Malaysian Biotechnology Corporation

		An Introduction
		The Gateway to Asia
		Definition of Biotechnology
		Malaysia’s National Biotechnology Policy
		Socio-Economic Impetus

National Biotechnology Policy:
AN OVERVIEW OF MALAYSIA’S NATIONAL BIOTECHNOLOGY POLICY

THIS LANDMARK POLICY ENCOMPASSES NINE THRUSTS WHICH UNDERLINE THE DIRECTION AND MEASURES OFFERED BY MY GOVERNMENT TOWARDS DEVELOPING BIOTECHNOLOGY FOR WEALTH CREATION AND NATIONAL WELL-BEING.

THRUST ONE OF THE NATIONAL BIOTECHNOLOGY POLICY IS TO TRANSFORM AND ENHANCE THE VALUE CREATION OF THE AGRICULTURAL SECTOR THROUGH BIOTECHNOLOGY.

THRUST TWO IS TO CAPITALISE ON THE STRENGTHS OF BIODIVERSITY TO COMMERCIALISE DISCOVERIES IN HEALTH-RELATED NATURAL PRODUCTS AND BIO-GENERIC DRUGS.

THRUST THREE IS TO LEVERAGE OUR STRONG MANUFACTURING SECTOR BY INCREASING OPPORTUNITIES IN BIO-PROCESSING AND BIO-MANUFACTURING. THESE THREE THRUSTS REFLECT ONE OF THE MAIN PRINCIPLES BEHIND THE NATIONAL BIOTECHNOLOGY POLICY - WHICH IS TO LEVERAGE THE COUNTRY'S EXISTING CAPABILITIES AND TO MOVE THEM UP THE VALUE CHAIN. IN THIS INITIAL PHASE OF BIOTECHNOLOGY DEVELOPMENT, WE ARE TARGETING BIOTECHNOLOGY SUB-SECTORS WHICH WILL SHIFT THE COUNTRY'S AGRICULTURE, HEALTHCARE AND MANUFACTURING SECTORS TO THE HIGH-TECH STAGE.

THRUST FOUR, MEANWHILE, IS TO ESTABLISH BIOTECHNOLOGY CENTRES OF EXCELLENCE IN THE COUNTRY, WHERE WE BRING TOGETHER MULTI-DISCIPLINARY RESEARCH TEAMS IN COORDINATED INITIATIVES.

THRUST FIVE IS TO BUILD THE NATION'S HUMAN CAPITAL IN BIOTECHNOLOGY VIA EDUCATION AND TRAINING. THERE IS NO DOUBT BIOTECHNOLOGY IS BUILT FROM THE POWER OF RESEARCH AND HUMAN INTELLECT. MY GOVERNMENT THEREFORE AIMS TO ENHANCE MALAYSIA'S KNOWLEDGE GENERATION CAPABILITIES BY NURTURING RESEARCH ACTIVITIES AND BY BUILDING A STRONG HUMAN CAPITAL BASE.

AT THE SAME TIME, MY GOVERNMENT FIRMLY BELIEVES IN GIVING BALANCED ATTENTION TO THE ENTIRE BIOTECHNOLOGY VALUE CHAIN, FROM R&D TO COMMERCIALISATION TO THE MARKET. THIS MEANS THAT RESOURCES MUST BE PROVIDED TO SUPPORT BIOTECHNOLOGY VENTURES AT ALL STAGES OF DEVELOPMENT.

THUS, THRUST SIX OF THE NATIONAL BIOTECHNOLOGY POLICY IS TO APPLY COMPETITIVE 'LAB TO MARKET' FUNDING AND INCENTIVES TO ENCOURAGE COMMITTED PARTICIPATION FROM ACADEMIA AND THE PRIVATE SECTOR, INCLUDING GOVERNMENT-LINKED COMPANIES.

