Support programs are developing a strong industry but access to qualified staff remains an issue, says Geneflux Director and biotechnology entrepreneur Dr. Prashanth Bagali
by Jon Southurst
It’s been over four years since the Malaysian government formed the Malaysian Biotechnology Corporation (BiotechCorp), an agency tasked with turning Malaysia’s infant biotechnology sector into a global competitor. BiotechCorp is achieving this with a comprehensive array of programs providing everything from education to entrepreneurial support, investment, training and marketing. Large companies and niche players alike would get the kind of assistance they needed to expand internationally. Geneflux™ Biosciences is one company that took its concept global with a focus on local issues under BiotechCorp’s guidance. Dr. Prashanth Bagali, its Director and co-founder, spoke to us about his company’s experience and the challenge for Malaysia in the 21st century’s preeminent scientific sphere.
The term ‘biotechnology’ refers to the science of life itself. It includes research and techniques involving living organisms from microorganisms to plants and animals, to serve specific applications in improving human health and agriculture. At its cutting edge is genome mapping, cell fusion, gene detection, gene transfer and embryo manipulation. It’s a prestigious, high-value industry with rewards in intellectual property, international sales and reputation among the world’s scientists.
The national interest in biotechnology started as early as the 5th Malaysian plan (1986-1990) but was given due recognition and emphasis starting from the 8th Malaysian Plan (2001-2005). Before 2007, healthcare biotechnology in Malaysia was an embryo itself. The existing industry was driven by traders, equipment suppliers and reagent vendors, with less than 100 local patents filed of any international importance. That was around the time BiotechCorp was just beginning, and it was into this scene that entrepreneurs Dr. Bagali and partner Ir.Balagaru Naidu arrived to set up a business.
Geneflux Biosciences registered in 2007 with a focus on the research and development of Polymerase Chain Reaction (PCR) based testing kits, a faster way to detect and analyze small quantities (or volume) of DNA or RNA without the need for full cloning. Their kits would be available at affordable prices to developing countries in Asia and Africa, vital in combating diseases affecting those regions. (more…)
There has been a ‘wave’ of foreign direct investment (FDI) into Malaysia this year, totaling RM31.7 billion (US$10.6 billion) to the end of July 2011. More than half of this has flowed to the manufacturing sector and the top sources are Japan, Singapore, the Netherlands and Taiwan.
Malaysia’s Minister of International Trade and Industry, Mustapa Mohamed, announced the figures and said government initiatives such as the Economic Transformation Programme (ETP) had attracted international interest. Domestic investment had also improved, with RM4.3 billion ($1.44 billion) also going to manufacturing projects.
Business Times reports a breakdown of manufacturing investments shows RM6.5 billion ($2.2 billion) went to electronics and electrical products, RM2.4 billion ($804 million) to basic metal products, RM1.7 billion ($570 million) to chemicals and chemical products, and RM1.1 billion ($369 million) to food manufacturing.
Mustapa also said the figures reflect a shift towards high-value-added, more capital intensive (investment per employee) industries as Malaysia became less competitive at the lower-pay end against countries like China and Vietnam. He promised more new opportunities and growth areas as the ETP chases its 2020 goal of RM1.2 trillion ($40.23 billion), 92% of which the government wants to come from the private sector.
Total investment in Malaysian projects, including both foreign and domestic, was RM47.2 billion ($15.8 billion) in 2010.
source & article: Business Times
“A combination of low cost and high technology” is the in-a-nutshell reason The Economist gives for the beginnings of Penang’s success in the healthcare and electronics industries. Penang state and its neighboring region on the mainland now account for 21% of Malaysia’s GDP as a result of its technology focus, as well as a strong rule of law, intellectual property protection and ease of doing business.
The road to technology riches was paved in the 1970s when Penang became Malaysia’s first free-trade zone, but the article also credits Penang’s current government for freeing up the local economy further by removing economic privileges and combating corruption and waste. For its part, the federal government has also invested heavily in Penang with massive infrastructure upgrades such as a duplication of the bridge to the mainland and extensions to the main seaport and international airport.
