Biotechnology Industry in Malaysia

Development of Biotechnology Industry in Malaysia

“Science to Business” has been one of the essential criteria being focused by Malaysia in its National Biotechnology Policy. The Policy aims to transform the biotechnology industry into one of the vital economic contributors to the nation. Malaysia is richly endowed with biodiversity and blessed with a wide array of natural resources that are useful for biotechnology research and development (R&D). Ranked 12th in the world as one of the megadiverse countries, it helps to create the necessary motivation towards developing a biotechnology industry in the country. Generally, biotechnology development in Malaysia can Biotechnology Industry in Malaysia October 2019 | 8 be categorised into four (4) main phases as below:

Phase 1 

Before 1995 – The first phase of biotechnology development in Malaysia began with the establishment of basic infrastructures and the necessary equipment to undertake biotechnology R&D. In the beginning, a few numbers of research institutions were assigned to carry out the R&D. A National Working Group on biotechnology was set up under the Ministry of Science, Technology and Environment (MOSTE) to oversee and coordinate biotechnology activities in the country.

Phase 2 

1996 to 2000 – During the second phase, the National Biotechnology Directorate (NBD) was formed under MOSTE to further enhance the biotechnology development in the country. The objective of the directorate was to spearhead the development of biotechnology in Malaysia through research and related activities as well as to establish Malaysia as a leading centre for the biotechnology industry. Simultaneously, Biotechnology Cooperative Centers (BCC) was created under NBD to assist in coordinating the National Programme in Biotechnology by building a robust professional network among universities, research institutions and industries to speed up the diffusion of knowledge to the relevant industry.

Phase 3 

2001 to 2005 – At the third stage of development, the collaboration between the National Biotechnology Directorate and the Massachusetts Institute of Technology (MIT) initiated the BioValley Strategic Plan. The plan includes the provision of BioValley Malaysia, a Malaysian Biotechnology Cluster, which is expected to accelerate the research and commercialisation of technologies. The former Prime Minister, Tun Abdullah Ahmad Badawi launched the National Biotechnology Policy on 28 April 2005. The objective of the policy is to invigorate the biotechnology industry to become a new economic engine to enhance prosperity and wellness of the nation by 2020. In light of this, a one-stop agency, namely the Malaysian Biotechnology Corporation (MBC) was established to facilitate the industry’s development, including coordination of regulatory policy among different agencies.

Phase 4 

2006 and beyond – The development of biotechnology industry during this phase was outlined in the Ninth Malaysian Plan. The government provided an allocation of RM2 billion to support the development of physical and soft infrastructure in the local biotechnology industry. Recognising the importance of a conducive regulatory framework to the success of this endeavour, the government has intensified the promotion of foreign and domestic investments and close collaboration with foreign entities to access new technology, expertise and markets. Efforts are also taken to improve the Intellectual Property (IP) policy and management framework to encourage innovation and safeguard investment in the biotechnology sector.

Driving Malaysian Biotechnology Industry

Biotechnology is recognised as one of the economic engines that will drive Malaysia towards a progressive and high-income nation as the country’s conducive environment and growth potential presents a multitude of long-term opportunities for countries with mature biotechnology sectors. Malaysia has been actively strengthening its biotechnology ecosystem in the last eight years, developing its local industry and creating a niche for itself as a reputable biotechnology hub in Asia. Besides cost-competitive skilled labour market, excellent transportation networks, ICT infrastructure, strong government support, active public-private sector participation and cost-effective base of doing business, the exceptional richness of biodiversity in Malaysia has led to the development of biotechnology in the region.

In 2018, the Malaysian Investment Development Authority (MIDA) approved two foreign-owned biotechnology projects with investments totalling RM2.7 billion, more than tripled the approved investments of RM814 million across six biotechnology projects in 2017. Both projects are a mix of new and expansion/diversification ventures and are expected to generate 150 job opportunities for the country. 

One of these approved investments was a new project by Leaf Malaysia OpCo Sdn Bhd to manufacture industrial sugars (C5 pentose and C6 hexose), refined glycerol and lignin with an initial first phase investment value of RM818.30 million, and planned expansion equalling a total of RM2.1 billion. The patented Glycell technology will convert biomass (empty fruit bunch fibre) into fermentable sugars which will be used as a major intermediate feedstock for bio-based chemicals, including bio-plastics. The process also yields refined glycerol and lignin as additional high-value by-products for renewable applications. The project creates 92 new jobs opportunities, of which 21 employees will receive salaries of RM10,000 and above. 

These new approved foreign investments are a demonstration of the growing impact and importance of the global biotechnology industry. They are also aligned with the goals of the Bioeconomy Transformation Programme and National Biotechnology Policy.

Future Direction

The establishment of the National Biotechnology Policy is a clear indication of the government’s intense effort in making biotechnology as one of the main pillars of economic growth. Research has shown that the success of the US biotech industry is centred on nine leading biotech clusters. Biotech activities will naturally take place around centres that have a good connection with research institutes and universities. The existing Multimedia Super Corridor can guarantee the need for high-speed communication between these centres of excellence and the enormous computing power for high-powered biotechnology projects. As such, the upgrading of existing facilities and encouraging researchers through government support would be the way to lure investors and companies in setting up their biotech entities in Malaysia.

Other key factors that contribute towards the success of the biotechnology industry are the availability of venture capital funding and a critical mass of highly qualified biotechnology graduates. Malaysia needs to produce a few hundreds of biotechnology graduates every year to fill up the jobs created in the industry. 

MIDA will continue its role in promoting the biotechnology industry to attract more local and foreign investments, thus create employment opportunities and strengthen the biotechnology ecosystem. Continuous support from the government can be seen through the introduction of tax incentives for companies investing in the manufacturing of biotechnology products, which includes significant incentives such as Pioneer Status and Investment Tax Allowance. Eligibility for PS and ITA is based on specific priorities, including the level of value-added, technology used and industrial linkages.

Download MIDA Newsletter October 2019