AS AN INITIAL STEP, MY GOVERNMENT WILL BE STRUCTURING DEDICATED MATCHING GRANTS FOR BIOTECHNOLOGY R&D AND COMMERCIALISATION, INCLUDING FINANCIAL SUPPORT IN PATENT APPLICATION. TO ASSIST R&D VENTURES EVEN FURTHER, A FUND WILL BE ESTABLISHED TO ASSIST IN THE TRAINING COSTS OF SKILLED WORKERS AND THE HIRING OF RESEARCHERS IN PROMOTED AREAS. THE DETAILS OF THESE GRANTS ARE CURRENTLY BEING WORKED OUT UNDER THE 9TH MALAYSIA PLAN PROCESS, BUT THOSE INTERESTED TO APPLY FOR FUNDING NOW MAY DO SO UNDER EXISTING GOVERNMENT GRANT SCHEMES SUCH AS THE I.R.P.A. GRANT SCHEME AND M.T.D.C.'S R&D COMMERCIALISATION SCHEME.

TO ENCOURAGE BIOTECHNOLOGY INVESTMENT FROM PRIVATE SECTOR CORPORATIONS, THE GOVERNMENT IS OFFERING 100 PERCENT GROUP TAX RELIEF OR DEDUCTION ON QUALIFYING INVESTMENTS IN BIOTECHNOLOGY. MEANWHILE, BIOTECHNOLOGY BUSINESSES CAN BENEFIT FROM PRE-PACKAGED TAX INCENTIVES CURRENTLY PROVIDED BY THE GOVERNMENT, INCLUDING 10 YEAR TAX-EXEMPT PIONEER STATUS, EXEMPTION OF IMPORT DUTIES ON APPROVED EQUIPMENT AND MATERIALS, DOUBLE TAX DEDUCTIONS ON QUALIFYING EXPENSES AND R&D INVESTMENTS, AMONG MANY OTHERS.

TO INCREASE ACCESS TO FUNDS FOR BIOTECHNOLOGY COMPANIES, VENTURE CAPITAL PARTICIPATION WILL BE STRENGTHENED AND ENTRY TO THE CAPITAL MARKETS WILL BE ENHANCED. ENTRY CRITERIA INTO MESDAQ, FOR EXAMPLE, MUST ALLOW FOR THE SPECIAL CHARACTERISTICS OF BIOTECHNOLOGY COMPANIES WITH ITS LONG GESTATION PERIODS AND HIGHER RISK PROFILES. OF COURSE, AS INDUSTRY PARTICIPANTS WILL ATTEST, ASSISTANCE IS NOT ALL ABOUT FINANCIAL HELP. MINDFUL OF THIS, THE GOVERNMENT IS COMMITTED TOWARDS IMPROVING THE OPERATING ENVIRONMENT ON SEVERAL FRONTS.

THUS, THRUST SEVEN OF THE POLICY IS TO IMPROVE THE COUNTRY'S INNOVATION SYSTEM BY REVIEWING THE COUNTRY'S LEGAL AND REGULATORY FRAMEWORK. PART OF THIS EFFORT INVOLVES MAKING REGULATORY CHANGES TO GIVE RESEARCHERS A SHARE IN THE OWNERSHIP OF INTELLECTUAL PROPERTY AND IN THE MONETARY REWARDS DERIVED FROM THEIR WORK, TOGETHER WITH THEIR INSTITUTIONS AND INVESTORS. REGULATIONS AND PROCEDURES PERTAINING TO EMPLOYMENT OF KNOWLEDGE WORKERS WILL ALSO BE REVIEWED TO INCREASE THE BIOTECHNOLOGY 'BRAIN-GAIN' INTO THE COUNTRY.

