>> MIM Speaks
TECHNOLOGY THE TO GROWTH
OCTOBER 7, 2001 (P.43) -
THE STAR
THE growth of any nation or organisation. is determined by its
ability to adopt technological changes demanded by
environmental forces prevailing at the time. The issue of
technology transfer into Malaysia has been on the main agenda
in almost all local technological conferences by both the
private and public sectors. However, not much has been
accomplished and there is not much time left to incorporate
technological changes in the light of globalisation. Most
Malaysians know that the key to our country's survival is to
capitalise on the potential of advancing technology in order to
enhance economic strength. Why is it not seen to be given
greater importance? Let's take a closer look.
First of all, what is technology? Zeleny M (1986) in his
article, "High Technology Management," defined technology as
consisting of three interdependent, co-determinant and equally
important components. They are the hardware, the software and
the brainware. The hardware is the physical structure and
logical layout of the equipment or machinery that is to be used
to carry out the required tasks. The software refers to the
knowledge of how to use the hardware in order to carry out the
required tasks. The brainware refers to the reasons for using
the technology in a particular way.
Technology also includes product designs, manufacturing
techniques and related managerial systems. It focuses on
manufacturing and all related activities with its beginning
dating back to the industrial revolution.
Malaysia needs to be competitive in order to be a global
player. The major step towards globalisation was set by our
Prime Minister in the nation's Vision 2020. The achievement of
this vision is contingent upon how capable we are in adopting
new technology and in managing the continuing changes in the
new technology. As Zeleny explained, we must not lack the
brainware, which will enable us to perform certain tasks
effectively and efficiently.
A technological transfer into Malaysia involves four key issues
that need to be addressed: the role of the g9vernment in policy
matters, the investors required to invest in the technology
transfer the employee ability to receive this transfer, and the
education system to prepare to meet the demands of technology
transfer.
Against this backdrop, some observations seemed to cast some
doubt on the seriousness of the Malaysians' quest of achieving
Vision 2020. For example, in 1983, a Malaysian Industrial
Development Authority study reported that most of the
foreign-owned facilities located here were little more than
appendages that concentrated on processes. that required cheap
labour. The same investors' mindset may still prevail.
In 1991 Bank Negara reported that direct foreign investments
(DFI) have been an important catalyst in the growth and
development of Malaysia's industrial base. Concentrating
primarily in the export-oriented manufacturing sector, it is
widely acknowledged that DFI have contributed significantly to
output, employment and total export earnings. For the growth
and development of Malaysia's industrial base, the key issues
are technology transfer, ongoing research, and development and
competitive advantage.
Drawing, from the above, one can infer that most foreign
investors are here to take advantage of the. low cost labour
supply and government incentives such as exemption of corporate
taxes and import duties. The primary objective of any investor
is to maximise profits. Unfortunately, many public planners
seem to miss this point.
R&D investments on marketing issues are needed, because the
life cycle of products is getting shorter and new designs of
greater variety must be made available at lower costs. What
will an investor do when heavy financial investments are
required for technological development and operating costs? The
investor needs to make sound management decisions and look for
cheap, resources. If these companies are forced by legislation
to spend money on R&D or to transfer technology, the investors
simply move out and set up their operation elsewhere, like in
China or Vietnam.
Generally, investors will only transfer to the host country
their start-up or static technology at the adoption phase. This
basic technology is transferred if necessary to start up their
production process, such as the assembling function, where no
advance skills are required. The major operations, such as new
product development and R&D, are still controlled by the parent
companies outside Malaysia.
Investors are reluctant to transfer their dynamic or rooting
technology to the host country primarily because of the cost of
the new technology. New or dynamic technology incorporates the
higher end of operations, maintenance and repair, and R&D
activities, which are currently lacking in Malaysia.
However, not all investors are interested in low-cost
operations and not investing in technology. Some large
multinational organizations operating in Malaysia since the
1970s have transferred dynamic technology and have even set up
in-house R&D units for constant improvements.
What do we do? Perhaps the answer lies within. Maybe, we should
revisit successful companies around Asia. Japan is a leader in
technology. Japanese firms have consistently increased their
own R&D efforts to use, improve, develop and perfect imported
technology.
It is clear that technology has to be bought from
industrialised nations. A classic example is our national car.
Having acquired the automobile technology from Japan in 1983,
we have been just maintaining it. It was not until the late
1990s and with our Prime Minister driving the need for
technology transfer that we started to develop our very own R&D
team in the automobile industry.
The major manufacturing players in Malaysia are the Americans,
the Europeans and the Japanese. Scoichi Yamashita, editor of
Transfer of Japanese Technology and Management to the Asean
Countries, said that the local government, economists, and
journalists are under the impression that the withdrawal of
foreign staff from a foreign-owned subsidiary signals
accomplishment of the technology transfer process. The American
and the European companies operating in Malaysia have their
technical expatriates withdrawn as soon as operation commences,
while the Japanese technical expatriates stay on after
commencement of operations and become technical advisors.
Yamashita clarifies that Western firms operating in Malaysia
formally train their staff in operational techniques and leave
behind sets of manuals for reference. The Japanese firms,
however, establish a system of on-the-job training and practice
a gradual process of continuous learning. Both cover areas of
operational techniques, machine maintenance and repair, quality
control, technological improvement and factory management.
It is also unclear about what Malaysians do with the new
manufacturing information. Instead of complaining that there is
no transfer of technology, local companies could address the
issue of technology transfer by investing in R&D. This view is
strongly shared by our Education Minister in the 2001 media
report, in which he raised concern for the lack of R&D in our
country, especially in our universities. He wants to see
research and development with commercially viable outcomes.
These could be in unexplored fields or in the improvement of
existing ones.
The Bank Negara Annual Report in 1999 reported that 87
scientists and engineers per million population were involved
in R&D in 1997. This worked out to an expenditure of 0.3% of
the GNP for that year. In 2000, the Government allocated 1% of
the GNP to R&D for developing more scientists and engineers.
We must understand that no one will give away technology they
develop for free. An example is when the Koreans bought the
oven technology from General Electric Company and, by research
and development at Samsung in Korea, were able to produce their
now famous microwave oven for the global market.
Finally, the presence of a digital divide has now made
technology transfer a bit more difficult for those who have not
embraced Information and Communication Technology. Technology
generally requires the user to be computer literate. In
Malaysia and the K-Economy, Dr Shahrin Sabibbudin reported the
Human Resources Minister, Datuk Dr Fong Chan Onn, as saying in
a press conference in February 2001 that only 10% of Malaysians
were computer literate and that Malaysia needs to achieve the
50% computer literacy rate to be on par with South Korea,
Singapore, Hong Kong and Taiwan.
These countries are our potential competitors and if we are not
able to stand tall alongside them, we may be at the losing end.
With the Asean Free Trade Area and the World Trade Organisation
at our doorstep, we need to wake up to the call to realise what
technology transfer means and the need to be seriously involved
in ongoing research and development. The ball is already at our
feet. It is up to us to decide what to do with it.
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