr. Richard Record, World Bank Lead Economist for Malaysia
Improve quality of education to close skills gap
Dr. Richard Record, World Bank Lead Economist for Malaysia, noted that the cost of innovating and adopting technology is high for SMEs, which can be demotivating and the lack of access to finance and skills are often seen as the biggest challenge as echoed by his peers. However, he believes that the solution is not to increase or provide new grants to startups but to reduce the barriers, such as to improve the quality of education to close the skills gap.
“The lack of talents (85% in Malaysia and 64% globally) and the incapacity to scale up successful innovation (88% in Malaysia and 65% globally) is another challenge faced by SMEs,” added Datuk Mark Rozario.
While the panelists agreed that Malaysia has many talents, the key factor was retention. There must be political stability, transparency and equal opportunity in Malaysia to attract talents back to the country.
One thing is clear, the 2018 GE Global Innovation Barometer revealed that despite facing significant and complex challenges, business leaders in Malaysia are feeling more confident when it comes to driving growth through innovation.
Watch the recap video of the panelists session here."