STRATEGIC INVESTMENT AND THE BIO-BASED ECONOMY
YBhg Dato’ Dr Mohd Nazlee Kamal CEO of BiotechCorp
Last month, I emphasised on the necessity for BiotechCorp to focus on its two wildly important goals. To create substantial impact at the national level, the organisation targets to build the bio-based sector up to the stage where it becomes a significant economic contributor. Secondly, bio-based SMEs are positioned to play a vital role in spurring growth and innovation as the future Malaysian bioeconomy will be.
Centering on these two goals, I briefly mentioned on creating a funnel for attracting Foreign Direct Investment (FDI) and Domestic Direct Investment (DDI), by means of strengthening the local bio-based ecosystem and making Malaysia an appealing destination to leading multinationals (MNCs) and investors.
It is important to note that the bio-based industry, showing great promises in many ways, is one of the emerging sectors in Malaysia that are actively attracting investments. Thus, further to the previous write-up, I really like to elaborate in greater detail on the benefits of having a sizeable FDI and DDI.
To date, both investments contributed to the overall growth of the bio-based industry. What we are seeing now is very similar to the economic diversification during the 1970s and 1980s, when Malaysia began to attract investment in other industries other than agriculture. It was a time when the economy was shifting from an agriculture and mining-based market into high-tech manufacturing and services. The influx of FDIs and DDIs resulted in the creation of ample jobs and business opportunities for the people, especially the young. In the midst of industrialisation, many left the rural heartland to work in cities.
Right now, the country has an expanding urban populace and a huge pool of home grown talents. In line with global trends that are increasingly shifting towards a green and more sustainable bio-based future, Malaysia is preparing for yet another economic transformation. For bioeconomy to be successful, it is of utmost importance that the bio-based industry remain attractive to the younger workforce. High-technology farming for example, is complex and it requires a lot of skilled people in agriculture. Hence, in contrast to the early years, we will now have to focus on attracting talents back to the farm instead! The bio-based sector has immense growth potential, and strategic investments are definitely an effective way for creating major investment flow and achieving productive capacity – more so in the early stages of industry development.
The concept of bioeconomy as a knowledge-driven and technology intensive economy is already well established. Given our limited history in the local bio-based scene, FDIs, DDIs and MNCs participation will continue to be an important source to stimulate growth in the foreseeable future. I am optimistic that rising bio-based investment is a tell-tale that we are on the right track when likening to the country past experiences in other industrial sectors. In the context of socio-economic impact, these investments are very likely the most effective channels to increase capital influx, disseminate new and innovative technologies, transferring technical expertise, skills as well as employment creation.
BiotechCorp will continue to function as the key institution mandated towards bio-based investment promotion. The myriad of deals secured since its establishment are strong indicators of the organisation’s proven track record over the years. In time, more economic parameters are needed to properly gauge the contribution of both FDIs and DDIs in the development of the bio-based industry. For example, we could be looking into realised investment or revenue generation or even the sum of wages paid to skilled workers. Possibly the amount of R&D or IPs generated could be a good set of measures as well. When everything is taken into consideration, ultimately a “bioeconomy index” is vital in order for us to accurately assess the bio-based contribution towards national economy.
With all these thoughts coming to mind, it leads to the need for further streamlining of strategies. Having sufficient amount of investment is a step directed at creating a substantial bio-based sector. More importantly, investment inflow needs to translate to domestic economic growth. What then should be the next strategy? For FDIs, emphasis has to be placed on having spin-off and local sourcing, which include the participation of locally-based SMEs. We have close to 250 BioNexus companies in the country; all are excellent candidates for collaborations.
Given that the bioeconomy value chain is complex and cross-sectoral in nature; I suppose the first step for maximising the benefits of inflowing strategic investments is to promote effective linkages between industries. Agricultural raw materials for instance are increasingly being used for multiple industries including healthcare, industrial applications and renewables to name a few. The overall economic impact is greater and every step of the supply chain, from producers to consumers stands to benefit from a larger value chain.
All told, FDIs and DDIs have played an important role in our country’s development, and it is important that the bio-based sector is able to continuously attract funds. From our part, FDIs contributed to more than half of the total investment accumulated in the bio-based sector. Therefore more efforts could be channelled into securing quality FDIs so to speak. Good FDIs are those which are knowledge and capital intensive and are able to improve workers socio-economic standing. These are also investments which will generate longer lasting value-added benefits and spin-offs to the local economy by means of having strong linkages to the domestic economy.