The Bioeconomy Contribution Index (BCI) is an attempt to periodically measure the progress of Bioeconomy in Malaysia. While a standard GDP approach to measuring Bioeconomy provides valuable information, it lacks details on Bioeconomy’s progress and developments. As such, we developed of a comprehensive index to monitor multiple aspects of Bioeconomy on selected indicators that are reliable and reflective of the milestones that BiotechCorp has pursued.
Chart below shows the overall calculated results of the yearly BCI findings from 2005 to 2014. In general, the index grew steadily although there were periods of significant increase due to strong performance on the sub-indicators. The index grew by 5.4% on average every year with strong performance recorded in 2007 and 2012.
Meanwhile, the performance of the sub-indices are matching or exceeding adjusted base year expectations, and importantly, show positive trends over the studied time period with the exception of JOB INCOME. The specific sub-index declines as it did not demonstrate achievements as expected compared to the base performance expected in the model. This is one area that policy makers can analyse to see what factors that leads to the decline and formulise solutions to address the problems.
The BCI is envisioned as a tool to assess the status of the Bioeconomy in a quick, consistent and comprehensive manner to enable targeted and timely policy and strategy. The effectiveness of these policies is crucial given the short timeframe BiotechCorp has set on its targets on Gross National Income, investment, and employment by the year 2020 as specified under the National Bioeconomy Policy.
In order to achieve these goals, regular strategic reviews, alignment of actions, performance, execution, and monitoring evaluation are all necessary. The creation of this index gives rise to a tool that will aid in identifying priority sectors and provide a basis for formulation of economic strategies going forward.
In monitoring the development of Bioeconomy, efforts to standardize, globalise and align various international Bioeconomy programmes have been ongoing such as the European Commission’s Bioeconomy Observatory project. In Malaysia, monitoring is still at its preliminary stages but there is already a need for the data to be packaged and communicated in a meaningful form to enable analysis and interpretation. It is proposed that a clear and standardized methodology be developed to capture the overall condition of a nation’s Bioeconomy and eventually to be used as a comparative tool to identify trends, patterns, and synergies which can form the basis of future policy decisions.
The Bioeconomy Contribution Index (BCI) is one such tool. It quantifies economic contribution by comparing actual accomplishments of selected indicators to real expectations. It is a tool that can put into context what frameworks have been set, what has been done, what is the missing gap to reach the expected outcomes, what needs to be done further, and how to set new scope to address the challenges.
The BCl specified five indicators: Revenue, Investment, R&D Spending, Employment Income, and Intellectual Property as identifiers of Bioeconomy performance. Crucially, it also computes an expected base performance for each of these indicators to assess the relative actual performance for specific parameters. The adjusted expected baseline works to convert the nominal values of a parameter into real values which is then combined along with other identifiers to form the BCI. This baseline uses a dynamic computable general equilibrium (DCGE) approach for its estimation.
Using the new components, the chart above shows all the overall calculated results of the yearly BCI findings from 2005 to 2014. In general, the index shows an upward trend although there were periods of significant volatility due to the changes in the economic environment. The index grew by 2.4% on average annually with strong performance in growth recorded in 2008, 2010 and 2011.
Meanwhile, the breakdown of the sub-indices highlights a greater disparity in performance. With the exception of PRODUCTIVITY and EMPLOYMENT, the other indicators are matching or exceeding adjusted base year expectations and show positive trends over the studies time period. The breakdown also shows significant volatility in EXPORTS which can be explained by the volatile macroeconomic conditions on the period. On a policy note, the weakening performance for the EMPLOYMENT and PRODUCTIVITY highlights the areas that policy makers can analyse to see what factors that leads to the decline and formulise solutions to address the problems.
Amid feedback from the Economic Planning Unit, a revision of the Bioeconomy Contribution Index (BCI) was conducted in particular to make the index more reflective of the conditions of the bio-based economy. The revised BCI adjusted 3 of the original 5 indicators. The new five indicators are: Value-added, Productivity, Investment, Exports, and Employment. The first 3 indicators replaces Revenue, Patent Granted, and R&D spending respectively. Methodically however, the calculations remains the same as it uses a dynamic computable general equilibrium (DCGE) approach for its estimation.
The new components highlights a fresh target for the BCI to achieve. By the year 2020, the index have the potential to grow significantly given the increased effort compared to what it can achieve under current trajectory especially in addressing the lacking indicators as well as further enhancing the performing indicators.
Importantly, while the BCI are designed to become the standard yardstick of Bioeconomy’s performance, it is also expected to be continually improved following constant feedback from the relevant stakeholder as well as from better data collections. One area that the BCI could explore is incorporating elements of social welfare in line with Government’s call for an inclusive society.