Workshop on PublicWorkshop on Public--Private RelationshipsPrivate RelationshipsThe Malaysian Experience in Building Sustainable The Malaysian Experience in Building Sustainable

Incubation Industry (Movement) Incubation Industry (Movement)

ByBy

MrMr AnnuarAnnuar MohdMohd SaffarSaffarPresidentPresident

National Incubator Network AssociationNational Incubator Network AssociationMalaysiaMalaysia

International Conference on Business IncubationInternational Conference on Business IncubationAuckland, New ZealandAuckland, New Zealand

1414--15 March 200715 March 2007

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ContentContent

History and BackgroundHistory and BackgroundFederal GovernmentFederal Government’’s Concern Overs Concern OverProgress of Incubation (1996Progress of Incubation (1996--1999) 1999) Malaysian Government Attempt at Correcting SituationMalaysian Government Attempt at Correcting Situation(Dialogue & MSC(Dialogue & MSC--Status Incubator)Status Incubator)Emerging Model of Typical IncubatorEmerging Model of Typical Incubator

Pseudo PublicPseudo Public--Private Sector IncubatorsPrivate Sector IncubatorsPublicPublic--Private Incubators CollaborationPrivate Incubators CollaborationBenchmarking Against Key Success FactorsBenchmarking Against Key Success FactorsConcluding RemarksConcluding Remarks

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Background: Malaysia Being Left Behind

CountryCountry Nos. of IncubatorsNos. of IncubatorsUSA/CanadaUSA/Canada 1100+ 1100+

ChinaChina 500+500+

South KoreaSouth Korea 200+200+

JapanJapan 200+200+

TaiwanTaiwan 65+65+

IndiaIndia 60+60+

MalaysiaMalaysia 50 +50 +UzbekistanUzbekistan 20+20+

IndonesiaIndonesia 10+10+ThailandThailand 12+12+

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Incubators in Malaysia

KEDAH

PENANG

KLANG VALLEY

JOHOR

SARAWAK

SABAH

MSC ZONE

PERAKMELAKA

KTM SB/KHTP

MCIABT MultimediaN2N Ventures

YTL E-Solutions BhdBioEnterprise S/BSirim Technology Inc.Skali E-Ventures S/BISpring Capital S/B

UTM/BIP

USAINS

MICTH S/B

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11stst GenerationGenerationReal estate, shared facilitiesReal estate, shared facilitiesReactive supportReactive support

22ndnd GenerationGeneration++ Advisory services,Advisory services,

Proactive supportProactive support

33rdrd GenerationGeneration++ Access to funding, CoAccess to funding, Co--venturingventuringAccelerating progress, Mentoring + Accelerating progress, Mentoring + Technology LabsTechnology Labs

1990 - 1994 1995 - 1999 2000 - 2010

MSC Status Incubators

Incubator/Facility Effective Incubation process and Conducive Ecosystem

Evolution of IncubatorsEvolution of Incubators

1988 1988 -- 19941994 1995 1995 -- 19981998 1999 1999 -- 20042004 2005 2005 -- 20102010

Technology Park Technology Park Malaysia (TPM)Malaysia (TPM)

•• MM’’siansian Tech Dev Tech Dev Corp (MTDC)Corp (MTDC)••SIRIMSIRIM

•• Multimedia Development CorporationMultimedia Development Corporation•• KHTPKHTP

1st Generation Model

Landlord model

Characteristics:

Real estate,

Shared facilities

Reactive support

In operation:-

1 (tech) incubator

2nd Generation Model:-Landlord +

consulting/advisory model

Characteristics:

Real estate,

Shared facilities

Proactive support

Business Advisory

Services

In operation:-

3 (tech) incubators

30+ incubators overall

3rd Generation Model:-Facilities + Business Advisory Services and

mentoring services

Characteristics:

Real estate,

Shared facilities

Proactive support

Access to Funding

Co-Venturing

Mentoring & Coaching

Business Acceleration process

Technology Labs

Focused Technopreneur Development Programs

Technology & Business Incubator Development

Consulting

Incubator Industry Development Consulting

NIDP as the nucleus for the nationwide roll-out of the MSC:-

MSC Status Incubator

Cybercentre

Cybercity

Incubator Industry Development Targetby 2010 : -• 100 Incubators Nationwide

(currently 55)• 30 MSC Status Incubators

(currently 18)

