Materia Medica Malaysiana

Malaysia puts muscle behind biotech in bid to lift economy

SINGAPORE — With its manufacturing sector slumping as foreign investors flock to mainland China, Malaysia is turning to biotechnology as an engine for growth. Malaysian Prime Minister Mahathir Mohamad has committed $40 million to build a biotechnology center with state-of-the-art research institutes and training facilities on a 500-acre site near Kuala Lumpur International Airport to lessen the country's dependence on manufacturing.

The BioValley Malaysia project is planned for 2006, and Malaysia hopes to attract $10.5 billion to $12.2 billion of investments within a decade in such fields as agro-biotechnology, genomics and molecular biology. A $13.1 million campus also is planned to train researchers and biotech entrepreneurs with the help of experts from overseas, including China. The government hopes the investments will launch 150 biotech firms and create 30,000 jobs within 10 years.

Malaysia has reported that its manufacturing investment shrank by almost 36 percent in 2002 from 2001. Trade Minister Rafidah Aziz blamed it on the postponement of several large projects that were stalled by the uncertainty of the global economy. In addition, capital investment by the Malaysian American electronics industry fell to $420 million last year from $605 million 2001. This was blamed in part on dwindling foreign investments and the greater competitiveness of China as a manufacturing locale.

Analysts see recent pump-priming measures by the government as insufficient to jump-start manufacturing or the electronics sector. A $1.92 billion stimulus package announced last week by Prime Minister Mahathir to arrest the impact of SARS and revive an economy dependent on foreign investments, tourism and international trade may be too little, too late, said Nagulan Narendran, a retired market analyst from Frontline Investments Sdn. Bhd.

With SARS, the Iraqi war and continuing economic sluggishness worldwide, Malaysia's gross domestic product is estimated to fall from 6.5 percent to 4.5 percent this year. The fiscal incentives were deemed necessary to stimulate the economy while raising competitiveness. Close to 90 measures were announced. In addition, the government separately unveiled a $263 million package to act as a tax relief fund for the tourism sector and to assist traders that needed fresh funds for their businesses. Bank Negara, Malaysia's central bank, is also expected to cut its interbank interest rates to a low of 4.5 percent.

Malaysia tries to catch up with biotech center

KUALA LUMPUR -- Malaysia launched a $26 million biotechnology center on Tuesday, hoping to attract homegrown and large foreign firms to a cluster and help it narrow a knowledge gap with neighbours Japan and Singapore. Prime Minister Mahathir Mohamad said his country might be late entering the biotech scene, but could catch up fast because its rich and diverse natural resources. "Other countries are already ahead," Mahathir told a news conference. "But we think we have great potential."

Sited on 2,000-acres of flat, former tin-mining land, the government-backed center is called BioValley Malaysia and located just south of software development town Cyberjaya. Two firms -- Dutch-based nutriceuticals Improser Technologies Sdn Bhd and biofoods INS ZHEN-AO Biotech Corp. Sdn Bhd -- signed up as pioneer tenants. "I don't care if this turns out to be a white elephant," Wong Kin Nam, INS ZHEN communications director, told Reuters. "We appreciate the government support. It helps small firms like us develop our products at affordable costs and that improves our chances of making it in the overseas markets." Companies which set up stall at BioValley will be given at least five years free of rent, be eligible for tax incentives and get to use advanced laboratory facilities built by the government, Wong said.

"We think the government needs to give a greater boost to advanced areas like biomedicine, where the payback takes longer," said Henry Low, director of clot blood bank CryoCord Sdn Bhd. Low, a UK.-trained biochemist, said Malaysia was a leader in several specialized palm oil-based research niches, but was on the whole about 10 years behind Singapore and Japan. "But creating a BioValley helps to narrow the gap," he said. Three more centers in Penang, Malacca and the eastern state of Sarawak on Borneo island are planned. Malaysia has huge bio-resources. It is estimated to have some 12,500 species of flowering plants and more than 1,100 species of fern.