Why Creativity and Innovation is Important to Malaysia

Written by : Bugs Tan

20th December 2015

In general a government elected into power to rule a country has a couple of major
responsibilities. One of them is to keep her citizens safe at all time. The government uses its
might to defend the citizen if her people is threatened and is in risk of harm, danger, war,
epidemic or natural disasters. And secondly, the governments primarily responsibility is to
keep the country peaceful and her people living in harmony at all time.
Apart from these major responsibilities, the government also have other important duties to
do. Among the few significant duties, the government is required to look after the welfare of
her people and to bring prosperity to the country. So that the standard of living can be raised
and her people lived a better and quality life.
Malaysia secured independence from the British Empire in 1957. Back then the country was
a poor nation relaying only on agriculture produce. People lived with just basic amenities and
the standard of living was low. Malaysia then was a typical poor and backward third world
nation.
However, the passion for a better standard of living has driven Malaysian to become a
progressive nation within a short period time of just over a few decades. The below short
passage found on Wikipedia summarized this extraordinary phenomenon that Malaysia has
experienced for her economic success.
Since its independence, Malaysia has had one of the best economic records in Asia, with its
GDP growing at an average of 6.5% per annum for almost 50 years. The economy has
traditionally been fuelled by its natural resources, but is expanding in the sectors of science,
tourism, commerce and medical tourism. Today, Malaysia has a newly industrialised market
economy, ranked third largest in Southeast Asia and 29th largest in the world. It is a founding
member of the Association of Southeast Asian Nations, the East Asia Summit and the
Organisation of Islamic Cooperation, and a member of Asia-Pacific Economic Cooperation,
the Commonwealth of Nations, and the Non-Aligned Movement. Source : Wikipedia

This economic success did not just happened by accident. But it was made possible by a well
thought off strategic blue print placed by the government ever since Malaysia was given the
full sovereign rights to rule her own country without the interference and influence of any
ideology or control from other country.
Development planning in Malaysia began in 1950 with the publication of the Draft
Development Plan of Malaya . Of the twenty- seven development planning document that has
been provided up to now (2016) , three represents Outline Perspective Plan and the twentyfour is the five-year development plan , including Malaya Draft Development Plan covering a
period of six years and a mid-term review of the five- year plan

Item

Plan Title

Duration

1.

Draft Development Plan of Malaya

1950-1955*

2.

Progress Report on Development Plan

1950-1952

3.

General Plan of Development

1956-1960

4.

Second Five Year Plan

1961-1965

5.

Interim Review of Second Five Year Plan

1961-1965

6.

First Malaysia Plan

1966-1970

7.

MTR First Malaysia Plan

1966-1970

8.

Second Malaysia Plan

1971-1975

9.

MTR Second Malaysia Plan

1971-1975

10.

Third Malaysia Plan

1976-1980

11.

MTR Third Malaysia Plan

1976-1980

12.

First Outline Perspective Plan (OPP1)

1971-1990

13.

Fourth Malaysia Plan

1981-1985

14.

MTR Fourth Malaysia Plan

1981-1985

15.

Fifth Malaysia Plan

1986-1990

16.

MTR Fifth Malaysia Plan

1986-1990

17.

Second Outline Perspective Plan (OPP2)

1991-2000

Item

Plan Title

Duration

18.

Sixth Malaysia Plan

1991-1995

19.

MTR Sixth Malaysia Plan

1991-1995

20.

Seventh Malaysia Plan

1996-2000

21.

MTR Seventh Malaysia Plan

1996-2000

22.

Third Outline Perspective Plan (OPP3)

2001-2010

23.

Eight Malaysia Plan

2001-2005

24.

MTR Eight Malaysia Plan

2001-2005

25.

Ninth Malaysia Plan

2006-2010

26.

MTR Ninth Malaysia Plan

2006-2010

27.