Historical Background of Historical Background of Malaysian Incubation Industry and Major StakeholdersMalaysian Incubation Industry and Major Stakeholders

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Federal GovernmentFederal Government’’s Concern Overs Concern OverProgress of Incubation (1996Progress of Incubation (1996--1999)1999)

Up to 1996/99, ALL (36) incubators were federal or Up to 1996/99, ALL (36) incubators were federal or state supported incubators.state supported incubators.Too much dependence on federal government Too much dependence on federal government funding (both development and operation budget).funding (both development and operation budget).No privateNo private--owned incubator.owned incubator.Success stories were lacking/not forthcoming.Success stories were lacking/not forthcoming.

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Malaysian Government Attempt at Correcting SituationMalaysian Government Attempt at Correcting Situation

““CorporatizationsCorporatizations”” of Technology Incubators/Parks beginning 1996.of Technology Incubators/Parks beginning 1996.These incubators will only be These incubators will only be Partially supportedPartially supported by Federal Government.by Federal Government.Receive only Development Budget, but no Operations Budget. Receive only Development Budget, but no Operations Budget. Emergence of Pseudo Emergence of Pseudo ““PublicPublic--PrivatePrivate”” Incubators.Incubators.However, Funding for Technology Excellence However, Funding for Technology Excellence CentresCentres will be continued, will be continued, e.ge.g::

Information Technology Centre Information Technology Centre –– Java Tech Java Tech DevmtDevmt Centre, Virtual Reality, Centre, Virtual Reality, etcetcAdvanced Engineering Advanced Engineering CentresCentres –– Rapid Prototyping, CAD Lab, Automation, Rapid Prototyping, CAD Lab, Automation, etc.etc.Biotech Biotech CentresCentres –– QC Lab, Standardization QC Lab, Standardization CentresCentres, Extraction Plant, etc., Extraction Plant, etc.

Dialogue with IndustryDialogue with IndustryIntroduction of Introduction of ““MSCMSC--Status IncubatorsStatus Incubators”” to promote growth of more to promote growth of more ““privateprivate--ownedowned”” incubators.*incubators.*

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A Malaysian Model of Technology IncubatorsA Malaysian Model of Technology Incubators

CorporatizationsCorporatizations of Technology Incubators/Parks.of Technology Incubators/Parks.Partially supported by Federal Malaysian GovernmentPartially supported by Federal Malaysian GovernmentReceive only Development Budget, but no Operations Budget.Receive only Development Budget, but no Operations Budget.Funding for Technology Excellence Funding for Technology Excellence CentresCentres

Information Technology Centre Information Technology Centre –– Java Tech Java Tech DevmtDevmt Centre, Virtual Reality, etcCentre, Virtual Reality, etcAdvanced Engineering Advanced Engineering CentresCentres –– Rapid Prototyping, CAD Lab, Automation, etc.Rapid Prototyping, CAD Lab, Automation, etc.Biotech Biotech CentresCentres –– QC Lab, Standardization QC Lab, Standardization CentresCentres, Extraction Plant, etc., Extraction Plant, etc.

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TECHNOLOGY CENTRES IN TECHNOLOGY CENTRES IN TECHNOLOGY INCUBATORSTECHNOLOGY INCUBATORS

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Incentives for MSC Status Incubators*Incentives for MSC Status Incubators*

MSC Status Incentives through the Bill of Guarantees for MSC MSC Status Incentives through the Bill of Guarantees for MSC Status IncubatorStatus Incubator

No Corporate Tax for 1No Corporate Tax for 1stst Ten Years.Ten Years.

Expedited Visa approval for Hiring of Knowledge workers from abrExpedited Visa approval for Hiring of Knowledge workers from abroad.oad.

Etc.Etc.

Strategic shared resources, business, technical advisory and Strategic shared resources, business, technical advisory and technology labs support through NIDP/NINA technology labs support through NIDP/NINA

Benchmarking and Networking through NIDPBenchmarking and Networking through NIDP

Incubator Manager Training Incubator Manager Training

Incubator Manager Exchange ProgramIncubator Manager Exchange Program

Access to MSCAccess to MSC--TDF Programs, KHTPTDF Programs, KHTP--PVED Programs, etc.PVED Programs, etc.

