Youth and Agrotechnopreneurship Ecosystem In Malaysia

Youth and Agrotechnopreneurship Ecosystem In Malaysia

Published: 2020.10.06
Accepted: 2020.09.28
80
Former Director
Strategic Planning and Innovation Management Centre, Malaysian Agricultural Research and Development Institute (MARDI)
Economic and Social Science Research Centre, Malaysian Agricultural Research and Development Institute (MARDI)
Malaysian Agricultural Research and Development Institute (MARDI)

ABSTRACT

Entrepreneurship is important for economic development of every nation as it creates employment and generates income from the selling of the technological products. Statistics show that majority of the entrepreneurs in Malaysia are those people whose ages are between 35 and 64 years old. The government would like to encourage young people whose ages are between 25 and 40 years old to be involved in entrepreneurship. Malaysia is known as one of the business-friendly nations in the world. The business ecosystem in Malaysia is the factor that promotes entrepreneurship and encourages young people to participate in agrotechnology based businesses or otherwise known as agrotechnopreneurs. Four important components that motivate young generation in Malaysia to be involved in agrotechnopreneurship are human capital, investments in R&D by public and private sector, law and policies introduced by the government and financial resources. The agrotechnopreneurship ecosystem in Malaysia is improving year after year. The government recently launched a new entrepreneurship policy in 2019 that set five objectives and six strategic thrusts that could further improve the ecosystem. Under the new policy, Malaysia aims to be a superior entrepreneurial nation by 2030.

Keywords: Entrepreneurship, youth, agrotechnopreneur, ecosystem, technology

INTRODUCTION

The youth is considered one of the key agents of socio-economic development and technological innovation in Malaysia. They bring talent, energy, creativity to economic development. In Malaysia, youth is defined as those in the age between 15 and 40 years old, but for the development program, the focus is for those in the age between 15 and 25 years old. Youth represents around 44% of the total population in Malaysia, hence they are very important workforce, driving technology development and creating entrepreneurship.

Entrepreneurship is one of the factors for economic development in which it enhances the economy growth, creates innovation, develops new technology and creates employment (United Nation, 2013). There is a strong correlation between technological development and entrepreneurship. Technology creates opportunities for an entrepreneur to gain profit. According to Kizner (1973), an entrepreneur always notices profit from opportunities that exist from a developed technology, mobilizes resources and starts a venture.

The government of Malaysia recognized the contribution of youth as a new source of workforce and new wealth creators. The involvement of youth in entrepreneurship would generate new economic development and create more employments. However, according to a report by Malaysia Labor Force Survey in 2014, the people who are involved in entrepreneurship are mainly those in the age group between 35 and 64 years old. At the same time, according to a report by SME Corp (2014), very few entrepreneurs in Malaysia are involved in high-technology manufacturing activities. A study by Amna et al. (2015) also revealed that the number of entrepreneurs involved in agriculture-based venture is only around 26%.

 These findings suggested that the participation of youths in entrepreneurial activities is low. There are many factors that impede the involvement of youth in agrotechnopreneurship. Ecosystem is seen as one of the factors that could motivate or discourage the youth to participate in the agrotechnopreneurship in Malaysia. This paper highlights the relationship between youth and agrotechnopreneurship in Malaysia. How the ecosystem in Malaysia would create opportunities for youth to be involved in entrepreneurship, and become self-employed or entrepreneurs.

ENTREPRENEURSHIP AND AGROTECHNOPRENEURSHIP

There are many definitions of the concept of entrepreneurship. For example, Joseph Schumpeter (1934) associated entrepreneurship with the concept of innovation and applied it to business context. Penrose (1963) on the other hand, views entrepreneurship as an activity that involves opportunity recognition in the economic system. In general, an entrepreneur is a person who can recognize a favorable opportunity in the market and responds to it for profitability. Martin (1994) and Sarasvathy (2001) explained that the concept of entrepreneurship and opportunity is always associated and linked together. They explain why a prospective entrepreneur chooses to pursue possible opportunity created in the market for profit. In other words, entrepreneurship and technological development are linked together when the entrepreneur recognizes the potential benefit or profit when he decides to venture or start-up a business.         