Tenth Malaysia Plan

2011-2015

Table 1 : Malaysia economic master plan

Source : Economic Planning Unit Prime Minister Department

MALAYSIA HAS MADE SIGNIFICANT PROGRESS

Sustained rapid economic growth has raised Malaysia from an agricultural and commoditybased low-income economy to a successful middle-income economy. The Malaysian success
story of moving from low-to middle-income status is one of the worlds success stories of the
past few decades. Since 1945, Malaysia is one of only 13 countries1 to have sustained growth
of over 7 percent or more for 25 years.
This strong economic performance has helped improve the quality of life for Malaysians and
supported advances in education, health, infrastructure, housing and public amenities
Growth has also been accompanied by a near-eradication of hard-core poverty, which fell
from 6.9 percent in 1984 to 0.9 percent in 2010. Primary school enrolment is now nearly
universal. Basic healthcare has improved in the past two decades with life expectancy rising
and infant mortality rates falling significantly. As a result, Malaysias score in the United
Nations Human Development Index rose from 0.67 in 1980 to 0.83 in 2007, surpassing the
0.8 score benchmark for countries with high standards of human development.

BECOMING A HIGH-INCOME NATION THAT IS BOTH INCLUSIVE AND

SUSTAINABLE
The Government is aiming for Malaysia to become a high-income nation that is both
inclusive and sustainable by 2020. These goals will be reached jointly. The Government will
not seek short-term progress on one goal at the expense of delaying progress on the others.
The Economic Transformation Program (ETP) is designed to drive Malaysia forward from its
current stagnant situation to be a high income economy which is both inclusive and
sustainable as shown in firgure no. 2

Figure no. 2

BUSINESS AS USUAL IS NOT ENOUGH

Business as usual will not be enough to deliver on the goals of high income, inclusiveness
and sustainability. Malaysia is at a critical point in its economic development. There has been
a loss of growth momentum over the past decade, and it has become increasingly clear that
the historical drivers of growth can no longer be relied on to deliver strong economic

outcomes. In an increasingly competitive global economy it is more difficult to generate high

rates of economic growth. Growth can no longer be taken for granted, but needs to be earned.
To achieve developed nation status by 2020, economic growth of 6 percent a year will be
required. Delivering this level of growth demands a comprehensive, structured transformation
of the economy.

Historical Growth Engines are Slowing Down

Malaysias relatively sluggish economic performance over the past several years indicates
that the historical engines of Malaysias economic growth are slowing down . After strong
growth through much of the 1990s, Malaysias economic growth over the past decade has
been considerably slower at about half of the average of the previous decade, as shown in
Chart no. 3

Chart no. 3

Risk of Being Stuck in the Middle

There are also signs that Malaysia is at risk of being stuck in the middle-income trap, as
shown in Chart no. 4. Malaysia is no longer able to remain competitive with low-income
countries as a high-volume, low-cost producer. At the same time it has not yet moved up the
value chain and become competitive with high-income countries. Other countries are more
competitive than Malaysia in both low-cost production and in high-value markets. This is not
a sustainable position.
Strategies that were successful in driving Malaysias transformation from a poor country,
reliant on rubber and tin at Independence into a diversified middle-income economy, are not
appropriate for the next stage of Malaysias developmental journey.
Indeed, many other countries that grew rapidly through the 1970s and 1980s found it difficult
to continue their growth once they reached middle-income status. Of the 13 countries to have
sustained 7 percent growth for 25 years or more, just 6 have successfully transitioned to highincome status. It was only those countries that undertook a systematic programme to
transform the underlying structure of their economies that were able to rise from middleincome status to become high-income countries.