Membership to National Incubator Network Association (NINA)Membership to National Incubator Network Association (NINA)

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Status as at 31Status as at 31stst Dec 2006 Dec 2006 (Breakdown of Incubators in Malaysia According to Type)(Breakdown of Incubators in Malaysia According to Type)

Technology Incubators 18

All are MSC Status Incubators/NINAAll are MSC Status Incubators/NINAPrivate owned Incubators Private owned Incubators = Nine (9)= Nine (9)

StateState--owned Incubatorsowned Incubators 1414

State Econ State Econ DevmtDevmt CorporationsCorporationsMARA Incubators 14

Ministry of Entrepreneur Ministry of Entrepreneur DevmtDevmtCraft Incubators Craft Incubators 33

Agro-tech Incubators 3

Others (UUM, UKM, UPM) 3

_____

TOTAL 55

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1. Provide an effective one-stop agency - MDeC.2. Provide a world-class physical and information

infrastructure.3. Provide competitive financial incentives, including no

income tax for up to 10 years or an investment tax allowance, and no duties on import of multimedia equipment.

4. Allow unrestricted employment of local and foreign knowledge workers.

5. Ensure freedom of ownership by exempting companies with MSC Status from local ownership requirements.

6. Give the freedom to source capital globally for MSC infrastructure, and the right to borrow funds globally.

7. Become a regional leader in intellectual property protection and cyberlaws.

8. Ensure no Internet censorship.9. Provide globally competitive telecommunications tariffs.10. Tender key MSC infrastructure contracts to leading

companies willing to use the MSC as their regional hub.

BILL OF GUARANTEES Under the Malaysian Government's Bill of Guarantees, any companygranted the 'MSC-Status' enjoys several financial and non-financial

incentives. The Government of Malaysia commits to:

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Number of Incubators 5555

1st Generation Incubators

Real Estate, Landlord, Shared facilities, Reactive Support

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2nd Generation Incubators

Real Estate, Landlord, Shared facilities, Reactive Support + Consulting/Advisory

13YTL EYTL E--SolutionsSolutions

N2N Venture SolutionsN2N Venture SolutionsBT MultimediaBT Multimedia

BIP/UTMBIP/UTMBioEnterprise AsiaBioEnterprise Asia

MICTHMICTHUSAINSUSAINS

SKALI ESKALI E--VenturesVenturesISpring CapitalISpring CapitalEastern MSCEastern MSC

PTTCPTTCCreative ClusterCreative Cluster

MIRCMIRCSohosuiteSohosuite

3rd Generation Incubators

Facilities + business advisory services + Acceleration Technology Labs

4MSC Tech ComMSC Tech Com

KTMSBKTMSBSIRIM (STI)SIRIM (STI)

Tech Park Tech Park MsiaMsia

Breakdown of MSC Status IncubatorsBreakdown of MSC Status Incubators(According to (According to ““GenerationGeneration””, as at Dec 2006), as at Dec 2006)

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Recent Successes of IncubationRecent Successes of Incubationin Malaysiain Malaysia

Technology Park Malaysia has more than Technology Park Malaysia has more than 20 public-listedcompanies that graduated from incubator program.companies that graduated from incubator program.MSCMSC--Tech Tech CommComm Centre has Centre has 5 public-listed companies companies that graduated from their incubator program.that graduated from their incubator program.16 new incubators formed in last 10 years.16 new incubators formed in last 10 years.Nine (Nine (9) are 9) are privateprivate--ownedowned incubators formed in last 3 incubators formed in last 3 years.years.

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Collaboration between

Public and Private Incubators

(An Overview)

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BackgroundBackgroundCollaboration between:Collaboration between:

BT Multimedia Sdn. Bhd. (part of the British Telecom Group) BT Multimedia Sdn. Bhd. (part of the British Telecom Group) -- (Private)(Private)MCA ICT Resource Centre (MIRC) MCA ICT Resource Centre (MIRC) -- (Public)(Public)

Both are Both are MSC Malaysia Status IncubatorsMSC Malaysia Status Incubators & members of the & members of the Malaysian National Incubator Network Association (NINA).Malaysian National Incubator Network Association (NINA).