Technopreneurship on the other hand, is defined as entrepreneurial activities in an existing or a new company operating under technology-intensive environment. In a simple sentence, technopreneurship is entrepreneurship in the field of high technology. It is a new breed of entrepreneurship. It involves a coming together of people who are intelligent, driven, creative, tech-savvy and passionate and have an appetite for calculated risks. A technopreneur business venture is realized through exploitation and application of technology and innovation. A technopreneur is an entrepreneur who is skilled in technologies, creative, innovative, dynamic, dares to be different and takes the unexplored path. S/He is very passionate about their work, and a person who makes money through the exploitation of technology or innovation. A technopreneur  differs from an entrepreneur on the type of business and products/services they do or provide. They are willing to take whatever risks to produce innovative products or provide services through complex technology commercialization processes. Agrotechnopreneur is the entrepreneur who is involved in agrobased industry. S/He commercializes agro-based technology or innovative products for profit. A combination of agriculture practices and technology is now a new uprising trend in the world, especially in developing countries, including Malaysia.

Entrepreneurship in Malaysia

In 2015, Malaysia’s economy was reported as one of the most competitive, and ranking 14th in the world. Malaysia is also known as a country with business-friendly ecosystem. According to a report by the World Bank, Malaysia ranked 18th in the world in the ease of doing business index 2016, and the second in South-East-Asia, behind Singapore.  The business-friendly ecosystem has attracted people to do business in Malaysia. A report by the Companies Commission of Malaysia revealed that more than 1.294 million companies and 7.30 million businesses were registered in Malaysia, in 2018. The number of business has increased around 17.8% compared to 2015, in which it indicates the great business opportunities in Malaysia. The number of businesses operated by foreigners has also increased to 4,803 establishments in 2018, from 4,680 establishments in 2015. Around 75% of the businesses are involved in service sector, construction (10.9%), manufacturing (10.5%), agriculture (2.8%) and mining and quarrying (0.8%).

In Malaysia, a company is categorized as big, medium, small and micro enterprises. In general, 97.3% of companies in Malaysia are categorized as small, medium and micro enterprises (SME). The definition of SME is determined by the sales turnover or the number of employees employed. A business can qualify as an SME if it meets either two specified criteria, namely sales turnover or full-time employees, whichever is lower (Table 1).

SME in Malaysia is classified under five sectors, manufacturing, services, agriculture, construction, and mining and quarrying. Manufacturing refers to the physical or chemical transformation of materials or components into new products. Services refer to all services, including distributive trade, hotels and restaurants, business, professional and ICT services, private education and health, entertainment, financial intermediation, and manufacturing-related services such as research and development (R&D), logistics and warehouse. Agriculture sector, on the other hand, includes production of perennial crops (such as rubber, oil palm, cocoa) and cash crops (such as vegetables and fruits); livestock, forestry and logging, marine fishing and aquaculture. Construction sector includes the fields of infrastructure, and residential and non-residential. 

Agrotechnopreneurship Ecosystem

The success of an agrotechnopreneur is influenced by the support (formal and informal) from the ecosystem. In general, ecosystem can be defined as a complex network or interconnected system. The Cambridge English dictionary explains ecosystem as all the living things in an area and the way they affect each other and the environment. Business ecosystem, on the other hand, is the network between an organization and others that include its suppliers, distributors, customers, competitors and government agencies. All entities involved in an ecosystem will affect and be affected by each other. Thus, in order to survive in the ecosystem, each entity must be flexible, and interact and support each other.

Cohen (2006) suggested that entrepreneurial ecosystem involved innovative individual and entrepreneurial system that linked together. He states that formal and informal ecosystem includes universities, government, support services, capital and human talents. Isenberg (2011) on the other hand, outlines six components of entrepreneurship ecosystem that include culture, policies and leadership, financial availability, human capital, markets for products, and institutional and infrastructural support. In the context of this paper, ecosystem can be considered as the enablers that serve as a foundation to promote and support the development of agrotechnopreneurship in Malaysia. In general, agrotechnopreneurship ecosystem is made up of four elements: 1) Human capital, 2) Investments in R&D, 3) Law and policies and 4) Financial resource (Figure 1).

Human capital development

Human capital is one of the important assets in any organization, including in a business establishment. Human capital makes up the workforce of a business organization. At the same time, human capital is one of the most challenging components in the technopreneurship ecosystem.  They represent the people who are playing crucial roles in determining a success of a company. They are overseeing various aspects of employment such as the development of new technologies, technical aspects, administration and financial management and marketing.  The human capital components in technopreneurship ecosystem include researchers or scientists, technical, operational and marketing people.

