Amid US-China trade war, western companies turning to Malaysia as it improves IP protection

Malaysia's toughening stance on IP protection has made it more attractive to foreign investors. — Reuters pic
Malaysia's toughening stance on IP protection has made it more attractive to foreign investors. — Reuters pic

NEW YORK, Feb 18 — Western companies, facing uncertainties caused by the US-China trade war, are looking for alternative sources of supply, and turning their attention to countries in Southeast Asia, including Malaysia, whose intellectual property  protection ranking has improved.

Indeed, Malaysian companies participating in international trade fairs in Germany and the US witness a marked increase in the number of Western and, particularly, US buyers enquiring about their products and services.

This applies, particularly, to products which are being sourced on a subcontracting basis – the foreign supplier manufactures the product according to the original prototype, design and specifications provided by the US buying company which then markets the product in the US under its own brand name.

“We have always had misgivings about entrusting our original designs to suppliers in China where intellectual property protection remains a vexing point.  You can never be sure whether the original product designed on your behalf will not find its way to other markets or in China itself,” a New York based buyer who sources from Asia told Bernama, preferring to remain anonymous. He said that he is now negotiating with a Malaysian company to supply products based on his original designs.

The New York businessman is not alone. At trade fairs in Germany and the US, it is not uncommon to see Western buyers thronging to booths of Malaysian exhibitors to find out about their products and long-term supplies.

The MEDICA trade fair of Düsseldorf – this is the world’s largest event dedicated to the medical devices and related products and held in November each year – witnessed a steady stream of foreign buyers.

Malaysia had a large contingent of 40 exhibitors at the last MEDICA event, including a group of small companies that had set up booths under the aegis of the large Malaysia pavilion set up by the Malaysia External Trade Development Corporation (Matrade).

“We highlight Malaysia’s strict IPR protection policy. Foreign companies can be sure that our system respects their IPR protection,” Malaysia’s trade commissioner in Frankfurt, Badrul Hishal Hilal, told Bernama at the MEDICA show.

The IPR is a sensitive issue for the US industry which is, understandably, protective about its assets.

Indeed, Malaysia has improved its IP protection ranking since the previous assessment.  It has been ranked 24th in the latest IP Index of the Washington, D.C.-based U.S. Chamber of Commerce (USCC).

The USCC’s Global Innovation Policy Centre (GIPC) released a few days back its seventh annual International Intellectual Property (IP) Index, “Inspiring Tomorrow,” which analyses the IP environment in 50 world economies. The report ranks economies based on 45 unique indicators that are critical to an innovation-led economy supported by robust patent, trademark, copyright, and trade secrets protection.

The seventh edition of the Index ranks Malaysia 24th out of 50 economies. Malaysia’s overall score increased from 48.68 per cent in the 6th edition to 49.70 per cent in the 7th edition.

“Malaysia’s score illustrates how the country has taken some positive steps to bring its IP framework more closely in line with its Southeast Asian economy peers,” noted Ellen Szymanski, executive director (international policy) at the GIPC.

“Given how much progress Malaysia has made in improving its IP framework in the seven editions of the Index, it is critical that the government rejects further attempts to weaken the IP framework through the use of compulsory licences. Further, to emerge as a leading middle-income economy and continue to attract global investment, the government must create a more robust patent environment, which is critical to protecting innovative, biopharmaceutical innovation in Malaysia.”

The USCC’s International IP Index creates a blueprint for policymakers in countries like Malaysia, who wish to bolster economic growth, create jobs, and foster innovation and creativity. The Index findings also show that pro-IP policies in Malaysia have the potential to increase Malaysia’s economic competitiveness as it strives to become a leader in Southeast Asia and on the global stage. It presents an objective, data-driven view of competitiveness in a global market, based on criteria used by the business community when determining where to invest.

 “The 2019 Index can serve as a roadmap for the Malaysian government to create a stronger overall business environment through more effective IP regime.” added Szymanski. “Through stronger IP policies, Malaysia will increase its ability to attract more venture capital, foreign investment, and private sector investment in R&D.”

According to the Chamber, Malaysia’s key areas of strength are its new case law that strengthens the customs enforcement environment against infringing goods in transit; generous R&D and IP-specific tax incentives; Intellectual Property Corporation of Malaysia (MyIPO) has PPH agreements in place with both the EPO and the IPO; and a strong focus by the Malaysian government on IP as a commercial asset and technology transfer. — Bernama

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