In 2006, at the SME ICT Global Leadership Forum, In 2006, at the SME ICT Global Leadership Forum, BT & MIRC signed a Memorandum of Understanding (BT & MIRC signed a Memorandum of Understanding (MoUMoU) to train ) to train small and mediumsmall and medium--scale enterprises (scale enterprises (SMEsSMEs) in implementing information ) in implementing information communication technology (ICT) into their operations. communication technology (ICT) into their operations.

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BT MultimediaBT Multimedia

(Part of British Telecom Group):(Part of British Telecom Group):Has Incubation laboratory in KL Has Incubation laboratory in KL SentralSentral which consists of 50 which consists of 50 staff. staff. Up to September 2005, they had 10 patents filed by Malaysians.Up to September 2005, they had 10 patents filed by Malaysians.The results of the research can be used in collaboration with The results of the research can be used in collaboration with local companies. local companies. Maxis, 2Maxis, 2ndnd largest local telecom co., is one of the partners of largest local telecom co., is one of the partners of the laboratory.the laboratory.Strong focus on innovation and Strong focus on innovation and commercialisationcommercialisation of research of research resultsresults

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MCA ICT Resource Centre (MIRC)MCA ICT Resource Centre (MIRC)

Was established to assist Malaysian Was established to assist Malaysian SMEsSMEs to leverage the use of to leverage the use of ICT solutions and advanced business processes that will enable ICT solutions and advanced business processes that will enable them to remain competitive in an era of globalization.them to remain competitive in an era of globalization.Currently focusing on: Currently focusing on:

SME TransformationSME TransformationTechnopreneurTechnopreneur DevelopmentDevelopmentMarket Intelligence and ResearchMarket Intelligence and ResearchIntellectual Property Development and ProtectionIntellectual Property Development and Protection

MIRC also have a huge database of nonMIRC also have a huge database of non--ICT members who can ICT members who can be the end users of the ICT products/services.be the end users of the ICT products/services.

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The Challenge toThe Challenge toBT Multimedia (Private) & MIRC (Public)BT Multimedia (Private) & MIRC (Public)

Malaysian Malaysian SMEsSMEs, even ICT ones, are , even ICT ones, are not particularly innovativenot particularly innovative..It is important for all It is important for all SMEs/incubateesSMEs/incubatees to get the right information on to get the right information on technology tools to innovate their business to stay ahead of comtechnology tools to innovate their business to stay ahead of competitors. petitors. BT will offer its methodologyBT will offer its methodology to help to help MIRCMIRC’’ss incubateesincubatees to strengthen to strengthen their businesses locally and their businesses locally and expand globally.expand globally.The three (3)The three (3)--month month programmeprogramme is being is being organisedorganised by MIRC with British by MIRC with British Telecom (BT) and is aimed at helping Telecom (BT) and is aimed at helping incubateesincubatees transform their transform their businesses.businesses.BT has its own innovation syllabusBT has its own innovation syllabus that covers many important topics, that covers many important topics, including including Product Creation and Product ModificationProduct Creation and Product Modification..

SUCCESS STORIES ??? Too early to Tell !!SUCCESS STORIES ??? Too early to Tell !!

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Impact Assessment StudyImpact Assessment Study

Economic Planning Unit (EPU)Economic Planning Unit (EPU) of Prime Ministerof Prime Minister’’s s Dept is conducting an Dept is conducting an Impact Assessment StudyImpact Assessment Study on on Incubators in Wealth Creation.Incubators in Wealth Creation.Opportunity to provide input to Govt.Opportunity to provide input to Govt.Last Baseline Review Study done in 2004.Last Baseline Review Study done in 2004.Malaysia was a part of Malaysia was a part of earlier studyearlier study conducted by UNDP conducted by UNDP in in 1999.1999.Interesting to Interesting to ““RERE--LOOKLOOK”” at how Malaysian Incubation at how Malaysian Incubation Industry perform and progress against the Industry perform and progress against the Four (4) Key Four (4) Key Success Factors.Success Factors.Are current Incubator Operations sustainable??.Are current Incubator Operations sustainable??.