In general, a researcher or scientist is a person who carries out academic or scientific research. A researcher received his knowledge and skills from universities, and the skill is determined by the course he registered in. The basic qualities of a researcher are intelligence, honesty, curiosity and initiative, knowledgeable and good in oral and written communication. These people must have research skills that include report writing, data collection, analysis of information from different sources, finding information off the internet, critical thinking, planning and scheduling and critical analysis. A researcher conducts R&D and generates new technology or new knowledge that can be sold as a new formulation or as an end product.

The process of the development of a new technology is carried out by researchers or scientists. The researcher or scientist is the thinker who develops new technology, the technical people involved in the manufacturing or fabricating the technology; marketing people seeks the market and sells the products, while financiers seek the investor to finance the projects. 

The development of agrotechnopreneur must be supported by R&D. This group of people will generate technologies and innovation that can be used by the agrotechnopreneurs. The entrepreneurs will use the technology as a production system, or as end products that can be sold for financial return. Since the R&D requires large investments, they are mostly carried out by research officers and scientists from government research institutions and universities. 

The number of researchers in Malaysia has increased significantly. In 2017, the number of researchers has exceeded 120,000 persons. Roughly around 3,750 workforces in one million people are working in R&D sector. Malaysia is behind South Korea (8,329), Singapore (7,247), Japan (7,019), and well ahead of Vietnam (1,170) and Thailand (769). The number of researchers with Master’s degrees has surged more than double from 32.6% in 2008 to 70% in 2017. The supply of the human resources by public and private universities is increasing every year. Currently, more than 20 public, 48 private universities and more than 20 University colleges are established in Malaysia. These universities supply more than 100,000 workforce that can be employed in the management and professional positions. At the same time, more than 30 polytechnics produced around 20,000 workers every year that can be employed in the operation and technical positions.

However, the number of students graduated with the agricultural science and agrotechnology studies are reducing every year. For example, the number of graduates in the field of agricultural science has dropped to 9,210 persons in 2015, from 11,018 in 2008. During the same period, the number of graduates in agrotechnology has reduced to 74 (in 2015) from 441 in 2008. The youths are not interested in venturing into agriculture. Consequently, the supply of professionals in the field of agrotechnopreneurship is less, compared with other fields. As comparison, the number of graduate in the field of information and communication technology is increasing and stands at 15,750 persons in 2015 (Figure 2).

Figure 2 shows the number of graduates with the agricultural science and the agrotechnology backgrounds have dropped significantly every year. It seems that the youth are not interested in the field of agriculture, and this scenario will affect the supply of human capital in the ecosystem. Lack of supply of graduates in the field of agrotechnology will affect the number of innovation and technologies that can be used by agrotechnopreneur and companies.

On the other hand, the number of professional and technical persons is still sufficient to support the agrotechnopreneur ecosystem. The engineers and the information system experts are sufficient to work in the companies and provide support in the process of manufacturing and marketing the products. At the same time, the number of graduates from the management faculties, such as economy, business is increasing every year. For example, the number of graduates in the field of social science, business and law was 103,318 people in 2018. These people will support the agrotechnopreneurs in the administration, finance and operation.

Investments on R&D

Research and development (R&D) plays significant roles for the development of a country, including Malaysia. R&D lays the foundation for Malaysia to develop new capabilities in business by introducing new technologies, new products and new services. Expenditure on R&D is one of the indicators for competitiveness in science and technology. Most of the developed nations spend between 2% and 5% of their gross domestic product (GDP) on R&D. For example, South Korea spent around 4.29% of its GDP on R&D, Japan (3.15%), USA (2.74%) and Singapore (2.19%), in 2018.

Malaysian government also recognized the importance of innovation and technologies as the enablers for economic development. Thus, the investments in the R&D activities have increased every year. Investments on R&D are considered as current and capital expenditures (both public and private) on creative work undertaken systematically to increase knowledge. In this context, it is measured by the percentage of GDP used for R&D expenditure. The Malaysia’s Gross Expenditure of R&D (GERD) was 1.44% in 2016, increased from 1.04% (2010). The investments on R&D by Malaysia is above the world average, which is 1% in 2016. This figure indicates the great effort by the Malaysian government in creating a favorable ecosystem in the development of new products and technologies. The government aims to increase the investments in R&D to at least 2% of the GDP by 2025.

