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

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• 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
Despite many follow-up calls it was not possible to get access to the only visiblejoint-venture firm in the cluster’s E&E sector. The following passages present the casestudies of the firms in the Penang region. The cases are structured to have somebackground information of the firm, key factors of the Penang region important forbeing located, linkages / collaborations with different actors in the innovation systemand conclusions.3.1. Case #1 - German Automotive Electronics MNC (GAE-MNC)This case is of a German GAE MNC which has been present in Malaysia since the1920s. It currently has offices located in Selangor, Perak and Penang. The GAE MNC isa public listed company in Malaysia and is responsible for the sales and distribution ofautomotive original equipment, automotive aftermarket products, power tools andsecurity systems in Malaysia. The automotive aftermarket and original equipment salesdivisions as well as car-multimedia division in Malaysia are part of the GAE MNCsautomotive technology business. Automotive technology is one of the biggest businessdivisions in this group. In 2008, sales were recorded at 26.5 billion Euros. GAE-MNCin Penang currently has a staff strength of about 700 and sales turnover of about RM600million (approximately 180-190 million US$) in 2008. The unit here produces carmultimedia products such as car radios, rear seat entertainment systems and navigationsystems as well as electronic components and actuator motors for original equipmentmanufacturers (OEMs).3.1.1. Factors Attractive in Penang for ManufacturingIn addition to the factor of low costs, the altruistic nature of the firm was to set upmanufacturing plants developing economies to help them through employmentopportunities and gain the benefit of low cost locations. Main motivation to start inPenang (in the 70s) was the efforts of the then Chief Minister – to promoting and102
Page 8 and 9: export-oriented strategy to promote
Page 10 and 11: Table 5 PENANG: APPROVED MANUFACTUR
Page 12 and 13: participating in the survey, improv
Page 14 and 15: 1. Customized incentives to attract
Page 18 and 19: developing certain factors conduciv
Page 20 and 21: Linkage with Other Cluster Actors T
Page 22 and 23: facility. Among the more recent inn
Page 25 and 26: precision engineering and manufactu
Page 27 and 28: Figure 5 Diagram of Firms Linkages
Page 29 and 30: 3.4.2. Key Drivers and Support For
Page 31 and 32: further develop the cluster are con
Page 33 and 34: Kontron has healthy inter firm link
Page 35 and 36: which houses manufacturing cells an
Page 37 and 38: this requires the application for t
Page 39 and 40: with a university (Multimedia Unive
Page 41 and 42: the federal government and good inf
Page 43 and 44: 3.9. Case #9 - Motorola MalaysiaFou
Page 45 and 46: Figure 11 Diagram of Motorola Linka
Page 47 and 48: co-develops products and also uses
Page 49 and 50: customers, as developers of supplie
Page 51 and 52: author is trying to make contact) b
Page 53 and 54: 5.4. Entrepreneurial Culture for In
Page 55 and 56: Appendix AScience and Technology In
Page 57 and 58: undertaking reinvestments D (by way
Page 59: Enrolment and Graduation in Doctora

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