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Benchmarking Against Benchmarking Against Key Success FactorsKey Success Factors

A.A. In Preparatory ProcessIn Preparatory ProcessB.B. In Implementation ProcessIn Implementation ProcessC.C. Start of Initial OperationsStart of Initial OperationsD.D. Sustainability of Incubator OperationsSustainability of Incubator Operations

LalkakaLalkaka, R. and P , R. and P AbettiAbetti (1999). (1999). Business Incubation and Enterprise Business Incubation and Enterprise Support Systems in Restructuring CountriesSupport Systems in Restructuring Countries. UNDP Report.. UNDP Report.

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Benchmarking Against Benchmarking Against Key Success Factors (contKey Success Factors (cont’’d)d)

A.A. In Preparatory ProcessIn Preparatory Process1.1. Reconnaissance Surveys (locations, benefit/cost, etc.)Reconnaissance Surveys (locations, benefit/cost, etc.)2.2. Local consultantsLocal consultants3.3. Identification of Strong SponsorIdentification of Strong Sponsor4.4. Feasibility (entrepreneurial spirit, talent pool, linkages, etc.Feasibility (entrepreneurial spirit, talent pool, linkages, etc.))5.5. Commitment of agencies (federal, state, local, etc.)Commitment of agencies (federal, state, local, etc.)

B.B. In Implementation ProcessIn Implementation Process1.1. Strong Mgmt linkage with Advisory GroupStrong Mgmt linkage with Advisory Group2.2. Careful selection, appointment and remuneration of MgrsCareful selection, appointment and remuneration of Mgrs3.3. Screening potentials of tenants (tech, business, marketing) Screening potentials of tenants (tech, business, marketing) 4.4. Sound tech assistance to supplement local skillsSound tech assistance to supplement local skills

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Benchmarking Against Benchmarking Against Key Success FactorsKey Success Factors

C.C. Start of Initial OperationsStart of Initial Operations1.1. Access to equity, credit and royalty facilitiesAccess to equity, credit and royalty facilities2.2. Involvement of private sectorInvolvement of private sector3.3. Continuing program for improving mgmt skills of incubator staffContinuing program for improving mgmt skills of incubator staff4.4. Links to other SME programs and support systems.Links to other SME programs and support systems.

D.D. Sustainability of Incubator OperationsSustainability of Incubator Operations1.1. Proactive pursuits of opportunities (home/abroad)Proactive pursuits of opportunities (home/abroad)2.2. Creative ways of raising incomes (corporate memberships, fees, eCreative ways of raising incomes (corporate memberships, fees, etc.)tc.)3.3. Political Stability (macroPolitical Stability (macro--econ policies that encourages entrepreneurship, econ policies that encourages entrepreneurship,

market stimulation, etc.)market stimulation, etc.)4.4. Objective reObjective re--evaluation of incubator experience.evaluation of incubator experience.

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CONCLUDING REMARKS CONCLUDING REMARKS Federal GovernmentFederal Government’’s res re--structuring/restructuring/re--modeling of (past) public incubators modeling of (past) public incubators has shown successes in making them more businesshas shown successes in making them more business--oriented.oriented.Establishment of Establishment of ninenine ((9) private9) private--owned incubatorsowned incubators within within last three (3) last three (3) yearsyears is very encouraging.is very encouraging.Two Cases of Public Private Relations:Two Cases of Public Private Relations:

Case 1: Case 1: GovtGovt--Industry Dialogue Industry Dialogue MSC Status IncubatorsMSC Status Incubators9 Private Incubators9 Private Incubators

Case 2: BT Multimedia and MIRC Collaborative ProjectCase 2: BT Multimedia and MIRC Collaborative Project

Must continue to establish a viable and sustainable incubator inMust continue to establish a viable and sustainable incubator industry to dustry to accelerate and support the growth of small & medium (SMI) industaccelerate and support the growth of small & medium (SMI) industry.ry.Must recognize the need to build a network of incubators nationwMust recognize the need to build a network of incubators nationwide and ide and worldwide.worldwide.

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THANK YOUTHANK YOU