Funding, Tax & other Incentives for Promoting Innovation. Mohamed Shariff Putra Science Park Universiti Putra Malaysia

Transcription

1 Funding, Tax & other Incentives for Promoting Innovation Mohamed Shariff Putra Science Park Universiti Putra Malaysia

2 General trends for R& D funding Grants for R & D & C Tax incentives Innovation awards Challenges

3 World of R&D 2011 Size of circle reflects the relative amount of annual R&D spending

4 Territory size shows the proportion of worldwide R&D spending that is spent there

5 Copyright SASI Group (University of Sheffield) and Mark Newman (University of Michigan).

6 Burkina Faso Egypt Ghana Madagascar Mali Gabon Kenya Mozambique Nigeria Tanzania Uganda % GDP S. Africa Tunisia Research & Development Expenditure

7 Malaysia's R&D Expenditure 0.6% of its GDP Malaysia's Expenditure on R&D (RM Million) Percentage Increase in R&D Expenditure 5th 6th 7th 8th 9th ,096 1,524 2,971 0% 50% 83% 39% 95% USA (2.8%) December 2009 Report: South Korea (3.3%), Finland (3.9%) Taiwan (2.4%).

8 Technology Market Identified Malaysia s Strategic Positioning and Market niche N ational Innovation Model Technology Focused 3-5 years Approach 1: Technology Driven Innovation (TDI) Approach 2: Market Driven Innovation (MDI) Acquisition Income, Growth and Jobs Science (Basic Research) Technology Market Driven Market (to be Identified) Innovation Risk Capital Valueadded products & services Science Grants Technology Grants Risk Capital years 3-5 years

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10 Collaboration with industry BioTech Corp Patent Tech Transfer Further product development Opportunities for Funds Product Market Opportunities Feasibility study CRDF 1 CRDF 2-3 Product development New benefit Safe Garage fund Techno fund Commercial Production Market Development Product Sales

11 Ministry of Science Technology & Innovation (MOSTI) ScienceFund Innovation of products or processes for further development & commercialisation $91k Lab scale investigation for production of CQ10 Max: $162K

12 TechnoFund Develop products & technologies for pre-commercialization stage Max: $1.6Million Pilot scale production of CQ10 $1.6 Million Commercial plant - VC - $20 million

13 InnoFund encourage innovation of new or existing products, process, or services for commercialisation $16 $162K

14 Ministry of Higher Education (MOHE) Fundamental Research Grant Scheme (FRGS) Exploratory Research Grant Scheme (ERGS) Long Term Research Grant Scheme (LRGS) Encourage development of new ideas/ concepts/theories for new findings, knowledge, development & inventions Explore new ideas & concepts catalyst for new discoveries & inventions Fundamental research - studies of more than 3 years

15 Prototype Research Grant Scheme Research for product development prior to commercial launch Toray Science Foundation - S & T Research Grant Conduct fundamental scientific research which has the potential to contribute greatly to the advancement of S&T

16 Malaysian Technology Development Corp. (MTDC) A Govt. Industry Venture Capital Co. Commercialisation R&D Fund (CRDF) CRDF 1 $162K or 90 % CRDF 2 $162K or 70 % Commer. activities of locally developed technologies/r&ds Focus on business development & producing product via out-sourcing mode Must operate from Technology Centre

17 Technology Centre

18 CRDF Recipient Tech. 1 Univ/RI spin-off Co. Completed ready made /prototype Grant Amount $162K or 90% 2 As above $162K or 70% 3 a SME $1.3 million or 70% 3b Non-SME $1.3 million or 50% Duration 2 yrs 2 yrs 2 yrs

19 The Business Growth Fund (BGF) A transition & a bridge from grant to VC financing A mix of 2 components: a grant portion an equity portion Structured as VC financing more flexible Build enough "commercial" value in Co. to make it attractive for financing by VCs & others