Chart no. 4

Government Transformation Programme

The Government Transformation Programme was introduced in 2010 to transform the
Government to be more effective in its delivery of services and accountable for outcomes.
The programme incorporates six National Key Result Areas (NKRAs): reducing crime,
fighting corruption, improving student outcomes, raising living standards of low-income
households, improving rural basic infrastructure and improving urban public transport.
National key performance indicators have been specified for these NKRAs, and a new
organisation, the Performance Management and Delivery Unit (PEMANDU), was created to
manage delivery against these targets.
Source : Economic Transformation Programme - A Roadmap For Malaysia - Chapter 1

Using Creativity and Innovation as a Catalyst of Economic Growth

In year 2010 too, the government has also simultaneously announced that Creativity and
Innovation has become part of the nations agenda. The government intended to formulate a
new economic model based on creativity and innovation.
This new government policies and initiatives are aimed at creating a competitive economy
via strategic public - private collaborations. The government hopes that business excellence
which incorporates the integration of products and services innovation processes will enable
firms to build innovative capabilities and venture into the global market.
Ultimately, through this new agenda for creativity and innovation, the government hopes to
see add value to the economic growth. The government aims to make Malaysia to become a
First World Nation by the year 2020. And this requires a sustainable GPD growth of 6% per
year for the next few years till 2020. The government is in the last lap and has only a period
of 10 years (out of the 30 years) to achieve this. And with creativity and innovation being
identified as the catalyst of growth, the government hope it will thrust the nation to reach its
goal of being a First World Nation by 2020.

Chart no. 5

The above chart no. 5 shows the GDP growth for Malaysia for a period of 22 years from year
1990 to 2012. The governments goal for achieving a First World Nation was initiated in year
1990. This gives the government a period of 30 years to transform the country from a Third
world to the realm of First World. The main key target is to achieve a minimum GNP per
capita of USD 15,000 by year 2020.
Ive taken a look at the Malaysian governments initiative of using creativity and innovation
as the catalyst of growth to leap frog the economic growth. So Ive researched on 30 most
innovative countries in the world. And secondly Ive also research on the top 30 GDP
countries. The purpose of my research to find out if there is any relationship between these
two indicators. If my find say these two actually have a close relationship, then I need to
analyse and find what does this close relationship of these 2 indicators tells us.

Top 30 Most Innovative Countries in the World for 2015

Rank

Top Innovative countries

Rank

Top Innovative Countries

Switzerland

16

Canada

United Kingdom

17

Australia

Sweden

18

Austria

Netherland

19

Japan

America

20

Norway

Finland

21

France

Singapore

22

Israel

Ireland

23

Estonia

Luxemburg

24

Czech

10

Denmark

25

Belgium

11

Hong Kong

26

Malta

12

Germany

27

Spain

13

Iceland

28

Slovenia

14

South Korea

29

China

15

New Zealand

30

Portugal

Table no. 6

The above table no. 6 is a list of top 30 most innovative countries listed in the global
innovation index for year 2015. This list was jointly released by WIPO, Cornell University,
INSEAD and its Global Innovation Index 2015 edition Knowledge Partners, the
Confederation of Indian Industry (CII), du and A.T. Kearney and IMProve European
Innovation Management Academy
In this years list Malaysia is ranked no. 32. This is a notch up from last year 2014 at no. 33
Top 30 High Income Countries in the World for 2015
Ran

Top GDP Countries

Per capita

Rank

Top GDP Countries

USD
1

Luxemburg

103,187

Per capita
USD

16

Austria

43,547

Switzerland

82,178

17

Finland

42,159

Qatar

78,829

17

Hong Kong

42,097

Norway

76,266

18

Germany

41,267

America

55,904

19

Belgium

40,456

Singapore

53,224

20

France

37,728

Australia

51,642

21

New Zealand

36,963

Denmark

51,424

22

Israel

35,702

Iceland

51,068

23

United Arab Emirates

35,392

10

San Marino

49,139

24

Japan

32,481

11

Sweden

48,966

25

Kuwait

29,983

12

Ireland

48,940

26

Italy

29,847

13

Netherland

44,333

27

Brunei

27,759

14

United Kingdom

44,118

28

South Korea

27,513

15

Canada

43,935

29

Spain

26,327

Table no. 7

The above table no. 7 is a list of top 30 countries with the highest Gross National Product
(GNP) per capital. This is the value of all final goods and services produced within a nation
in a given year, converted at market exchange rates to current U.S. dollars, divided by the
average (or mid-year) population for the same year. Source : Wikipedia - IMF
In this years list 2015 Malaysia is ranked no. 62 with a GDP per capita of USD 10,073. This
is 4 notches up from the rank achieved last year in 2014 at no. 66

