myForesight Future Rail 2030

FUTURE RAIL 2030:Shaping theFuture ofMalaysian RailIndustry

LEADER’SINSIGHTSIn person with… Tan Sri Datuk Dr.Ahmad Tajuddin Ali

EXPERTS’INSIGHTSHighlights from theTechCast Project

INDUSTRYINSIGHTSTowards Green andSustainable Aeronautics

TRENDS &ISSUESMalaysia Report on SmallHydropower

04 26 360603/2012

features

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34

ADVISORMohd Yusoff Sulaiman

EDITOR-IN-CHIEFRushdi Abdul Rahim

WRITERSTan Sri Datuk Dr. Ahmad Tajudin AliWilliam E. HalalJonathan CalofJack E. SmithGregory RichardsNazery KhalidMohd Nurul Azammi Mohd NudriI.M. NasirAbd. Rahim Abu TalibPuvaneswari RamasamyMohd Afzanizam Mohd BadrinAbdul Rahman Hamdan

CONTRIBUTORAni Suzila AnasNatrah Mohd EmranAmallia Ahmad ZainiMohd Kamaruzaman AbdullahAhmad Nazri Abudin

PUBLISHED BYMalaysian Industry-GovernmentGroup for High TechnologyPrime Minister's Department3517, Jalan Teknokrat 563000 Cyberjaya,Selangor Darul Ehsanwww.might.org.my

FOR INQUIRIESmyForesight®

Phone : +603 8315 7888Fax : +603 8312 0300E-mail : [email protected] : www.myforesight.my

DISCLAIMERAny article included in thispublication and/or opinionsexpressed therein do notnecessarily reflect the views of themyForesight® but remain solelythose of the author(s).

The Publisher is not to be heldresponsible for any copyrightviolation of articles, which havebeen provided by contributingwriters

PP17630/12/2012(o31478)

03/2012

inside

EDITORIAL BOARD

EDITOR’S NOTE02 Initial Thoughts

LEADER'S INSIGHTS04 In person with…

Tan Sri Datuk Dr. Ahmad Tajuddin Ali

EXPERTS' INSIGHTS06 Forescasting the Technology Revolution:

Highlights from the TechCast Project09 Creating Successful Industrial Policy-Towards Decreasing

Uncertainty by Combining Foresight, Intelligence andBusiness Analysis

COVER STORY20 Future Rail 2030: Shaping the Future of Malaysian

Rail Industry

INDUSTRY INSIGHTS26 Towards Green and Sustainable Aeronautics31 MYBiomass: ‘A Unique Model for a Greener Future’

YOUTH INSIGHTS40 Can Anime Create an Impact to Our Country?

TRENDS & ISSUES36 Malaysia Report on Small Hydro Power (SHP)40 Keeping up with the trends in Maritime Sector

VIEWPOINTS44 Future of Social Media

FORESIGHT INTERCONNECT™

48 myForesight® Book Club

ENVISIONING EMERGING TECHNOLOGY FOR 2012 AND BEYOND

03/2012 myForesight®

2

InitialThoughts

Editor’s note

As previously mentioned the institute wascreated as an effort to mainstream and

expand foresight beyond MIGHT scope of focusareas and activities, although we are still underthe purview of MIGHT. We certainly hope thecreation of the Institute will promotecollaboration and joint effort of foresight invarious fields’ and subject matter with multipleorganizations for the benefit of the nation.

The creation of the institute would not havehappen without the effort, contribution andsupport of a number of individuals. There will betoo many names to list (you know who you are)but our thanks will definitely goes to both theJoint-Chairman as well as the President/CEO ofMIGHT for having the vision and believe in theimportance of foresight.

However one of the important concepts aboutforesight is to learn from your predecessors.Therefore I would like to acknowledge those whohave come before me, head of MIGHT’s foresightprogram who have laid the foundation to enablethe creation of the National Foresight Institute.Many thanks to Mohd Zakwan Mohd Zabidi andNik Ahmad Faizul Abdul Mallek.

On the topic of learning from your predecessors,unfortunately in today’s world, these lessons aretoo often is neglected. We live in a worldconsumed with the present. Little thought isgiven to what’s come before or most significantlywhat lies ahead. While drawing valuable lessonsfrom the past, we need to stay alert to current,emerging, and future challenges. Despite beingaware of the trends and challenges, too manycountries, organizations, and individuals today

suffer from the afflictions of having a myopicview of being short-sighted.

Look around and you will find; too manyindividuals focus on their next pay check, toomany organizations focus on the next quarterlyearnings report, too many politicians focus on thenext election cycle rather than the nextgeneration and too many countries focus on theirworld ranking and position rather than realizingthat we are all inhabitants of this planet.

There is a need for individuals and organizationsto take the long view and consider the broaderimpact of our actions on the world, whether it’seconomic, environmental or societal. The samecan be said for the need for countries to considerthe longer-term implications of their currentpolicies, programs, and proposed actions.

By having foresight; considering the long-termimplications of current trends and proposedpolicies, we can capitalize on opportunities andreduce the risks that lie ahead. Partnering andworking together will be essential. We’re going toneed to start rowing together or else we risksinking separately. Because with the complicatedproblems our world is facing, nations, institutions,and individuals cannot afford to go it alone. Wemust join forces with others and apply ourcollective expertise to solve shared challenges.

This is what National Foresight Institute hope toinculcate by asking the right questions andexploring future possibilities. This partnership isevident in the way we do things, even in the waywe bring you this magazine through contributionsof our partners.

As usual the magazine has to date provide ameans for us to reach our stakeholders and hopeto continually do so in making the magazinebeneficial and thought provoking. My gratitudegoes to the willing contributors whose viewpointsand expertise have definitely enriched thecontent of the magazine.

After reading the magazine, we expect you tohave your opinion on certain matters. You mightagree or disagree. Whichever it goes, we want to hearthem. We welcome your feedback and contributions.

BYRUSHDI ABDUL RAHIMDirectormyForesight®

[email protected]

”

“One of theimportant conceptsabout foresight isto learn from yourpredecessors.ThereforeI would like toacknowledge thosewho have comebefore me, who havelaid the foundationto enable thecreation of theNational ForesightInstitute

Greetings and salutations from all of us at myForesight®. The time between the publicationswas pretty eventful and exciting. I am glad to say that you are now reading a publicationproduced by the Malaysia’s very own National Foresight Institute, thought we still like to beknown by myForesight®.

NationalForesight InstituteLaunching

03/2012myForesight®

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4


Leader’s insightsLeader’s insights

Tan Sri Datuk Dr. Ahmad Tajuddin AliIn person with …

On The Future...

Foresight is not just about tomorrow, but yearsto come. We have to look at 20-50 years from

today – what trends are going to happen and tomake necessary adjustments today. The future isbleak … and this is not the ‘feel good’ timebecause my view of the future – 20 to 50 year’stime – is indeed bleak for this country. I have myown reasons, but I really hope that when the timecomes, I’m proven wrong.

There are many factors and indicators that showwe are not heading in the right direction. Let’sstart with the global challenges. There are bigissues being debated in all international forums, forinstance Rio +20. During Rio +20, The InternationalInstitute for Applied System Analysis (IIASA)presented the global energy assessment whichshows that the world is facing challenges, namelyin energy, climate change, food security, foodproduction, poverty and equity. All these challengesare interrelated and each one feeds the other.

We certainly cannot extract ourselves from beingin that predicament as part of the global community.For example, food crisis, energy crisis and povertyissues in Africa will become even more critical aswe go forward. Continuous consumption ofenergy due to growing population is impactingthe food prices and distribution.

Energy prices will continue to escalate andMalaysia is currently importing much of our energy.Although we produce palm oil, the plantationwill be competing with the growing populationfor land. Soon, those agricultural lands will beconverted into housing and industrial area. At thesame time we are facing the global demand andpressures to preserve our rainforest and greenery,hence, preventing further conversion of ourvirgin jungles into palm oil plantations.

