IP rights can help Malaysian businesses succeed in the global economy

The govt should be applauded for its recognition that a knowledge-based economy in the nation will be essential to achieve faster economic growth

by PHILIP STEVENS / pic by BLOOMBERG

The government has, as one of its major 2019 objectives, the attraction of additional investments in the production of high-technology and knowledge-based goods and services that have made Malaysia an upper-middle-income country.

The government should be applauded for its recognition that a knowledge-based economy in Malaysia will be essential to achieve faster economic growth. Strong protection of intellectual property (IP) rights will be key to this ambition, but there is ambivalence within the government.

Malaysia is unlikely to produce the next Google, or another innovation multinational. Rather, its opportunity comes from connecting local entrepreneurs and start-ups with existing knowledge-based multinational companies (MNCs).

Malaysia today is host to increasing numbers of large, knowledge-intensive multinational businesses. This knowledge-rich business community includes software giants, agricultural chemicals, technology developers and biopharmaceutical companies.

Companies like these in Malaysia bring huge opportunities for local entrepreneurs and start-ups.

MNCs often struggle to enter markets and address local problems due to their lack of agility and local knowledge. Collaboration with local businesses can be the key to success.

In order for this to work, local businesses must confidently speak the language of IP — particularly if they wish to sell their own ideas to be commercialised and scaled by large MNCs.

Patents, trademarks, copyrights, trade secrets, know-how, websites, social media identities and other forms of IP are the instruments by which multinationals trade with local companies. IP laws and international treaties govern these forms of IP.

When an MNC wants to buy or license ideas or technology from a local company, the conversation will often be held in these terms.

Technology transfer and licensing are the most efficient ways that a promising local company armed with a great idea for the region can

follow the traditional Silicon Valley model — introduce an idea, grow the business and then get bought by a far bigger company.

Malaysia’s small businesses are sitting on a rich pipeline of technology, brands and other knowledge assets that could thrive internationally if they are able to exploit their IP.

Take Hypoband, a smart wristband for diabetics developed by Malaysian company Geob International Sdn Bhd. The gadget works by pairing with a smartphone via bluetooth. The smartphone calls out, SMS or alarms when the Hypoband detects cold sweat or a panic button is triggered, alerting carers or emergency contacts. The technology within the wristband is protected by patents, the application’s coding depends on copyright protection, while its branding relies on trademarks to protect it from imitators.

Obtaining local and foreign patents makes it more likely that foreign investors will seek licensing and collaborative deals with companies such as these. Patents allow investors to know both that the product is original and that they can protect their investment for enough time to make returns.

Malaysia is rich with IPS. Its entrepreneurs need to recognise and value their own knowledge assets and use them effectively to grow and sell abroad. In turn, the country can move further into the global economy, attract more foreign investment and trade more readily overseas. This is the key to sustainable economic growth.

Naturally, there are challenges. Awareness among business people is low on the vital role and function of IP rights such as patents, trademarks and copyright, along with limited understanding on how to register and protect these various forms of IP.

To an extent, the government recognises the importance of IP to its wider economic objectives. There has been a greater focus by the government on exploiting IP as a commercial asset and technology transfer, and there are a range of generous research and development and IP-specific tax incentives.

Yet, more needs to be done. Malaysia’s IP environment sits halfway down the 2019 Global IP Index, alongside countries such as China and Turkey — and well behind regional leader Singapore.

Recent moves by the government to confiscate medicine patents do not help the situation, while weaknesses exist with Malaysia’s trade secrets laws and the legal processes to enforce trademarks.

In addition to regulatory and tax reforms, efforts should therefore be made to upgrade the country’s IP laws to take account of modern technological developments and ensure that foreign IP rights are treated equally to local rights.

Above all, Malaysian entrepreneurs and the government need to care about IP. It is the rocket fuel for business growth, overseas expansion and significant value creation, and the key to the knowledge economy.

  • Philip Stevens is ED of Geneva Network, a UK-based research organisation focusing on international innovation and trade policy.