Innovation Vs High Income

Country

Innovatio
n Ranking

GDP

Country

Innovatio
n Ranking

Raking

GDP
Rankin
g

Switzerland

Canada

16

15

United Kingdom

14

Australia

17

17

Sweden

11

Austria

18

16

Netherland

13

Japan

19

24

America

Norway

20

Finland

17

France

21

20

Singapore

Israel

22

22

Ireland

12

Estonia

23

Luxemburg

Czech

24

Denmark

10

Belgium

25

19

Hong Kong

11

17

Malta

26

Germany

12

18

Spain

27

29

Iceland

13

Slovenia

28

South Korea

14

28

China

29

New Zealand

15

21

Portugal

30

Table no.8

The above table no. 8 shows the top 30 most innovative countries placed among the top 30
high income nation based on GDP per capita.
The 5 countries which are listed in the top 30 most innovative countries but did failed to
reach the top 30 high income earner are as follows:Estonia

ranked 40

DGP Per capital is USD 17,425

Czech

ranked 41

GDP per capital is USD 17,330

Slovenia

ranked 35

GDP per capital is USD 20,712

China

ranked 74

GDP per capital is USD 8,280

Portugal

ranked 38

GDP per capital is USD 18,984

The Relationship between Innovation and Being a High Income Nation

From the analysis, Ive found out that 24 top innovative countries have made it into the 30
top GDP countries. It shows that countries which are innovative enjoy high income with 86%
of them being in the top 30 earners.

Analysis : Innovation Helps a Nation to raise Their Earnings

Therefore I can support the fact that there is good relationship that tights the indicator of
innovative country to the indicator of a rich nation. Hence, I can support the initiative taken
by the Malaysian government to use creativity and innovation as a catalyst to spur its
economy.
However, whether this catalyst of creativity and innovation is able to propel Malaysia into
a First World Nation by the year 2020 or not is not part of my research.
Ive noted that most government departments, if not, nearly all government department and
agencies have already adopted the governments call to include creative and innovation into
their organization commencing from year 2010 onwards. The government wished to see that
the various department and agencies could actually use or incorporate creativity and
innovation in their work and duties so to improve their delivery system to their customers
more effectively and productively.
In December 2010 the Malaysian took a big step by passing a bill in the parliament for a law
that incorporated the Agensi Inovasi Malaysia (AIM), to stimulate and develop the innovation
eco-system in Malaysia towards achieving Vision 2020.
Hence, all government departments and agencies have gone down to their wire to incorporate
this national agenda in their department. All 28 Ministries have created its own Unit
(Division) for Innovation. This runs down to every agencies and government related
departments. Each of them will in-cooperate its policy for creativity and innovation in its own
ways that suit their function and the way they operate.
However 5 years on since 2010 when most government department have in-cooperated
creativity and innovation as part of their policy in their work function, not much success were

recorded. The GDP over the last 5 years from 2010 to 2015 did not reached the targeted GDP
of 6% growth per year.
Chart no. 9 below shows the GDP growth for Malaysia from 2010 to 2015. The economic for
year 2010 managed to surpass 6% where else the rest of the other years has recorded a
growth below the targeted mark.

Chart no. 9

Hence, I think more research is needed find out what are the factors and challenges faced by
the government departments and agencies in this area.
I hope this article is able to show you the importance of creativity and innovation for a
country economic growth. I also hope this article has given you some food for thoughts to
look at the issue faced by the government when implementing such policy.
If you have comment to share, pls do write to me at [email protected]. I would to keen to
hear your thoughts too.
Be cre8tive selalu
Uncle Bugs
Inventor