I’m quoting a few known challenges in terms ofrising population, increase cost of food production,distribution, and storage – the whole line of foodsecurity. Water scarcity is another global problemthat is being faced in Malaysia too. If we lookforward to 20 to 30 years from now, the water problemwill be acute. All these issues – food shortages,energy crisis, water scarcity, etc. – will have animpact on us and hamper our growth. However,we are very lucky to be where we are today. Wehave exploited and make good use of our existingresources – labour, land and technology so far. Butwe know that it is not adequate. For instance, thelabour cost in Malaysia is not as competitive as itis in China. Land scarcity and increasing landprices limit our ability to offer foreign businessesto open their plants here. When Malaysia aims forKnowledge Economy and moves towards higherincome society there are also hindrances such asinadequate investment in R&D, small GDP etc.

On competitiveness…In the context of global competition, Malaysia is,at the moment, too dependent on imported orforeign technologies and the people. This includesexperts and their expertise, ownership of patentright, etc. – as the basis of our manufacturing andproduction. We need to extract more value fromthe resources that we have today. In palm oil, forinstance, we need more than what we already havenow. By going downstream we can produce higherquality products range across the value chain;from the raw materials to the end products. Thiscan be done with the aid of our own scientists in ourown laboratories, by generating new sources ofintellectual property rights on products andprocesses. We can boost our production, locallyor abroad, but hold the IP rights. We should try toreverse the current scenario where laboratoriesabroad use our raw materials for theirproductions but hold the IP rights, and sell backthe end products to us at higher prices.

On Socio Economic vs. Technology…Basically, there are two types of people in thisworld that generate and create wealth. First, theagriculturists, planters, and farmers – they plantfruits or cereals, and create or generate finechemicals from minerals in soil, air and water.Second, the technicians, be it chemists, engineersand so on. Through the use of S&T, they create aprocess that leads to higher value produces.While others – the accountants, lawyers etc. – help inmanaging the wealth created along the pipeline. The political system in Malaysia has evolved,enabling us to maintain harmony and peace. Inspite of the other ingredients of instability, thebasic ingredients are multi-racial, multi-cultural,multi-religion, and multi-lingual. People arecontented and they are now looking at the nextphase – environment, equal rights, etc.

The political statements are correct, but the willto carry through by the system such as fundingfor R&D and emphasis on science educationsystem is vital. In an effort to produce the ‘breed’that we want – a society that is scientificallyliterate – teaching science and mathematicsshould be made compulsory.

Beyond any shadow of doubt, we are enjoyingpolitical harmony and stability. This is because ofthe size of our economic cake is big enough andhave continue to expand. However, if we are not ableto keep this cake from expanding continuously,the basis of our harmony and stability may beshaken or even erode.

The strive to put food on the table for the familyis paramount. We are talking about the wholesociety in general, about the masses. If our economyis not able to expand and compete on the globalstage, that is if we are unable to export high valueadded products, we will lose out. Eventually,

Foresight is not just abouttomorrow, but years to come.We have to look at 20-50 yearsfrom today – what trends aregoing to happen and to makenecessary adjustments today.

5


Leader’s insights

although the cake may not shrink, but it may also notexpand as fast as needed to satisfy the growingdemands and expectations of the community.

We must always remember that other countriesare also trying and succeeding, possibly at a fasterrate compared to ours. We must do something tomaintain our competitive edge because we aresharing the same world market. We have to beahead of the curve, ahead of the pack, if we wantto sustain our competitive position. It is sad to say,the way I see it, the ingredients for achieving thatcompetitive edge is not there.

On Theory of Abundance …The greatest danger to humanity is complacency.As for the theory of abundance, I would prefer tolook from the opposite end. When we say thereare pockets of abundance, there are also pocketsof poverty. When I see towards 20 to 30 years inthe future, I see regions in the world that will be veryunstable due to poverty, hunger, overpopulation,etc. It has happened – in Somalia and Sudan. Inequity is the main cause of the instability, andthe impact could be cross-borders. For example,the needs – rather than the demand – for water. Water is one example on competing demand forresources. Water source, may come from anupstream in one country and flow to adownstream in another country with the latterdepending very much on what is coming fromthe former. There could be diversion of waterresources in order to optimise the use by theupstream country, thus depriving the supply tothe downstream country. This will cause thesupply-demand conflict.

On Innovation Ingredients …Our education system aims to have 60:40 ratio ofscience to art students. Sadly, today we only haveless than 30% students in the science stream. Ifthis trend continues, future Malaysians will bepure consumers of technology. Only a smallpercentage of our population will engage in S&T,especially R&D thus, decreasing the chances ofMalaysia to be a producer of technology that cancontribute more to wealth.

Greater challenges are faced by teachers todaycompared to yesteryears. Continuous use oftraditional teaching methods are no longerconducive as students are now sometimes ahead

of their teachers and become less interested tobe in school. Unless the interest in technologyamongst students is inculcated, nourished anddeveloped, future Malaysians will be technologyconsumers, not producers. Only through strongfoundation of science and mathematics in oureducation system, are we able to groom futureresearchers, scientist and innovators.

Talent is a key resource to move up in thetechnological scale in terms of ability andcapacity. There is no point in allocating so muchmoney in R&D if we don’t have the humancapital. Yes, we can open up our economy tooutsiders, but indigenous capacity is vital. Wecannot rely on foreigners as they will come andgo within the context of their own analysis. Forinstance, if they find another country which isbetter and more competitive, they will move out.They may not fully translocate, but instead ofexpanding here, they will expand elsewhere.Therefore, our system and infrastructure need tobe conducive enough to support and continuegenerating growth into the future.

On Regeneration of New Talent …One of the things that worry me is that we failedat regeneration of talents in the management ofSTI and R&D. There are several institutions that failto leap forward from the foundations that were setby earlier founders. Somehow, these foundationshave gone into some sort of oblivion.

Some of the institutions and organizations thatwere vibrant before are not moving forwardbecause they are trapped in their cocoon. Theyare not creative and innovative to face currentchanges and challenges.

Staying in the same trajectory is fine, but if westay at that level while everybody else is movingforward, we are actually moving backwards. Thepessimism in me is for a good reason, and I wouldlike to help. Through NSRC, for instance, weintend to reorganise things in order to redirectthe ships that are already afloat to face stormywaters ahead.

There are so many other things that we can do tocreate and generate interest of the youngergeneration in S&T. Real innovation is the one thatwill really create value and has to be based onS&T, knowledge and strong foundation in science,engineering and mathematics.

At this point I am pessimistic. But I hope mypessimism will lead to actions being taken,actions that will prove 30 -50 years from now -although I may not be around to see it - that I'mwrong... then I will be happy.

“

”

At this point I ampessimistic. But I hopemy pessimism will lead toactions being taken,actions that will prove30 -50 years from now -although I may not bearound to see it - that I'mwrong... then I willbe happy.

About Tan Sri DatukDr Ahmad Tajuddin Ali• Tan Sri Datuk Dr Ahmad Tajuddin Ali is the Chairman

of UEM Group Berhad. He is a Registered ProfessionalEngineer with the Board of Engineers Malaysia, a Fellow of the Institution of Engineers Malaysia and a Fellow of the ASEAN Federation of Engineering Organisation (AFEO).

• He is involved in many professional activities, boards,councils, and committees at national, regional, and international levels. Currently among others he is: Chairman of UEM Land Holdings Berhad, PLUS Expressways Berhad, Linde Malaysia Holdings Berhadand of the Energy Commission of Malaysia. He is also

the Chairman of the Malaysian Standards and Accreditation Council, SIRIM-SIME Technologies Sdn. Bhd., Malaysian Technology Consultants Sdn. Bhd, and the Joint-Chairman (Industry) of the Malaysian Industry-Government Group for High Technology (MIGHT).