THE MALAYSIAN GOVERNMENT, PARTICULARLY THE MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION, HAS WORKED HARD AT PUTTING TOGETHER A COMPREHENSIVE BIOTECHNOLOGY POLICY THAT IS RELEVANT AND COMPETITIVE. HOWEVER, WHILE WE APPRECIATE THAT POLICY DIRECTION IS IMPORTANT, WE ALSO RECOGNISE THAT THE MERIT OF ANY POLICY CAN ONLY BE SEEN IN ITS EXECUTION. THEREFORE, THE NINTH AND FINAL THRUST OF THE NATIONAL BIOTECHNOLOGY POLICY IS TO ESTABLISH A DEDICATED AND PROFESSIONAL AGENCY TO SPEARHEAD THE DEVELOPMENT OF MALAYSIA'S BIOTECHNOLOGY SECTOR.

THE "MALAYSIAN BIOTECHNOLOGY CORPORATION" IS THUS SET UP UNDER THE OVERSIGHT OF AN IMPLEMENTATION COUNCIL HEADED BY MYSELF. THIS AGENCY IS ENTRUSTED WITH IDENTIFYING GOOD VALUE PROPOSITIONS IN BOTH R&D AND COMMERCE, AND TO ASSIST THESE VENTURES VIA FINANCIAL SUPPORT AND DEVELOPMENTAL SERVICES.

THE MALAYSIAN BIOTECHNOLOGY CORPORATION WILL WORK CLOSELY WITH ALL RELEVANT AGENCIES AND MINISTRIES, SUCH AS THE MINISTRY OF HEALTH, THE MINISTRY OF AGRICULTURE & AGRO-BASED INDUSTRIES AND THE MINISTRY OF COMMODITIES & PLANTATION INDUSTRIES. THE MALAYSIAN BIOTECHNOLOGY CORPORATION WILL ALSO BE WORKING UNDER THE PURVIEW OF THE MINISTRY OF SCIENCE, TECHNOLOGY AND INNOVATION TO ENHANCE BIOTECHNOLOGY R&D AND TO HELP IMPROVE THE REGULATORY ENVIRONMENT DR. AHMAD ZAHARUDDIN IDRUS, THE SCIENCE ADVISOR TO THE PRIME MINISTER, HAS BEEN APPOINTED CHAIRMAN OF MBC, WHILE MALAYSIAN TECHNOLOGY DEVELOPMENT CORPORATION CHIEF EXECUTIVE OFFICER ISKANDAR MIZAL MAHMOOD HAS BEEN APPOINTED AS THE NEW AGENCY'S CEO. THE MBC WILL ALSO LOOK INTO CREATING OPPORTUNITIES FOR COMMERCIAL SPIN-OFFS; PROVIDING FUNDING AND INDUSTRY DEVELOPMENT SERVICES; AND ADVANCING R&D AND COMMERCE IN AGRICULTURE BIOTECHNOLOGY, HEALTHCARE BIOTECHNOLOGY AND INDUSTRIAL BIOTECHNOLOGY.

AFTER MUCH CONSIDERATION, THE GOVERNMENT HAS ALSO DECIDED TO EMPLOY AN APPROACH THAT MOVES AWAY FROM AN INFRASTRUCTURE FOCUS TO ONE THAT BUILDS ON THE CAPABILITIES OF EXISTING INSTITUTIONS. IN LINE WITH THIS, THE GOVERNMENT WILL BE DEVELOPING A NETWORK OR NEXUS OF CENTRES OF EXCELLENCE FROM EXISTING INSTITUTIONS AROUND THE COUNTRY, TO BE KNOWN AS BIONEXUS MALAYSIA. THIS BIONEXUS WILL REPRESENT THE BEST INSTITUTIONS THAT MALAYSIA HAS TO OFFER IN SPECIFIC BIOTECHNOLOGY SUB-SECTORS.