20 Graduate Entrepreneurship Program Train selected graduates to become technopreneurs Start-up Co. to commercialise Uni/Ri IPs Receive fund & nurturing & other value added services Promote commer. of R&D output of Uni/RI Increase pool of young entrepreneurs with excellent business knowledge & skills

21 Technology Acquisition Fund Facilitate Co. acquire foreign technologies for immediate incorporation into Co. manufacturing activity Japan microalga production for Astaxanthin - enclosed Dome shape type Photo-bioreactor

22 Cradle Fund Sdn Bhd Ministry of Finance: not-for-profit Org. Catalyst targeted at budding entrepreneurs Helps local start-up companies to attain commercialisation The Co. owns IP rights of product or service Co. has a prototype which requires another 8% to 10% product refinement to meet market & industry expectations Max: $161,500

23 Malaysian Biotechnology Corporation Sdn Bhd Biotechnology Commercialisation Fund ( BCF ) Term loan/financing Facilitate on-going commercialisation of biotechnology products & services Facilitate expansion of existing biotechnology business Maximum $1 million Interest rate - 5% % monthly rest basis

24 Typical expenditure: BCF Term loan/ Financing a. Project/Machinery Expansion of production, research & service related facilities For production or laboratory equipment

25 b. Working Capital IP filing BCF Term loan/ Financing Clinical or field trial Raw materials, consumable or livestock Compliance & regulatory costs R&D towards improving existing products/ services No salaries Business expansion to introduce products/services into global market

26 Other sources of funding KeTTHA - Green Tech. Financing Scheme MATRADE - Market Develop Grant Multimedia Super Corridor R&D Grant MDEC IP Grant Scheme Help incorporate green technology elements in specific project Assist SMEs expand to overseas market Innovative of ICT/multimedia products -potential commercialisation Delivery of the No. of IP rights protected & commercialised for MSC Malaysia

27 Tax Incentives R&D incentives: Investment Tax Allowance (ITA) Super Deductions Enhanced benefits for Pioneer Status

28 Investment Tax Allowance (ITA) In-house R&D - 50% on capital expenditure incurred within 10 years R&D service providers -100% capital expenditure incurred within 10 years Any unutilized allowances can be carried forward to subsequent years

29 Investment Tax Allowance (ITA) If an R&D Co. does not claim benefit for services provided to related companies, the related Co. can receive a 200% super deduction for payments made to R&D Co.

30 200% Super Deductions In-house R&D can claim 200% super deductions for noncapital expenditures Cash donations to research institutes Payments for use of services of RI, RC

31 200% Super Deductions R&D activities undertaken outside of Malaysia Including the training of Malaysian staff /ca_en_tax_RD_Global_RD_Survey_TaxIncentives_ pdf

32 Enhanced Benefits for Pioneer Status Income from activities & products that benefit economy R&D companies: high tech software development companies manufacturing producing world class products Tax excepted for 5 years can extend addition 5 years

33 Biotechnology Co. approved with BioNexus Status Tax exemption on 100% statutory income for 10 years Tax exemption on dividends 0Innovation.pdf

34 Angel Tax Incentive Angel accorded a tax relief of up to $161,500 p.a, in the 3rd year (after 2 years) of his/her shareholding.

35 Challenges are seeds for success. Complacency breeds failures

36 Academic Award National University Best Commercialised Product Award - $13K

37 Royal Award Bestowed the honorific title Dato (Sir)

38 National Awards Cash prize $16 K Award Logo for publicity purpose for 3 years Tax exemption of 100% of value of increased export (VIE) for winner of Export Excellence Award Free standard booth for 3 international trade fairs

39 National Awards Publicity overseas on profile of Co. together with its products & services Nominated for Prime Minister s Industry Excellence Award Given priority soft loan SME Publicised in newspapers

40 Challenges

41 COMPLEXITY Technology Economics Tools Learning Theory Systems Generic Strategy PIMS Human Behaviour Creativity/Innovation SCOPE OF STRATEGY RESEARCH