• Tan Sri Ahmad Tajuddin is known for his passion in science and technology. He was the Founder Presidentof the Malaysian Association of Research Scientists, the Malaysian Society for Non- Destructive Testing (MSNT) and the Malaysian Nuclear Science Society. He is currently the President of the Academy of Sciences,Malaysia and Malaysian Association of Research Scientists. He is also the Chairman of the National Council for Standards and Accreditation and a Memberof National Science and Research Council (NSRC).


6

Experts insights

This cycle then repeated as smart phones, inturn, replaced digital cameras. Sales of stand-

alone cameras started to decline with thelandmark introduction of Apple’s iPhone withbuilt-in digital cameras and video recorders. TheFlip camcorder, for instance, was widely popularbecause it was simple and easy to use. But themarket dried up after a flood of smart phoneswith good digital cameras and video appeared in2008, and the Flip was soon sold to a gentledeath. 1 Kodak invented the digital camera years ago,but had to abandon the market to smart phones. 2

The same disruptive force of technological changeis at work as alternative energy replaces oil, geneticmedicine extends lives, artificial intelligenceautomates jobs, robots serve as helpers, andother innovations reach the take-off point.

These simple examples highlight the threatsmanagers face if they fail to adapt to strategictechnological change, as well as theopportunities available at the leading edge. Andshorter technology life cycles require that theyact quickly or lose product lines. The only safehaven is to remain at the forefront of change.

This article presents an overview of the TechnologyRevolution and how corporations can competein an era of economic transformation. We drawon a state-of-the-art forecasting system(www.TechCast.org) to outline strategic technologicaladvances that are likely to enter the globalmainstream and their expected impacts.Guidelines outline how business and otherorganizations use technology forecasts to formstrategy, and conclude by aggregating our datato provide a “macro-forecast” of the next decadeor so. Technology strategy is a powerful tool to helpconvert creative destruction into successfulbusiness ventures during the difficult years ahead.

THE COMING TECHNOLOGYREVOLUTIONTo better understand the Technology Revolution,the TechCast Project at George WashingtonUniversity (www.TechCast.org) provides authoritativeforecasts across the entire technologicalspectrum. Technology forecasts are essentialbecause society’s collective technical “tools”comprise the economic foundations of the social

order, and so sound forecasts are crucial foranticipating product innovations and social changes.TechCast is a data-based website that pools theknowledge of 100 plus high-tech CEOs, scientistsand engineers, academics, consultants, futurists,and other experts worldwide to forecastbreakthroughs in all fields. It is possibly the bestforecasting system available, covering the entirerange of technological innovation and updatedconstantly. The Project was cited by the U.S.National Academies of Science and Engineeringas one of the three best systems in the world,3

and web searches rank it No. 2 or 3 out of 52million hits. No forecast can be really accurate, ofcourse, but validation studies confirm thisapproach provides estimates accurate enough toput decision-makers in the right ballpark.

The results show that technological advances,their adoption patterns, and social impacts followwell-defined cycles that can be forecast ratheraccurately. Figure 1 presents highlights of thiswork for 70 leading technologies organized intoseven fields. Some of these technologies areavailable commercially but they have not yet

Forecastingthe TechnologyRevolution:Highlights fromthe TechCast Project

BYWilliam E. Halal, Ph.DGeorge Washington [email protected]

The strategic impact of technology is seen in the rushing change of everyday products. When digitalphotography became feasible a few years ago, the entire film industry was overturned by simply movingaround digital bits instead. Nikon, Kodak, and other famous names that once dominated photography arestill struggling to adjust, laying off thousands of employees and replacing product lines. In place of film,new industries soon sprung up as digital cameras unleashed floods of photos and videos to populate Web2.0 – Facebook, YouTube, blogs, wikis, and more sure to come.

reached the 30% adoption level wherebreakthroughs enter mainstream use. Followingis a quick summary of how these advances arelikely to affect various business sectors. Pleasenote that these highlights are drawn from thewebsite, and so details and references can befound at www.TechCast.org.

The Energy & Environment Crisis is anOpportunity in DisguiseGlobalization is expected to almost double thenumber of people living at industrial levels overthe next decade,4 producing commensurateincreases in energy demands, pollution levels,global warming, and other aspects of the energyand environment crisis. Our forecasts show thatgreen business is likely to take off in three-fiveyears and governments are likely to take serioussteps on global warming about that time.Alternative energy sources – solar cells, windturbines, biofuels, etc. – are growing 30-40% peryear, almost like Moore’s Law. The global marketfor green technologies is expected to reachabout $10 trillion in two-three decades, largerthan autos, health care, or defense. In short, theenergy and environment mess actually offers agreat opportunity in disguise.

Information Technology Changes EverythingComputer power should continue to doubleevery two years; a second generation of optical,biological, and quantum computers is poised totake over; and artificial intelligence is automatingroutine tasks. The Web is the same age that TVwas when it became the dominant force of the20th century. Over the coming decade, working,shopping, learning, and most other socialfunctions are likely to move online into a virtualworld that is ever-present and intelligent. Youmight buy something by simply talking with avirtual robot that greets you by name, knows allthe merchandise and displays it on demand,answers questions, and has infinite patience – theperfect salesperson.5

E-Commerce is Exploding around the Globe Most e-commerce today operates at 10 -15%adoption levels, but online shopping, publishing,education, entertainment, and other services arelikely to reach the critical 30% adoption levelsoon where new markets usually take off. Andthe huge populations of China, India, Brazil, andother developing countries are moving in drovesto PCs, the Internet, and smart phones. Weanticipate that five-six billion people will sooncreate online markets of several trillion dollars.The late C.K. Prahalad, a leading businessprofessor, put it best: “The world’s four billion poorshould be considered the biggest source ofgrowth left.” 6

Manufacturing Goes High-TechThe factories of the Industrial Age are yielding tointelligent manufacturing systems operatingworldwide to produce goods cheaply andquickly. Research in materials and nanotechnologyis making it possible to create almost any type of

product, and mass customization can deliversophisticated goods designed for individualseasily. Attracted by cheap labor and new markets,industrialization is likely to raise living standardsdramatically in most poor nations over the nextfew decades – along with mounting demands forenergy, ecological damage, and clashes betweendiverse cultures. An industrialized world will be aboon to business, but making it sustainable is anenormous challenge that will test us severly.

Medical Advances Confer Mastery Over LifeArtificial organs are being developed to replacealmost all bodily functions, including parts of thebrain, and stem cell research is increasingly ableto repair and grow organs. Electronic medicalrecords, online doctor’s visits, computerizeddiagnostics, and other forms of telemedicineshould curtail rising costs and improve quality ofcare. Nanotech is being used to develop tinydevices that are intelligent enough to seek outcancer cells and destroy them. Just as theIndustrial Age mastered most aspects of thephysical world, these advances are now makingit possible to master the biological world. Yes, itsounds too good to be true, but so did the notionthat men could fly, much less to the Moon.

Transportation Is Moving Faster and Farther Our forecasts show that a new wave of greenautos powered by hybrid, electric, and fuel cellengines should become mainstream about 2013- 2018, and we are likely to see intelligent cars thatdrive themselves. It may seem that information

forms a virtual world that parallels the physicalworld. People will always want to visit each other,handle the merchandise, and hammer out toughdecisions together.

Space is Going PrivateCEO Richard Branson’s Virgin Galactic is likely tolaunch its first suborbital flight of tourists in a yearor two, commercial rockets will soon service theInternational Space Station, and othercompetitors are planning visits to the Moon andspace hotels. Just a few years ago the ideaseemed laughable, but it now looks like spacecommercialization will soon open the finalfrontier to private ventures. 7 As access to spacebecomes widely available, it’s easy to imaginehow this watershed from government control toprivate enterprise could unleash a rush of spacepioneering.