AS A START, RESOURCES WILL BE PUT INTO DEVELOPING THREE CENTRES OF EXCELLENCE. THE CENTRE OF EXCELLENCE FOR AGRICULTURAL BIOTECHNOLOGY WILL BE FOCUSED AROUND MARDI AND UNIVERSITI PUTRA MALAYSIA. THE CENTRE OF EXCELLENCE FOR GENOMICS AND MOLECULAR BIOLOGY WILL BE FOCUSED IN UNIVERSITI KEBANGSAAN MALAYSIA. THE CENTRE OF EXCELLENCE FOR PHARMACEUTICALS AND NUTRACEUTICALS WILL BE BUILT. THESE CENTRES OF EXCELLENCE WILL BECOME ANCHORS AND ATTRACT THE SET-UP OF OTHER INSTITUTIONS AND COMPANIES IN RELATED AREAS OF EXPERTISE. IN FUTURE, THESE CENTRES OF EXCELLENCE WILL LINK UP WITH OTHER BIONEXUS CENTRES ALL AROUND THE COUNTRY IN A NETWORK OF COLLABORATION AND EXCHANGE OF IDEAS.

1. INCENTIVE FOR THE HOLDING COMPANIES
A HOLDING COMPANY OWNING AT LEAST 70% OF AN APPROVED BIOTECHNOLOGY COMPANY CAN CLAIM:
A. GROUP RELIEF: WHEREBY ITS INCOME CAN BE OFFSET BY LOSSES INCURRED BY ITS APPROVED SUBSIDIARY BIOTECHNOLOGY COMPANY; OR
B. DEDUCTION FOR THE INVESTMENT IN ITS APPROVED SUBSIDIARY BIOTECHNOLOGY COMPANY AGAINST ITS PROFITS;

2. TAX EXEMPTION FOR BIOTECHNOLOGY COMPANIES
APPROVED BIOTECHNOLOGY COMPANIES WILL BE ELIGIBLE FOR:
A. PIONEER STATUS: 100% INCOME TAX EXEMPTION FOR A PERIOD OF UP TO 10 YEARS; OR
B. INVESTMENT TAX ALLOWANCE: 100% OF QUALIFYING INVESTMENTS OVER A PERIOD OF 5 YEARS CAN BE SET OFF AGAINST PROFITS (THIS INCENTIVE IS NOT AVAILABLE IF HOLDING COMPANY INCENTIVES HAVE
BEEN CLAIMED);

3. DIVIDENDS DISTRIBUTED FROM TAX EXEMPT BIOTECHNOLOGY COMPANIES WILL BE TREATED AS TAX EXEMPT INCOME FOR ITS SHAREHOLDERS;

4. IMPORT DUTY AND SALES TAX EXEMPTION ON APPROVED BIOTECHNOLOGY EQUIPMENT AND MATERIALS;

5. DOUBLE DEDUCTION FOR QUALIFYING EXPENDITURE ON R&D;

6. DOUBLE DEDUCTION FOR QUALIFYING EXPENDITURE ON EXPORT PROMOTION. THE MALAYSIAN BIOTECHNOLOGY CORPORATION WILL ACT AS THE SINGLE POINT OF CONTACT (ONE STOP AGENCY) TO PROCESS APPLICATIONS FOR TAX INCENTIVES TO BIOTECHNOLOGY RELATED COMPANIES. THE ACTUAL PACKAGE OF TAX INCENTIVES ACCORDED TO A GIVEN BIOTECHNOLOGY COMPANY WILL BE CUSTOMISED BASED ON THE MERITS OF THE PROJECT.

Ninth Malaysia Plan 2006 – 2010

Chapter 6 “Biotechnology for Wealth Creation”
Biotechnology is becoming the next source of wealth for the world. It is playing an increasingly dominant position in the economy. Equipped with its strength in biotechnology infrastructure, Malaysia has the opportunity to play a vital role in this emerging industry. Therefore, the Malaysian Government is making a concerted effort in ensuring the initiatives and incentives are in line with other leading countries. In the recent Ninth Malaysia Plan (2006 – 2010), a whole chapter (Chapter 6) is dedicated to the development of biotechnology in Malaysia.

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