Salam Malaysia Madani and a very good morning to all.
1. May I warmly welcome the distinguished global experts and innovators to the International Conference on Quality and Innovation 2024. I would like to thank SIRIM and the organisers for bringing together all of you to discuss topics that are critical to economic growth as well as the sustainability of our global future.
2. The world is at a crossroads. With the advent of generative AI and many other technologies, the world is technologically most advanced of all times. Yet the world is most divided ever politically, as evident in so many wars and conflicts around the globe, and as we speak, we are now awaiting the results of the U.S. election. Technological advancement as it is gives asymmetric information advantages to the economically and politically powerful, as well as potentially causing the losses of jobs, which in turn fueled right-wing populism in advanced economies, and further divide the haves and have-nots within a country and between countries. While the world is at its height of technology, it is also facing problems such as climate change, resource depletion and aging, which requires collective action.
3. Malaysia is committed to help solve some of these domestic, regional and global challenges. Prime Minister Dato’ Seri Anwar Ibrahim launched the Madani Economy Framework in July 2023 with the twin goals of “raising the ceiling” and “raising the floor”. It aims to make Malaysia among the 30 largest economies in the world while dealing with inequality such as workers’ share of the economic pie. Separately, Malaysia has clarified its net zero target from “as early as 2050”, announced two years ago, to achieving net zero “by 2050”.
4. Malaysia will chair ASEAN in 2025, with the theme of “inclusivity and sustainability”. In a volatile and divided world, ASEAN as a non-aligned entity and with a potentially sizable middle class, can be both a middle ground in geopolitics and an important future market for the world.
5. To achieve growth, inclusivity, and sustainability at the same time, as well as to raise the ceiling and the floor at once, we need to do a lot more.
6. To do so, economic development in Malaysia cannot just be about vertically integrated to the global supply chain of multinationals. We cannot just be sourcing FDIs of individual foreign firms that do not grow forward and backward linkages to other firms in Malaysia, especially the domestic small and middle industries. We must find a way to grow technology horizontally in Malaysia so that the great global technology companies that are in Malaysia are not just serving the global market but actually spend money on R&D to solve problems faced by Malaysia and ASEAN. I recently visited a top global medical devices company in my constituency of Iskandar Puteri, and found that by design of Malaysian government policies and also corporate assumption of using Malaysia as a production base for the global market, there was no plan to sell these Malaysia-made products to Malaysian consumers. This has to change. Both government policies and investors’ assumptions have to change.
7. When I visited Brazil in May, I learned that the Brazilian government mandated Petronas, a foreign investor, to contribute a significant amount of its revenue to fund local R&D collaborations with Brazilian universities. This means Petronas has to invest in Brazilian R&D, and both Petronas and Brazil gain from this arrangement. For Malaysia to grow into a technology-based nation and for technology to solve Malaysia’s problems, we will need investments into R&D collaborations by firms operating in Malaysia. Whether government leaders, civil servants, or businesses, we must not assume Malaysia as just a production site. We must work on the basis that Malaysia is a consumer market, and most importantly, Malaysia is a nation that creates, a line that I borrow from Khazanah. We must do everything possible to innovate more.
8. Under the leadership of Prime Minister Anwar, Malaysia now has clarity in purpose and directions. We also have a once-in-a-generation opportunity for a second takeoff as a result of the relocation of the supply chain into Southeast Asia. However, having aspiration is one thing, to get there is another thing. We must aim to leapfrog, not just catch-up. We need to change the mindset of incremental catch-ups and improvements. How do we do this?
9. First, Malaysia’s first economic takeoff happened between 1988 and 1997. In the last takeoff, half way into that marathon, many Malaysians got rich by spending time to speculate about the stock market and real estate market. When the Asian Financial Crisis hit, we did not accumulate sufficient technology and R&D to re-emerge like South Korea did. After a quarter century of stagnation, this is Malaysia’s time to shine and we must get it right. We must leapfrog as this window of opportunity may last only a couple of years.
10. Second, a nation has to innovate to get ahead. I encourage you to read Kuen Lee’s The Art of Economic Catch-Up: Barriers, Detours and Leapfrogging in Innovation Systems to understand the policy and institutional challenges, and how Penang, despite having a semiconductor cluster for half a century, did not grow like Taipei or Shenzhen in creating TSMC or Huawei. Malaysia needs to innovate and to build our leading companies in sectors in which we could have a breakthrough.
11. Before I end my speech, I would like to touch on SIRIM briefly. SIRIM was corporatised in 1996 from the Standards Department. No doubt, SIRIM has done very well especially in the testing-quality assurance side of the business and I am proud of SIRIM because it has all sorts of testing capabilities which can be called upon to the rescue when needed. However, when SIRIM was corporatised, there was also an aspiration: for SIRIM to be like ITRI of Taiwan. Alas, SIRIM did not become ITRI because Malaysia then did not have the ambition and policy to support the enabling environment that created TSMC and many other technology companies.
12. Now is the time for Malaysia to have a second takeoff. SIRIM cannot just be doing testing and quality assurance. It needs to grow the R&D side, which has done various interesting things, to as large as the testing side of the business. SIRIM should be a plane flying on two equal-sized wings, namely the testing-quality assurance wing and the R&D wing.
13. To that end, I hope today’s conference will help all of us to think through how to raise the ceiling and the floor simultaneously, to seriously grow Malaysia into a technology nation that creates and not just manufacture, and to ensure SIRIM be at the forefront of this new found purpose of Malaysia.
14. I hereby officiate the International Conference on Quality and Innovation 2024.
Terima kasih.