GUIDES TO MANAGINGBREAKTHROUGHSForming a good strategy is inherently anuncertain process and all organizations do itsomewhat differently, of course. Box 1 outlinesinsights from creative companies like NetFlix,Apple, and Toyota stay at the cutting edge ofinnovation. Our consulting work and soundmanagement practices all lead to the followingfour general principles to effectively guide technologystrategy. For more, see www.BillHalal.com.


7

Experts insights

2015

2010 InformationTechnology

Energy, &Environment

E-CommerceManufacturing

& RoboticsMedicine &Biogenetics

Transportation Space

2040

2035

2030

2025

2020

NuclearFusion

SolarSatellites

QuantumComputing

CommercialSpace

HydrogenEconomy

SmartGrid

ThoughtPower

Water Purif’n

Bio Computing

Small AircraftLife Span = 100

Optical Computers

Virtual Reality

IntelligentInterface

Biometrics

CloudComputing

SmartPhone

GMOAlternativeEnergy

OrganicFarmingRecycling

Aquaculture

Precision Farming

GreenBusiness

Climate Control

AI

Broadband

MassCustom’n

3DPrinting

PowerStorage

PersonalMedicine

ElectricCars

MoonBase

DeepSpace

Contact

Off Scale

HumanOn Mars

HybridCars

SpaceTourism

IntelligentCars

SmartSensors

BodyMonitoring

Fuel CellCars

SyntheticBiology

Hi-SpeedTrains

DesignMaterials

ArtificialOrgans

GlobalAccess

E-Gov’t

On-LinePublishing

TeleWork

Convergence

Entertainment

VideoConfer’ng

VirtualEducation

Web 3.0

Eco-Bikes

Web 2.0E-Tailing

Child Traits

Cancer Cure

Tele Medicine

GeneticTherapy

GrownOrgans

MicroMachinesModular

Homes

SmartRobots

Nano Tech

HypersonicPlanes

Mos

t Lik

ely

Year

Copyright W. Halal

Figure 1 The Technology Revolution


8

Figure 2 The Technology Revolution

As the Technology Revolution picks up speedabout 2020, we are likely to see personalmedicine, intelligent cars, alternative energy, andthe other advanced technologies shown. Thisperiod is also likely to enjoy near-infinitecomputing power with 2nd-generationarchitectures (optical, bio, nano, quantum). Smartrobots are likely to enter homes and offices, andgood AI is likely to automate routine tasks, in thesame way GPS navigation solved the problem oftravelling from point A to point B.

With such bold prospects for innovation likelyover the next five to ten years, it is essential toprepare for the Technology Revolution. Whateverthe method and whatever the purpose,organizations need to develop some type of well-thought system to forecast and adapt to this

wave of technological change. There may beuncertainty about specific breakthroughs, butthere is very little uncertainty that we are goingto see plenty of technological change over theplanning horizon.

1. Track Strategic Technologies

Online research systems now offer big advantages in the need to track critical emerging technologies and social trends, and to anticipate their likely corporate impact. (see box 1)

2. Develop Creative Opportunities

Trends should be explored carefully to discover creative opportunities for converting disruptive breakthroughs into successful ventures.

3. Involve Stakeholders

Critical knowledge, good ideas, and commitment are gained by working with employees, partners, clients, and other stakeholders.

4. Plan on Both Failures and Success

Failure can offer valuable lesions, and good management can hedge against risk.

Box 1 Guides to Technology-Based Strategy

Experts insights

PLANNING FOR THE NEXT ECONOMICUPCYCLEOur collective forecasts are aggregated to“macro-forecast” the larger economy over thenext decade or two. The bubble chart in Figure 2presents all three dimensions of all forecast data:Most Likely Year, Experts’ Confidence and thepotential Market Size. This analysis suggests thatthe Great Recession may linger for a few years,but a new wave of economic growth is likely totake off about 2015.

The period around 2015 is significant because thecluster of green technologies, informationsystems, e -commerce, and advanced autodesigns in Figure 3 suggests a resurgence ofeconomic growth is likely about that time. Thisalso coincides with the pattern of 35 year cyclesthat roughly govern U.S. stock markets. Look at a100 year graph of the Dow Jones IndustrialAverage on a log scale and you will find three 35year cycles. The Roaring Twenties was the peak ofa 35 year cycle that ended with the Great Crashof 1929. The Eisenhower boom of the sixtiesstarted about 1945 and was followed by theReagan boom that began with his election in1980. The 2008 economic crisis marked the endof the Reagan 35 year cycle, and it is likely befollowed by a new worldwide boom startingabout 2015 based on the technologies noted above.

2010: The World Online

Expe

rts’

Con

fiden

ce

2020: High-Tech Arrives 2030: Global Consciousness

Most Likely Year to Enter Mainstream

Longitudinal Summary of Forecast - www.TechCast.org

2005

80

75

70

65

60

55

502010 2015 2020 2025 2030 2035 2040

Entertainment

Smart Phones

Intelligent cars

Artificial Organs

Electric Cars

Artifical IntelligenceSmart Robots

Cancer cureNanotechOrganicFarming

Smart Grids

Humans on

Life Extension

Virtual RealityPower strong

Body Monitoring

Recycling

Biometrics

VideoConferen

DigitalConvergence

E-tailing

Broadband

Wireless

Web 2.0

Green Business Telewor

Virtual

HypersonicPlanes

Intelligent Interface

Pervasive

Networks

Climate Control

Intelligent

OnlinePublidhing

Precision

Farming

ModularHomes

Fuel Cell Cars

Eco-Bikes

AutomatedHighways

Small Aircraft

Nuclear Fusion

Grown Organs

Biocomputing

Desalination

High Speed TrainsThought Power

Gene Therapy

QauntumComputing

Masscustomization

CloudComputing

PersonalMedicine

SmartSensor

Aquaculture

E-Government

Telemedicine

DesignedMaterials

Synthetic Life

Child Traits

HydrogenEconomy

Moon Base

MicroMachines

Space Tourism

OpticalCompute

MarketSize

GlobalAccess

GridComputing

Hybrid Cars

AlternativeEnergy

Genetic Food

©TechCast, LLC. All Right ReservedGraph by Elizabeth West

Energy & Environment Information Technology E-Commerce Manufacturing & Robotics Medicine and Biogenetics Transportation Space

ReFeRences1. c. Gallo,”Lessons in simplicity from the Flip,” BusinessWeek,

vFebruary 24, 2010. 2. Ben coxworth, “Kodak Announces It’s Getting Out of the

camera Business.” Gizmag.com (Feb 10, 2012) 3. national Research council, Persistant Forecasting of

Disruptive Technologies (Washington, Dc: nationalAcademies Press, 2010)

4. World economic Outlook, International Monetary Fund, 20105. W. Halal, “The Intelligent Internet,” The Futurist

(March-April 2004).6. c. K. Prahalad, The Fortune at the Bottom of the Pyramid

(Pearson Prentice Hall, 2006)7. J. Hitt, “Interview with Burt Rutan,” Discover (October, 2007)

BYJonathan Calof, Jack E. Smith and Gregory RichardsTelfer School of Management, University of [email protected]

CreatingSuccessfulIndustrial Policy - TowardsDecreasingUncertainty byCombiningForesight,Intelligence andBusiness Analytics.


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Experts insights

03/2012

10

Introduction

Establishing industrial policy and its ensuing programs and industry assistance measures are fraught with high levels of uncertainty.As will be shown in this article, through an integrated program involving foresight, intelligence and business analytics not only

will it be able to decrease levels of uncertainty and risk, but these techniques should lead to increasing probabilities of policy uptakeby its intended audience and also early identification of industry opportunities.

