Why Budget 2027 must fix our misplaced innovation funding — Ahmad Ibrahim
OCTOBER 24 — The 2027 budget’s strategic areas — AI, digital services, the energy transition — a...
The 2027 Malaysian budget must address the misaligned innovation funding structure, according to Ahmad Ibrahim. Malaysia currently spends only 1% of its GDP on research and development (R&D), with the government bearing the majority of this burden. This is significantly lower than neighbouring countries like South Korea, Japan, the United States, the United Kingdom, and Germany, where the private sector funds the majority of business enterprise R&D.
The government recognizes this issue, as outlined in the NSTIP 2021-2030 targets, which aim for a 30:70 public-private contribution ratio. However, private sector funding for R&D is lagging and even decreasing. Malaysia offers various tax incentives to encourage R&D spending, but these incentives do not effectively shift the risk calculus for firms.
To improve the situation, Budget 2027 should target the demand side by making government procurement an innovation instrument, redesigning commercialization incentives around outcomes, confronting the talent gap through industry-researcher mobility programs, and consolidating the fiscal architecture of R&D support. These changes are necessary to shift the balance away from government funding and towards private sector investment in R&D.
Written by urgent.news from Malay Mail's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