The investments on R&D was done by the government, business enterprises, high education institutions and private non-profit organizations. In 2016, more than RM4.33 billion (US$1.03 billion) was spent for R&D activities. It covers basic research, applied research and experimental development. Applied research represents around 75% of the total expenditure for R&D, while basic research and applied research represent 17% and 7.5% respectively in 2014. The Malaysia’s GERD has increased since 2008, from RM6.071 billion (US$1.445 billion) to RM17.685 billion (US$4.210 billion) in 2016. However, the GERD has decreased to RM15.060 billion (US$3.585 billion) in 2018. As a result the number of researchers has also reduced from 108,557 researchers per 10,000 labor force in 2016 to 90,060 researchers per 10,000 labor force in 2018 ( MASTIC, 2020)

The Malaysian government encourages and gives incentives to companies to embark on R&D activities. At the same time, the government also encourages collaboration between public research institutions and public universities, and the private sector. This approach has sped up the development of new technologies and the process of technology transfer from public entities to private firms. The higher investments in R&D has resulted with a higher number of innovations. In 2018, Malaysia was ranked 35th out of 126 countries in the Global Innovation Index 2018.  In other words, many innovations or technology could be transferred to SMEs and marketed in the local and international markets.

Law and policies

Entrepreneurship development gained significance in Malaysia with the establishment of the Ministry of Entrepreneur Development in 1996. Under this Ministry, the government introduces numerous programs to foster entrepreneurship, especially among young generations. The government is also fostering technology entrepreneurship where the focus is on the development of technopreneurs.

The Malaysian government has introduced the National Entrepreneurship Policy 2030, in 2019. This policy aims to inculcate a culture of entrepreneurship in order to drive this sector to contribute around 50% to the National Gross Domestic Product (GDP) by 2030. This policy aims to provide a holistic ecosystem for the development of entrepreneurs, especially for those in the age between 25 and 40 years old. At the end, this policy hopes to strengthen the competitiveness of Malaysian products in the world market.

This policy outlines five objectives, as follows:

  1. To create a conducive and holistic entrepreneurship ecosystem that could support the inclusive, balance and sustainable socioeconomic development agenda;
  2. To develop a Malaysian community that has entrepreneurship thinking and culture;
  3. To increase the number of quality, sustainable, competitive and global minded entrepreneurs;
  4. To enhance the capability of the micro, small and medium enterprises, and the cooperatives; and
  5. To promote entrepreneurship as a career.

The policy sets six Strategic Thrusts, as follows:

  1. Cultivating entrepreneurship culture in all communities;
  2. Optimizing regulatory system and access to financing facilities;
  3. Stimulating the development of integrated and holistic entrepreneurship;
  4. Driving economic growth through innovation-based enterprises;
  5. Strengthening the capabilities and performance of micro, small and medium enterprises; and
  6. Internationalizing high-growth enterprises

These strategic thrusts are supported by 19 strategies and 62 incentives.

In Malaysia, government policy is targeted more in getting the agrotechnopreneur program succeeded and contribute to the development of the nation (nation building). It is how government agencies could offer services effectively in order to link between technology and industry. The component includes intellectual property rights, technology transfer office and legal services. Currently, more than 60 agencies under 14 Ministries are involved in the development of technopreneurs. More than 150 entrepreneur development programs were carried out, with the expenditure amounting to more than RM13.7 billion (US$3.26 billion) in 2018. These programs benefited 637,808 youth aged between 15 and 40 years old. The programs include financing, research grants, training and capacity building, the development of infrastructure and the purchase of infrastructure and machines, technology development, market access, social enterprise and globalization.

The Malaysian government has introduced many science and technology programs that could encourage R&D and technological innovation to acquire and advance technological capability. R&D programs are established for generating new knowledge, creating wealth and improving the societal well-being. It is a way to boost the economy through the development of human capital and intellectual property rights, and as a result, will reduce the knowledge gap among the people in general.

Under this new policy, Malaysia aims to increase the contribution of the small and medium enterprises (SME) to GDP from 37.4% in 2018 to 45% (2025) and 50% (2030).  At the same duration, the number of employment created by SME will increase from 66.2% to 72% and 80%, respectively. The government is also optimistic that by 2030, Malaysia will be one of the top 25 nations in the Global Entrepreneurship Index.

The role of higher learning institutions

There are growing numbers of higher learning institutions in Malaysia offering entrepreneurship and technopreneurship programs. According to a report by the Ministry of Higher Education, more than 35 Universities, University Colleges and Polytechnics offer entrepreneur or technopreneurship programs. Most of the higher learning curriculum or syllabus aims to create new entrepreneurs based on knowledge-technology (Nugroho Joshua, 2016).