The authors of this article have been involved in hundreds of industrial policy and program projects around the world. We haveseen programs succeed and we have seen far more fail and the purpose of this article is to propose a framework and series of toolsdesigned to increase the chances of industrial policy success. Industrial policy and its ensuing industrial assistance measures, whethertax based or fiscal incentives, is designed for several broad purposes. To simplify this, for the purpose of this article, we will focus onwhat is emerging as a more common objective or outcome of the industrial policy which is to get domestic companies properlypositioned for markets identified as high priority for the country.

myForesight®

Malaysia and Industrial PolicyIn past years, Malaysia identified clean technologyas a priority market and instituted several policymechanisms including loan guarantees foreligible clean tech investments. During almostthe same period, Russia invested approximately$5 billion in infrastructure spending and industrialinvestment in nano-technology. The intent ofthese policies and supporting programs is toensure that the domestic environment providesthe necessary support for the industry and thatthe countries’ companies develop theappropriate products/services for these markets.For the most part these programs and policies areintended to support the development of industrythat will be either regionally or globallycompetitive. So, for this article we will not focuson industrial policy aimed at strengtheningdomestic industries selling to only domesticmarkets but on domestic industries selling inglobal or regional markets. This is certainly thecase for Malaysia in clean technology as theintent of the program is to make Malaysianindustry number 1 in Asia in certain cleantechnologies, not just in Malaysia. In the case ofRussia it’s about global nanotechnology basedproduct sales. Thus, for this article, the outcomeof industrial policy will be defined as regionally orglobally competitive domestic firms selling thetargeted industry products or services.

Types of Industrial Policy UncertaintyDeveloping industrial policy designed to developinnovative, science and technology relatedindustry’s is fraught with significant uncertainty.This uncertainty arises for many reasons, from ourexperience; most of this is due to the fact thatgovernments have very little true control over theprogram uptake and outcomes. In industrialpolicy, governments control the program design,its support elements and of course who gets thebenefits. But the government does not control whoapplies for the program, whether the companiesaccept the program, and other such factors.

For example, when Malaysia launched its cleantechnology assistance program the governmentcontrolled what company investments wouldqualify for clean technology certification and

whether they would get the loan guarantee andfunding. But that is where their control ends.

For a program to succeed, many factors beyondthe governments control must, in a sense,cooperate, and therein lies the uncertainty. Beloware three types of these uncertainties:

a. Program uptake uncertainty: For the desired outcome of an industrial policy to arise, the domestic industry players must actually use the mechanism/s and do what the policy is intended to encourage them to do. Think of government policy as a program designed to change organizational behaviours. A loan guarantee program for example is designed to get banks to give loans that they otherwise would not have given out. Investment tax credits for research and development are designed to cause companies to do research in areas that previously they were not aware of or willing to invest in. Conceptually, the program is designed to cause the decision makers (industry) to make the decisions designed to support the government’s industrial policy outcomes by increasing the perceived attractiveness of these markets. But while the government does control the level of loan guarantee and the type of tax credit, it is ultimately the bank that decides if they will put the loans out and it is the company that decides if they will do the research and development. Government programs can encourage these actions, but if the companies do not make these decisions, the policy will fail. We have seen many government tax incentives,credits and loan programs around the world fail because the intended targets did not use the mechanisms; i.e. they had no desire or were not yet ready to make the decisions that the industrial policy was designed to support.

b. Domestic capacity uncertainty. Domestic industry players must have both the ability and the desire to do what the policy intends it to do. In the case of the Russian nanotechnology program the desire is for Russian companies to develop products that are nano enabled. By 2020 the hope is that they will have what is termed level 3 nano products (see table 1 for more on levels of nanotechnology). But even if the companies are interested in moving in that direction (point “A”) do they have the

capacity? Do they have the ability? Too many times we have seen government programs specify targets and directions that the domestic industry does not have the capacity to meet within the program policy time frame

c. Time line induced market uncertainty: Once developed and implemented it takes many years till policies objectives are realized. Meanwhile as the policy is being designed and being implemented, markets evolve at increasingly faster rates, new competitors emerge, new technologies are created, customers’ needs change, some markets grow and others die, and so forth. When a government like Malaysia institutes a clean technology program they hope that the technologies it is designed to support are still commercially viable when the companies they are helping are ready to sell them. As it can take upwards of ten years between idea inception and commercialization this creates a lot of uncertainty because there are many factors that can change the industry in that time, and usually none of these are under the control of the Malaysian government (e.g. they have no control over what a company in the United States does in their R&D program or whata foreign government designs as its clean technologypolicy. For Russia’s nanotechnology program one of the support measures was to stimulatethe development of nanotechnology universityprograms. While it takes four years to graduate someone with an undergraduate degree in nano-science, it also takes several years to create the program that will lead to these graduates. Given that the objective of industrialpolicy is to create future industry success, the longer the timeline between program development and eventual commercialization, the higher the uncertainty is - that by then the environment may have changed significantly. The uncertainty therefore lies in whether the industrial policy and programs being designed today which are designed to affect companies decisions upon program implementation (itemsa and b above) will fit with the global competitiveenvironment at the end of the program timeline (when the products/services are ready for market). For Russia and nanotechnology the industrial programs are geared towards an environment envisioned in the year 2020.

Experts insights

03/2012

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myForesight®

Experts insights

The above only describes 3 of the elements ofuncertainty that will impact industrial programsuccess. Foresight, intelligence and businessanalytics provide important tools for reducing theuncertainty associated with these elements. Inthis article, readers will be shown how:

1) Foresight and intelligence can be used to identify where the industry is going is in the longer term. This increases certainty and understanding to look at what areas of the industry to actively support with policy and programs. These techniques will be shown to reduce timeline induced market uncertainty.

2) Intelligence and business analytics can be used to identify what instruments (programs and policies) need to be developed and how they should be designed to get industry to move in the direction identified under number 1. These tools will be shown as a method to reduce program uptake uncertainty.

3) Intelligence and business analytics will also be used to determine if the program targets are reasonable. This is part of domestic capacity uncertainty

4) Finally ongoing foresight, intelligence and business analytics will be linked with the idea of an industrial policy dashboard to help policy makers monitor whether the program is still on track after the program is launched. Ongoing monitoring on the dashboard will result in continued reduction of uncertainties associated with program uptake, timeline and domestic capacity, and provide an early warning system to policy makers so that they will know early enough whether design or criteria changes to the industrial policy are needed.

A Case Example; ApplyingForesight, Intelligence andBusiness Analytics (IFAB)For the purposes of this article we will use Nutra-pharmaceuticals as the basis for our industrialpolicy examination for the use of foresight,intelligence and business analytics. The use ofnutra-pharmaceuticals is purely for demonstrationpurposes and is based on Malaysia having activeinvolvement in this sector with an active industry,research and MOSTI’s Malaysian Institute ofPharmaceuticals and Nutraceuticals.

Foresight is about the application of collaborative,creative and analytic techniques to ensure longerterm visions can be factored into improving shortterm decision-making. It a systematic multi-toolsand perspectives approach based in science andearly signals identification that enhances

anticipatory capacity, examines readiness forchange, and develops agility and mechanisms forcoping with change to reduce surprise tobusiness, government and society. Foresight isnot prediction; - instead, it produces multiple,plausible, contingent scenarios, roadmaps andother directional guides to managing uncertaintyby reducing the surprise aspects but noteliminating it.

Most advanced technology-based economiesnow have developed foresight programs to assisttheir industries cope with the speed anduncertainties of global competition.