Penang has historically enjoyed a strategic trading position thanks both to its physical location between China, India and Southeast Asia, and the well-connected multi-ethnic mix that reflects this. High-tech industries have created a skilled local workforce of technicians and engineers, the capital Georgetown is enjoying a revival, and foreign companies are moving in once again.
source & article: The Economist
Iskandar Malaysia-based technology park aims to lead Malaysia into an advanced future as it signs another new investment and production deal.
Johor’s Senai Hi-Tech Park (SHTP) would be a “key driver” for high value technology industries and Malaysia’s aim to transform itself into an advanced, innovative nation, says Prime Minister Najib Razak.
PM Najib spoke yesterday at a signing ceremony for SHTP and Solexel (M) Sdn Bhd, a subsidiary of California-based solar cell manufacturer Solexel Inc. A new memorandum of understanding between the two will see an aggregate investment of RM2.8 billion (US$944 million) over the next five years, and create 2,300 jobs.
Solexel will manufacture crystalline silicone solar cells at a new 100-acre facility in SHTP’s Industrial Zone Phase 1, and is capable of producing one gigawatt of cells per year. The company will also conduct R&D operations and help create a local supply chain for chemicals used in solar photovoltaic (PV) cell and semiconductor manufacturing.
Senai Hi-Tech Park will be 1,000 acres total at completion, and is Malaysia’s second dedicated high technology zone after Kulim Hi-Tech Park in the country’s northwest. Kulim’s success at attracting international investment was the impetus for creating the SHTP project last year and the project’s developers are negotiating major deals with foreign investors.
Both parks aim to spur the local high-value economy and create employment for Malaysians in more advanced industries. Calling itself a ‘third-generation technology park’, SHTP is located next to the redeveloped Senai International Airport in Johor state’s Iskandar Malaysia special economic region, across the water from Singapore.
Here’s an interesting story: reports indicate that AirAsia is about to embark on a share-swap deal with its chief competitor and Malaysian national flag carrier, Malaysia Airlines (MAS). Sources have told Malaysian newspapers that the budget carrier will gain a 20% share of MAS under a partnership agreement.
The companies have supposedly been negotiating the deal for the past year. The sources also say the Malaysian government’s investment arm Khazanah Nasional will get a share in AirAsia and Tune Air Sdn Bhd will receive a stake in MAS. AirAsia’s CEO Tony Fernandes is also CEO of Tune Air, which itself owns a 26% share of AirAsia.
Neither Malaysia Airlines or Khazanah Nasional, its 70% shareholder, are commenting on the matter. It’s understood a formal partnership between the two rivals would enable them to compete more effectively in the global market, and bargain from a position of greater strength with airports and aircraft manufacturers.
AirAsia, which focuses on the budget end of the market, recorded a profit in Q1 of 2011 while Malaysia Airlines, which focuses on the traditional and higher end, recorded a loss and is undergoing a management restructure.
source & article: Channel NewsAsia
More companies listed on the Bursa Malaysia (Malaysian stock market) are potential acquisition targets for Japanese companies as investment continues to flow in, thanks to a strong yen and a geographic diversification drive gathers pace in Japan.
The momentum was already underway before Japan’s 11 March 2011 disasters highlighted the need for more offshore activity. Between January 2009 and July 2011 Japan was involved in 513 M&A deals worth US$14.2 billion in emerging Asia, reports The Edge Malaysia. This figure includes Chinese and Indian deals as well as those in Malaysia and Indonesia.
Focusing on Malaysia alone, however, Japanese FDI rose 537% year on year in 2010 (compared to 109% in other Southeast Asia), accounting for 12% of all foreign direct investment inflow. Japan was involved in 34% of Malaysian M&A activity.
But this activity might not be what you’d expect from Japanese deals, and is certainly different to those of the previous two decades. UOB Kay Hian Malaysia Research said it’s not the electronics and electrical sector attracting Japanese interest this time. Instead, the Japanese are looking at logistics, financial, healthcare and consumer industries, as well as heavier industries where Malaysia offers a better deal on energy and logistics costs. The research house said Japanese companies were also prepared to pay more for greater control of their acquisitions, like Asahi Group’s purchase of Malaysian bottler Permanis, and Mitsui & Co’s 30% stake in Integrated Healthcare Holdings. Companies that already trade with Japanese firms are seen as more attractive.
source & article: The Edge Malaysia
Canadian technology firm Research In Motion (RIM), makers of the best selling Blackberry devices, has apparently applied to set up an international procurement center in Penang.
