Chapter 3 Linkages for Fostering Innovation Activities – Case ... - ERIA

• Investment tax allowance on the capital expenditure incurred in in-house R&D• Exemption of import duty on machinery and equipment, materials, raw-materials,components and samples used for R&D purposes• Double deduction of expenses incurred in approved research projects.Overall there seems to be in place a substantial set of incentives be it grants, taxincentives, special status type of benefits in place for encouraging Innovation from thegovernment. But what is more important is how much of this support is being utilizedand leading to innovation or at least a move towards innovation activities / efforts in theindustry. What is interesting is the at crucial points in time the S&T policy has beenchanging to address changing needs, albeit reactive, of the industry.In this section a descriptive account of some indicators of the manufacturing andinvestment activity in Penang and to a small extent in the E&E sector were outlined.Aspect of S&T manpower in terms of education were presented and support in terms ofpolicy and incentives from the government of Malaysia were gleaned from the relevantministry documents were presented. In the next section the cases developed from thefield study are presented.3. CASE STUDIESThe main research question what are the linkages between firms and other actors /institutions for supporting innovation activities in Penang’s E&E sector? The report is tobe based on ten case studies (9 completed one more to be done) of firms located in thePenang Island of Malaysia. The cases studied for this report can be classified into thefollowing groups:1. Multinational or Transnational Corporations (MNCs/TNCs)2. Large Local Firms (with specific/formal R&D units)3. Small and Medium Sized Local Firms101