So how for example, might a national foresightorganization, concerned about the long termcompetitive viability of its nutra -pharmaceuticalssector approach the challenges of a rapidlychanging technology landscape? More specifically,how should an industry department, already witha successful track record of nurturing thedevelopment of new nutra-pharma companiesapproach the complexity of deciding whether,when and how to invest in a new area oftechnological progress with potentiallytransformative applications?

A first step would be to consult technology andenvironmental scanning reports similar to thosecategories highlighted in Table 2, below. (Table 2was developed by organizers of the 2008European Commission’s Future TechnologiesAssessment Conference overview report on theBig Picture Survey it sponsored.)

The survey uses five standard STEEP- typecategories and then three sub-categories foreach- with technology areas embedded in eachsub area, and/or featured in the two yellowhighlighted areas under Science and Technology).These foresight techniques would indicate, for

Table 2 creating successful Industrial Policy

Passive nanostructures (1st generation products) a. Dispersed and contact nanostructures. Ex: aerosols, colloids b. Product incorporating nanostructures. Ex: coatings; nanoparticle reinforced composites; nanostructured metals, polymers, ceramics

Active nanostructures a. Bio-active, health effects. Ex: targeted drugs, biodevices b. Physico-chemical active. Ex: 3D transistors, amplifiers, actuators, adaptive structures

Systems of nanosystems Ex: guided assembling; 3D networking and new hierarchical architectures, robotics, evolutionary

Molecular nanosystems Ex: molecular devices ‘by design’. atomic design, emerging functions

1st

2nd

3rd

4th Risk

Gov

erna

nce

Fram

e 2

Fram

e 1

22000000

22005005

22010010

22015-2020015-2020

source: european commision FTA seville 2008

Source European Commission FTA Seville 2008

Social Norms, Education,Information &Knowledge Society

Science Culture &Discoveries

Current Energy Use,Peak Oil, Efficiency &Security

State of Global Finance,Trade, Debt and RelatedGlobalization Issues

East-West, North-SouthIssues, Governance,Health of Democracy,Failed States

Equity, Ethical, Moral &Legal Issues

Innovative,TransformativeApplications & Products

Non Renewable EnergyAlternative(e.g.H2, nukes)

Climate Change, GlobalWarning=sustainableecology, new economy

Water, Food andResource Shortages,Disasters

Society & Culture

Science & Technology

Energy

Ecology-Economy

Geo-Politics &Security

Demographic,Urbanization, PopulationHealth & Migration

Technology Progress

New and RenewableSources

BRIC Rapid DevelopmentEconomies

Global, Cyber Terrorism& Nuclear & Bio WMD

o Ti Sr

Figure 1 Four Generations of nanotechnology

source: M. Roco Us nnI –nsF


12

example, that there exist real uncertainties aboutwhat applications might soon become bothtechnically feasible and economically viable andwhether there may be toxicological risks.Scanning would also indicate that there alreadyis a growing global market in bio-nutraceuticals- and - that the application of molecular scalenano-engineering is progressing fast and couldcreate enormous growth if and when successfullycommercialized.Significant uncertainty howeverremains around which countries and producerscould do this when and how.

To better understand the broader context ofthese uncertainties two additional foresighttechniques are frequently employed: scenariosand technology roadmaps.

Foresight ScenariosScenarios explicitly build upon identified keyuncertainties to develop future oriented situationalnarrative visions and glimpses of plausible futureoperating environments that can reveal businesschallenges as well as opportunities flowing fromthe resolution of the identified uncertainties -thereby enabling anticipatory actions in advanceof one's competition.

For example in the area of future nutra-pharmaceuticalapplications, here are four representative scenariosthat are derived from the dual uncertainties ofScience and Technology (S&T) rate of progress,and the pace and performance results of regulatoryoversight: what is most apparent is that regardlessof whether the performance is uncertain or high,as soon as the dynamic for S&T progress shiftsinto fast - the result moves into the nano driven zone-a clear alert for technological disruption watchers.

So what messages are the foresight scenariosconveying?

• The current market - 2012 - for conventional pharma-nutraceuticals is projected to remain sluggish but could soon be highly vulnerable if (as expected by leading scientists), nano-scale design and production advances enable producers in other countries or markets to shift intowhat is described as fast and transformative - a situation that would create a new basefor competition;

• There are understandable uncertainties associated with R&D, regulatory approval which will have to be closely monitored - because if the new nano techniques are able to obtain approval then current production platforms will become as obsolete as floppy disks competing against flash drives.

• While timelines are imprecise in foresight, it is clear that key change factors - as represented by the scenario drivers and uncertainties - are going to be influencing the next business cycles of pharma-nutraceuticals - so now it is time to apply technology road mapping and then competitive intelligence techniques.

Technology RoadmapsMore specific to the needs of most businessenterprises than scenarios, (which are typicallyinitiated by governments) technology roadmapsare employed to further reduce uncertainty; firstby being managed by industry, and second, byhaving more near-term and specific decisiontime lines for investment - i.e. What specificinvestments will be required and when (e.g. newR&D; equipment, training and skills development,emerging market research) to acquire theneeded agile capacity to realize the opportunitiesand to reach the business destination before others.

To apply these to ourcasewe first need to determinewhere we are now in 2012- where we seem to beheading and whether thiscan or should be altered,accelerated in somemanner throughpolicy actions.

Diagram 1 scenario Descriptors: Pharma-nutriceuticals 2030

Diagram 2 scenario situating: Pharma-nutriceuticals 212-2030

Scenario number 1 (Nutri-Slow)• Gradual but confident market development- due largely to strong science and measurement base;• Investment risks are mainly realted to regulatory rigours-patent capital necessary;• New competitors, alternate solutions continually testing the boundries of market differentiation;• Major focus by both public and private entities on shaping or changing public perceptions of cost- efficacy, realibility and comparative long term safety;

Scenario number 2 (Nano-Go)• New & innovative products continully upgrading, extending performance; crowded marketplace• Hyper global competition-pressure on prices, attribute based differentition; ROI winner, loser;• Perceptions must be continually reinforced to be distinct from genomic, meabolomic, other nano etc. solutions• Science quality and reputation are critical assets for marketing and holding competitive positioning.

Scenario number 4 (Nutri-Sue)• Very risky to jump to nano due to strength, credibility of toxicology concerns, slow, rigorous regulatory regime; and sluggish maret conditions.• Government not treating this market as priority- it is buyer beware until proven otherwise;• Product developers and early entrants have lerge insurance cost but also less competition;• Producers seek alliances with credible S&T sources organizations

Scenario number 3 (Nano)• Consumers assaulted by promoters claims-major competition to shape, counter perceived risks;• Pressure on government to increase regulatory over sight; penalties for false claims;• Competitive secces linked to performance credibility;• Strong demand for execellent

Market & Technology EvolutionFast, Agile,Transformative

Perception of Performance - Efficacy & SafetyHesitant, Perceived Toxicology Risk,

Uncertain Performance

Market & Technology EvolutionSlow, Reg Barriers, Competitors

Perception of Performance - Efficacy & SafetyPositive, High, Proven Performance

Scenario number 1 (Nutri-Slow) Scenario number 2 (Nano-Go)

Scenario number 4 (Nutri-Sue) Scenario number 3 (Nano - Promo)

Foresight + Intelligence required toproject trajectory 2012-2020

Market & Technology EvolutionFast & Transform

Perception of Performance - Efficacy & SafetyHesitant, Perceived Toxicology Risk,

Uncertain Performance

Market & Technology EvolutionSlow, Reg Barriers

Perception of Performance - Efficacy & SafetyPositive, High, Proven Performance

2012 - 2015?

Technology roadmap can be used to reveal contingencies then apply Intelligence tools to test if or when feasible to jump to nano-scale

2018?

2017 - 2019?

2020

Experts insights

To apply these to our case we first need to determine where we are now in 2012 – where we seemto be heading and whether this can or should be altered, accelerated in some manner through policy actions.