RIM hasn’t released an official statement on procurement yet but has confirmed it will manufacture devices in Penang. Business Times reports the Malaysian Industrial Development Authority (MIDA) has received an application for a procurement center, with no further information about its nature or when it would be approved.
The report says photos of a local electronics company which has just received a major contract to manufacture Blackberry devices for the worldwide market was included in the application. Indonesia is also believed to be lobbying RIM to set up a company-owned facility there.
There are already around 209 international procurement centers (IPCs) already based in Malaysia. Many are located around Penang’s technology parks, such as those belonging to German healthcare products maker B. Braun Melsungen AG and Japan’s Toray Industries Inc.
source & article: Business Times
Malaysia’s government wants all sports development funding to come from private sources by 2020, saying it’s (yet) another reason the country should move from a planned to a market-based economy.
Financial sports events and development nationwide is becoming more expensive, and sports organizations need to move away from sponsorship to a corporate model with “dynamic return on investment,” said Sports Minister Ahmad Shabery Cheek at the Sports Business Conference.
Sports funding is also part of Malaysia’s grand Economic Transformation Programme (ETP) and 2011-12 has been designated Sports Industry Year (SIY) to encourage more economically sustainable, privately funded sports initiatives. Sports activities contributed about RM30.2 million to Malaysia’s GDP in 2009.
source & article: Business Times
Malaysia’s dreams of becoming a regional leader in aerospace received a boost today from UK-based BAE Systems, which said it was keen to revitalize the two countries’ relationship. The group’s business development director, Alan Garwood, said he would be keen to discuss issues with Malaysian Prime Minister Najib Razak, who is on an official tour of the UK this week.
PM Najib met with 20 major industry players at an official dinner to discuss possible Malaysian collaborations.
Malaysia has earmarked aerospace as a potential major industry, with the government saying it hopes to become a big player in aircraft component manufacture and aircraft repair and maintenance. Do do so would need advances in local training and skills, as well as investment from international aerospace companies like BAE. Conveniently, many aerospace/defense firms have begun to focus on Asia-Pacific and Middle East of late, seeking new markets in emerging economies at a time when developed countries are spending less on their equipment.
Garwood said Malaysia’s growth over the last few years had been “phenomenal”, and unmatched by European countries. BAE Systems is looking to find local partners for joint ventures, and is also hoping to use that leverage to become a defense contractor to the Malaysian government when the Malaysian air force replaces its fleet of 10 MiG-29N fighters soon.
BAE has already teamed up with Malaysia’s Composites Technology Research Malaysia Sdn Bhd (CTRM).
source & article: Business Times
Another Malaysian petroeum giant is set to emerge, with SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd announcing a RM11.9 billion (US$3.9 billion) merger plan to form Malaysia’s largest oilfields services provider by assets. The move is bound to please the government, coming just half a year after Prime Minister Najib Razak revealed incentives to explore less profitable oilfields, and the two companies jointly received a contract from government-linked Petronas to develop an eastern field in partnership with Petrofac Ltd.
The merger was orchestrated by Integral Key Sdn, a company set up especially to handle the merger by a unit of Malayan Banking Bhd (Maybank). The company made a bid of RM4.60 per share in stock and cash for SapuraCrest and the equivalent of RM3 per share for Kencana. The merged company would have around RM6 billion ($1.98 billion) in assets and would grow from there thanks to an increased ability to handle larger and more complex projects.
Integral’s offer, which is valid until 15 August 2011, is a 2.4% premium on SapuraCrest’s 8 July share price of RM4.49 and a 7.1% premium on Kencana’s RM2.80. SapuraCrest’s share price rose 0.7% to RM4.92 on the news and Kencana’s jumped 3.9% to RM2.91. Bloomberg reports the new entity would have a market cap of RM11.1 billion ($3.66 billion) based on current prices, making it Malaysia’s second largest company of its type by market cap (after Malaysia Marine and Heavy Engineering Bhd) but the largest by assets.
Analysts say the two companies are a good fit. SapuraCrest operates drilling rigs, installing pipelines and developing oil and gas fields, while Kencana is in the engineering and fabrication business. The merger is expected to prompt other smaller players into tie-ups, and the government’s offer of development investives still stands.
source & article: Bloomberg