Entrepreneurship programs and courses

The government has implemented various measures to encourage and cultivate youths’ interests to engage in entrepreneurial activities. Among others are the formation of the Malaysian Global Innovation and Creativity Center (MaGIC), 1Malaysia Entrepreneurs (1MeT) and Tabung Usahawan Siswazah (TUS) which is literally translated as the Graduate Entrepreneur Fund. Under this program, candidates are trained with specific subject matters such as accounting for SMEs, leadership, marketing, business management, human resources management and operation management. Besides knowledge, Nor Amna et al. (2015) also revealed that youths who attended entrepreneurship courses have a higher potential to engage in agricultural entrepreneurship.

Government initiatives

In line with the National Transformation Program, Malaysian government has continuously encouraged the involvement of youths in agrotechnopreneurship. For example, the Ministry of Agriculture and Agro-based Industry established Young Agropreneur Unit in September 2013. This Unit aims to inculcate interest of young generation towards agriculture sector and develop a group of high-income young agriculture entrepreneurs. This program is designed specifically for young people under the age of 40 years old. The program facilitates and encourages the involvement of youth entrepreneurship based on agricultural activities, such as crops, livestock, fisheries, marketing, as well as special projects such as agro-tourism and agro-based industry. 

The government aims to transform the negative perception towards agriculture through the application of technology. The focal target group is new entrepreneurs who have the interest in executing the agriculture-project. They will be experiencing several phases of training through a complete package as below:

  1. Training courses;
  2. Advice services; 
  3. Technical advice;
  4. Loan service or grant provider;
  5. Advice services on marketing; and
  6. Continuous guidance/monitoring

Financial resources

A wide range of public grants, incentives and programs have been designed and implemented by various ministries and agencies to support technopreneurship activities at different stages.

For example, at the stage of technology development, grants are allocated for pre-R&D, research, development and commercialization stages. For example, Cradle Fund Private Limited, a non-profit agency under the purview of the Ministry of Finance, creates an ecosystem that supports a strong and innovative business-oriented environment for the technology entrepreneur. Science fund is allocated for R&D projects that can contribute to the discovery of new ideas and the advancement of knowledge in applied science, focusing on high impact and innovative research. Techno fund provides funding for technology development up to the pre-commercialization stage. InnoFund on the other hand, is a pre-commercialization fund that aims to increase the participation of micro-business and individuals in innovative activities. This fund can also be used for the development of technological innovation of new or existing products, processes or services for commercialization.

For the development of agrotechnopreneur, many agencies and financial institutions offer financial services and business grants. In general, more than 44 financial assistance programs were provided and benefited more than 424,115 entrepreneurs in 2018. Among the financial support provided by government agencies are as follows:

  • Majlis Amanah MARA and TEKUN National
    • These agencies provide the fund for the development of entrepreneurs for people in the B40 categories (Household with gross income of less than RM2,500 a month (US$595)
  • Credit Guarantee Corporation (CGC)
    •  Financial assistance in terms of bank guarantee
  • Malaysian Industrial Development Finance Berhad (MIDF)
    •  Soft loan

The government also provides a tax incentive that could promote the participation of local entrepreneurs in special businesses such as the tax exemption incentive for social business and tax incentive for green technology or known as Green Investment Tax Allowance.  At the same time, the government also promotes non-banking financial facilities such as venture capital, crowd-funding, investment account platform and peer-to-peer funding. These approaches create an entrepreneur community independent from the government. 

CONCLUSION

Agrotechnopreneurship aims at producing scientists who develop new technologies, industries and markets. The scientists are innovative, creative, technologically capable and productive driven. However, not all scientists have entrepreneurship traits that include being risk takers, market driven, profit oriented and competitive at domestic as well as global markets. In many cases, a scientist is different as compared with an entrepreneur. Thus, they require an ecosystem that can influence and create a scientist to be an agrotechnopreneur.

The entrepreneurship ecosystem in Malaysia has improved contentiously every year. The Malaysian position in the global index has improved significantly. However, there are rooms for improvement, such as in the generation of new knowledge, the development of innovation products and the adoption of technologies by entrepreneurs. The gaps are contributed by the previous policies and regulatory system that are not entrepreneur friendly. Thus, the introduction of the new policy creates new opportunities for the young generation to be involved in the entrepreneurship in Malaysia.

Malaysia has the strength and capability in terms of research and development, innovation, business culture, marketing aspect that supports the development of agrotechnopreneur among young generation.  Malaysia could position itself as one of the important countries that promotes agrotechnopreneurship as a new source of wealth for its young generation, as well as the income generator for economic development. Malaysia aims to be a Super Entrepreneurial Country by 2030.

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