13

Experts insights

The TCOS Frameworki pioneered by the RANDcorporation, encapsulates these concerns, whereuncertainties associated with Technological,Commercial, Organizational and Social factorsmust be overcome before an invention will likelybecome a successful innovation:

The TCOS uncertainties can be regarded as a seriesof hurdles, but they can also be regarded aspotential sources of competitive advantage/disadvantage – i.e. competencies in one areacompensate for deficiencies in another. So nowlet's look at how this example might apply toMalaysia - a country where conventional pharma-nutraceuticals are doing quite well but withoutmuch awareness or preparedness at the firm levelfor disruptive change on the scale that a rapidshift into nano design and production would imply.

Table 3, (developed by one of the authors for aCanadian foresight exercise in 2007) shows, forexample, how a generic foresight roadmap mightcomparatively position - in terms of relative risks(technical, market and policy) - differentcandidate emerging technologies that involvenanotechnology applied to food and waterapplications.

Although technology foresight is showing thatseveral pharma-nutraceuticals have already beencommercialized, risk nevertheless remains, mainly

1. Technological uncertainty:

• Does it work? • Relatively non-complex and unambiguous (interacting variables can be identified and outcomes tested)

• Domain of scientists, engineers, e.g. Popperian scientific methodology (conjecture-refutation approach) appropriate

2. Commercial uncertainty• Is it commercially viable?• More complex than technological uncertainty, but relatively unambiguous(i.e. market demand can be estimated)

• Domain of marketing, advertising

3. Organisational uncertainty

• Can your organisation appropriate the benefits? • Based on intellectual property protection regime and complementary assets• Domain of the Strategists

4. Social Uncertainty

• Is it acceptable to civil society? • Generally most complex and ambiguous (some interacting variables such as secondary

stakeholder concerns are often difficult to identify or have disparate goals, demands, opinions and may interpret the same situation differently or emerge after the fact, change when concessions are offered or scientific evidence is presented).

Smart Agri Nanoencapsulation

Anticipated Market Size

Directed EvolutionChips

Minor

Modarate

Major

Water-MonitoringNanobiosensors

Water Nanofilters

Nano-nutri

Very Feasible

Feasible

Unknown

Unlikely

Very Unlikely

Smart BiocidalCoatings

Nanoimaging forCloning

SprayableBionansensors

Niche SignificantMarket

Very SignificantMarket

ImplantableNanoarrays

Food TrackingNanotags

Policy Issues

Table 2 Technology Roadmap of emerging nano-Food and Water Technologies

Source: Prospective Applications of Converging Technologies Report by the Center for Innovation Studiesfor the Office of the National Science Advisor for Canada 2007

Table 3 (excerpt from) Analysis of Technology Roadmap 2025 nano - Bio candidate Applications

Bio-nano-compositenewmaterials

Biocomposites such asbone combine thestrength of mineralswith the elasticity ofcollagen. Adding nanotubes to themix would enablesuperstrong, supertoughmaterials

- Bio-mimetic / polymer/fabrics - “breakdown”properties maybe critical: need to engineer

- Nano-natural materials (bone patch, micellefood additives) - GM already has composites(nano potential)

- Nutraceuticals: lots of prospective applications

- Molecular diversification for product diversification /nano element (separate)

- 2020: do we see any limits on this?

Conclusion from the same 2007 report:

We shall illustratehow intelligence andbusiness analytics canbe employed tomore precisely andquantitativelydetermine how tochoose between thecandidates thatmake it past the initialuncertainty filter ofthe roadmap which isderived from expertopinion and tendsto bequalitative.

Although technology foresight is showing thatseveral pharma-nutraceuticals have already beencommercialized, risk nevertheless remains, mainlybecause the regulatory environment has not yetfully rendered its judgements. Here is an example

of regulatory research that continues to impactthe long term horizons for nano-nutraceuticals:The conclusion of the technology roadmapsapplication is that:

• The TCOS framework suggests positive potential from the new technological opportunities;

• Further R&D will be required, especially in terms of the regulatory hurdles;

• To succeed - or at least to be early entrants into the emerging new nano-based nutra-ceutical design and production platforms will require excellent scientific capabilities and equipment that aspiring firms must plan and recruit for in advance if they want to be competitive.

We leave the foresight section with a clearerunderstanding of potential emerging scenariosin nutra-pharmaceuticals and the recognition ofthe need to get Malaysian companies movingforward faster in transformative technologies inthis area. In particular, a program is desired to getMalaysian companies developing nano basednutra-pharmaceutical products. Through theroad-mapping exercise we also have a sense asto what areas of research and productdevelopment will be most important to work onat least from a 10 to 20 year timeline.


14

Experts insights

JANUAry 28, 2010

A research team at the National Organization of Standards and Technology (NOST) has quantified theinteraction of gold Nano Nutricals and Nano Nutraceuticals with important proteins found in human blood,an approach that should be useful in the development of nanoparticle-based medical therapies and forbetter understanding the physical origin of the toxicity of certain Nano Nutricals and Nano Nutraceuticals.

Nano Nutricals and Nano Nutraceuticals show promise as vehicles for drug delivery, as medical diagnostictools, and as a cancer treatment agent in their own right. Gold Nano Nutricals and Nano Nutraceuticals,spheres that vary in size between 5 and 100 billionths of a meter in diameter, are especially usefulbecause of the many ways their metal surfaces can be “functionalized” by attaching tailored molecules toperform different tasks in the body. However, treatments require a large number of particles to be injectedinto the bloodstream, and these could be hazardous if they interact with the body in unforeseen ways.

* S.H.D. Lacerda, J. Park, C. Meuse, D. Pristinski, M.L. Becker, A. Karim and J.F. Douglas. Interaction of gold

Nano Nutricals and Nano Nutraceuticalswith common human blood proteins. ACS Nano, December 18,

2009, DOI: 10.1021/nn9011187.

+++ NRC report, “Review of Federal Strategy for Nanotechnology-Related Environmental, Health, andSafety Research,” available online athttp://www.nap.edu/catalog.php?record_id=12559numbertoc.

For more information on ANOBOL™ manufactured by NanoNutricals™ please visit www.nanonutricals.info .

Nutraceuticals Scientists Quantify Nanoparticle-Protein Interactions

NANOSCI NANOTECH.2004, 4, 1–11

Paul J. A. Borma and Wolfgang Kreylinhg at the University of Dusseldorf, Germany and Institute for

Inhalation Biology, GSF-National Center for Environment & Health, Munich, Germany:

Nanoparticles (NP), here defined as particles with a diameter smaller than 100 nm, are increasingly

used in different applications, including drug carrier systems and to pass organ barriers such as the blood-

brain barrier. On the other hand, a large body of know-how is available regarding toxicological effects

of NP after inhalation. More specifically, a number of effects of inhaled NP are attributed to their (i) direct

effects on the central nervous system, (ii) their translocation from the lung into the bloodstream,

and (iii) their capacity to invoke inflammatory responses in the lung with subsequent systemic effects.

This paper gives a brief review on the toxicology of inhaled NP, including general principles and current

paradigms to explain the special case of NP in pulmonary toxicology. Since the evidence for health risks

of NP after inhalation has been increasing over the last decade, this paper tries to extrapolate these

findings and principles observed in inhalation toxicology into recommendations and methods for testing

NP for nanocarrier purposes. This review recommends a closer interaction between both disciplines

to gain insight in the role of NP size and properties and their mechanisms of acute and chronic interaction

with biological systems. In this review, we have indicated what effects of NP have been found by

toxicologists and epidemiologists, and how this know-how could be used to develop screening for

safe NP drug delivery.

