NOVEMBER 11 — Unlike Malaysia, China, by contrast, has made innovation an industry in its own right. Its policy directive on integrating science with industrial innovation is explicit: enterprises lead, research serves application, and the entire chain from idea to market is treated as a production system to be optimised. Malaysia wants the same. The question is whether it is willing to do the unglamorous industrial work that China did.

Malaysia’s innovation problem is not a shortage of ideas. The core challenge is the gap between R&D outputs and the ability of local technology to penetrate real markets. Malaysia spends only 1 per cent of GDP on R&D. But the private sector’s share of R&D spending is disproportionately low, meaning the engine of commercial innovation is running well below capacity.

Malaysia ranked 34th in the 2026 GII, a respectable position among developing economies. But look at the composition: Malaysia ranks first globally in high-tech exports and imports. It ranks eighth in science and engineering graduates. Yet its knowledge and technology outputs rank 32nd, and its creative goods exports are strong while its own intellectual property generation lags. Malaysia is exceptionally good at making things designed elsewhere. It is far less good at designing things the world wants to buy.

We need to treat innovation as an industry, with upstream, midstream, and downstream, each with dedicated capital, specialised labour, and performance metrics. Malaysia has pieces of this chain. What it lacks is the connective tissue that turns pieces into a system.

China’s approach is instructive. The country does not celebrate innovation as a virtue. It treats it as a logistical problem. It mandates that national science and technology programmes be oriented toward industrial application, that enterprises take the lead in projects with clear commercial goals, that project acceptance criteria evaluate both technological and industrial targets together, replacing the leisurely pace of academic research with the urgency of market demand .

Malaysia has gestures in this direction. But intent is not an industry. The difference is that China’s policy assigns ownership of outcomes. Malaysia’s ecosystem still suffers from what one described as a “broken bridge” between knowledge producers and users, with both sides operating in silos. When a startup fails to commercialise, the university blames the market, the market blames the university, and the agency blames both while ticking its KPI box for workshops conducted.

The government’s rhetoric has shifted from “Made in Malaysia” to “Made by Malaysia,”. The challenge is not R&D spending alone but “whether it leads to value capture in the country, including ownership of intellectual property and the ability of local firms to compete globally. The diagnosis is right. But the institutional architecture has not yet caught up. Universities are still rewarded primarily for publications and grants, not for licensing revenue or spin-off equity. 

If Malaysia were serious about innovation as an industry, three things would change immediately.

First, the metrics would change. An industry measures revenue per researcher, licensing income as a percentage of R&D spend, and the survival rate of spin-offs after five years. Malaysia should publish these numbers annually and hold agencies accountable for them.

Second, the money would follow the market. Malaysia’s public R&D spending is concentrated in government research institutes and universities. China’s policy directs that projects with clear industrial application be led by enterprises. Malaysia could adopt a simple rule: any public R&D grant above a certain threshold must have a named industry partner with skin in the game, co-funding at least 30 per cent and committing to a first-right-of-refusal on the resulting IP. This would force researchers to talk to customers before they write their proposals.

Third, Malaysia needs dedicated prototyping and pilot manufacturing facilities that operate on industry timelines, not academic ones. MRANTI’s shared testing facilities are a start, but they must be run like a contract manufacturer, with turnaround times measured in weeks and pricing that reflects commercial rates, not subsidised ones. 

Malaysia does not need a new innovation policy. It needs to stop pretending that innovation is a separate sector that can be stimulated by occasional funding injections and then left to its own devices. China’s success comes from treating the entire chain from idea to market as a single industrial system, with enterprises at the centre, research serving production, and policy designed to eliminate friction rather than celebrate effort.

The question is whether Malaysia is willing to do what an industrial approach to innovation actually requires: less ceremony, more enterprise leadership; fewer grants, more contracts; less publication, more product. Until then, innovation in Malaysia will remain what it has always been—an accidental investment, generously funded and chronically under-industrialised.

* Professor Datuk Dr Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my.   

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.