42 Weak linkages between Univ. /RI - industry

43 Early stage collaboration with industry partners

44 Fragmented research activities within ministries MOSTI MOH MOHE MOA NRE MOD MOT KKR KPPK KETTHA SIRIM MIGHT MIMOS BIOTECH MDeC Others IMR USM MARDI FRIM STRIDE MIROS CRC UPM VRI UM FRI NAHRIM CREAM UKM Fragmented & working in silo LGM MPOB MCB PTHN TNB PETRONAS No single agency to collaborate R&D No centralised database on R&D R&D allocation is not optimally utilised

45 And in reality, gaps exist at implementation level by the various factors FINANCIAL Partners: Banks, MTDC, MAVCAP, MDV, MBC, MDeC, SME Corp, EU, OIC, ADB etc. COMMUNITY Partners: YIM, ADUN, MPS, NGOS, MINDS, MACRI, etc. INTELLECTUAL CAPITAL Partners: RI, IHL, schools, Colleges, etc ENTERPRISE & INDUSTRY Partners: SME Corp, MBC, MDeC, TPM, Khazanah, Sime Darby, etc. KNOWLEDGE Partners: Research Institutes, Universities Industry, etc. LEADERSHIP & CULTURE Partners: National Councils NEAC, ISIS, etc. MARKET ACCESS Partners: MITI, MATRADE, MIDA, Khazanah, private sectors, Chambers of Commerce, MOFA, etc. GOVERNANCE & POLICY Partners: EPU, MOF and other ministries and agencies, MAMPU, PEMUDAH, etc. PHYSICAL INFRASTRUCTURE Partners: JPJ, Tenaga, MSC, TM, Maxis, Celcom,CSM,.my domain registry, etc. INNOVATION SUPPORT Partners: YIM, Incubation centres, MRM and other Councils, MINDS, MACRI, etc. INTERNATIONAL Partners: Top RIs, Universities, multinationals, foundations, strategic alliances, etc. R&D Research Institutes, Universities Industry, Councils, etc.

46 LEADERSHIP & CULTURE Need to facilitate and synergise all components of Total Innovation Ecosystem PHYSICAL INNOVATION INFRASTRUCTURE SUPPORT Leadership, empowerment, Partners: community participation MTDC, MAVCAP, MDV, MBC, MDeC, SME Corp R&D Research Institutes, Partners: Universities MAMPU Industry, PEMUDAH Councils, etc. Tech Commercialization Offices/Centres/ Partners: Incubators/Tech RI Parks/ IP Laws/Regulations IHL schools Business colleges Consultants/ Clusters/Networks Partners: JPJ, Tenaga, MSC, TM, Maxis, Celcom,CSM,.my domain registry, etc INTERNATION AL Partners: Research Institutes, Universities Industry, etc. PUBLIC SECTOR Public services delivery Partners: National Councils NEAC ISIS InnovationMalaysia TM +Strategic Partners KNOWLEDGE Partners: INFOSTRUCTURE EPU, MOF Access to MOSTI, MITI information and MOHE, MOA, MOH knowledge KeTTHA INTELLECTUAL CAPITAL Schools (Pri/Sec) Vocational/Tertiary Corporate training Community Service Org/NGO Governance & Policy Policy Partners: coordination Regulatory YIM & Incubation administrative centres Transparency and Stability Partners: ENTERPRISE & Top RIs, Universities, INDUSTRY multinationals, Manufacturing and foundations, services, SMEs, strategic GLCs, alliances, MNCs etc. FINANCIAL Partners: Private Venture Research Institutes, Capitalists, Angels and Business Universities investment, Industry Government Investment in innovation infrastructure

47 Team work Strategic alliance Innovation Partnership Same vision, mission & wavelength!

48 The secret of

49 Whatever you do, do it with Passion

50 Twin Towers