Nanosci. Nanotech. 2004, 4, 1–11 Borm and Kreyling/Toxicological Hazards of Inhaled Nanoparticles

Toxicological Hazards of Inhaled Nanoparticles—PotentialImplications for Drug Delivery

Subsequently by 2010 we can see that nano-nutraceuticals are already being actively pursuedfor risk reduction and commercial opportunities:

A final point important for all readers isto understand the method by whichthese conclusions were reached.Scenarios, roadmaps and scans are allexternally focused. That is it relies oninformation provided by expertsgenerally outside our organization. Ascenario exercise typically bringstogether dozens of industry participants(company executives, academics,association executives and so forth) notjust from our country but from aroundthe world. In a Canadian scenarioworkshop on Oceans Technology, over100 people participated, coming fromorganizations representing 75% of all theindustry. In this way information from allportions of the industry and not justgovernment can be integrated in makingsound policy decisions. As well, by havingthis broad a representation of theindustry meet and work towards a sharedvision, there is better chance of theindustry accepting the industrial policydeveloped and its associated programs.Having industry help in the developmentof industrial policy in this manner islogical as if they have a role in formingthe policy there should be less reluctancefor them to accept the program policyand instruments. This leads to a reductionin program uptake uncertainty.


15

Experts insights

Intelligence – Further ReducingUncertaintyThe Strategic and Competitive IntelligenceProfessionals Society (SCIP) defines competitiveintelligence (CI) as:

The Competitive Intelligence NING, an onlinecommunity of intelligence professionals furtherdefines it as:

At the heart of competitive intelligence isdecreasing environmental uncertainty in theshort to medium term by integrating informationfrom various sources and applying appropriateanalytical techniques. How does this work for ournutra-pharmaceutical example? There are threeshorter term external environmental uncertaintiesthat need to be addressed to create an industrialassistance program that is properly targeted.

1) Program uptake uncertainty: What will it take to get the corporate decision makers to invest in nano-neutri-pharmaceutical research? What levers can we use in an industrial program to cause the companies to shift R&D?

2) Domestic capacity uncertainty: What specificallyare we going to have to support? What stage of development are our companies and infrastructure in?

3) Time line induced market uncertainty - While foresight did help to decrease the timeline based uncertainty, nevertheless foresight is not designed for prediction. We have four plausible scenarios and want to get increased certainty on, for example, how fast and transformative science currently is. 10-20 year scenarios and roadmaps provide superb indicative information

for program design but we will have to get abetter sense of what is likely going to happenover the next 5 years, a timeline that industry ismore likely to respond to.

These three areas of uncertainty now form thecore of an intelligence program. An intelligenceprogram consists of several key intelligencetopics (KITS) that collectively are required to makeappropriate recommendations. KITS are externalenvironmentally focused, so similar to foresight,it is very much an outside-in approach. Let’s lookat two of these KITS.

The industry – the next five years: The first projectseeks to gain greater certainty about the driversof science and technology. How fast is it currentlymoving? Where is it likely to be in the next 5years? Where is the industry going? Anintelligence practitioner would break this downinto a series of intelligence questions or needsand apply appropriate collection and analysistechniques to each. I will highlight two that couldbe used for this KIT – Time-lining and Back-casting.

Time-lining: Intelligence realized a long timeago that there were logical sequences to anymajor shift in a marketplace. For example, longbefore a new technology hits the market therehad to have been manufacturing activity, beforethat testing, before that research and so forth.Each of these sequenced steps leavesinformation that those interested can view. Forexample research activities are accompaniedwith patents and sometimes poster sessions atconferences. Table 4 provides an example of ascience based timeline.

It is no wonder that several companies have toldemployees that when they see someone new ata trade show to let management know. The newplayer could be a potential customer, competitor,supplier etc learning about the industry. It’s anearly sign on the timeline. Similarly techniquessuch as science mapping have been developedto look at what research communities are comingtogether to better project research direction.Again, an early signal in the timeline. Whileprojecting 10 years is very difficult, time-liningmakes things a little more certain by looking atwhat activities have already been done. The ideathen is to identify what is currently happening inthe industry at a global level and place it on thetimeline. The information is taken from secondarysources such as magazines and various onlinedatabases but is also more commonly found byattending industry events. Event intelligence is agrowing discipline within intelligence andinvolves organizing for collection at conferences,tradeshows, workshops and the like to collect thiskind of information.

By use of event intelligence it should be relativelystraightforward to identify how fast andtransformative science currently is and forexample, where various companies are at on thetimeline. Logically, if nano enabled pharmaceuticalis to be commercialized, there has to have beenmany other activities that precede it. Our job inintelligence is to look at what currently has beendone and thereby determine likely directions.

“

”

the process of monitoring thecompetitive environment and analyzingthe findings in the context of internalissues, for the purpose of decisionsupport. CI enables senior managers incompanies of all sizes to make more-informed decisions about everythingfrom marketing, R&D, and investingtactics to long-term businessstrategies.(hp://www.scip.org)

“

”

Sign

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tens

ity

New Product Intorduction Timeline

Dis

cuss

ions

Gra

y Li

tera

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Scie

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R&

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Join

t Ven

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Prod

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nnou

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Prod

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the interpretation of signals from theenvironment for an organization'sdecision makers to understand andanticipate industry change.”(hp://competitiveintelligence.ning.com/)

Table 4 Time-Lining example

Back-casting: Another version of thistechnique is back-casting. This works in thereverse of time-lining and asks what activitiesmust have preceded the event we are concernedabout. For example, in a recent exercise that theauthors were part of in food safety, “fasttransformative science and technology by 2020”meant that everyone would have hand held foodscanners that were DNA programmed. If that wasto happen by 2020, then in a back cast, thesedevices would need to have been in pilot testingstage by 2015, since it would take at least 5 yearsto get volumes to the levels where consumerscould afford to buy them. For this to be inventedby 2015, food scientists estimated that by 2013at the latest you would have to have DNA codingfor a variety of allergens and foodstuffs(whichdoes exist) and a bio-informatics infrastructurethat could hold this data (which we currently donot have). For this to occur (the bio-informaticsinfrastructure) to occur by 2013 would require aresearch and training capacity in Universities fordeveloping this by 2011 and that had not yethappened. Conclusion – the 2020 scenario had alow likelihood of happening as by 2015 - whichwere only 3 years away from when the backcasting exercise was done - a product wouldhave to be developed which could not happengiven the current state of science andtechnology. One day it will happen, but based onthe back casting not by 2020. The conclusion wasthat the speed and nature of transformativetechnology based on intelligence gathered anddeveloped today would not be as fast assuggested in that scenario. These twotechniques, - time-lining and back-casting helpto reduce uncertainty.

Program uptake uncertainty: Let’s assume thattime-lining and back-casting have validated thetype of research and development that theprogram will support. Also assume that throughtechniques such as sentiment analysis (to bedescribed in the next section) and resource gapanalysis we have validated that there is capacityand desire in our country to support theprogram. With domestic capacity certainty andnow reduced time line induced marketuncertainty it is now time to reduce participantuptake uncertainty – so let’s get them making thedecisions that support the program outcome –invest in nano based nutra pharmaceuticalresearch and development. Put another way, howdo we change their minds? Here again is whereintelligence becomes key, the technique is called

profiling and involves putting together detailedpsychological based assessments of the targetsfor the program. The idea in profiling is to identifyall the questions that must be answered so thatwe can project likelihood of a positive decisionoutcome. The difficulty in putting together aprofile is threefold:

1. Who do we profile: You can’t do detailed profiles on every company in your industry, thus you need to decide which ones are most important to profile. This requires in-depth industry understanding. At a minimum you profile those companies that you know could, if properly motivated, develop the appropriate technology within the program time period. Butyou need to know your industry participants well.

2. What specifically do we need to know? Given that the objective of the profile is to design appropriate policy instruments that would lead to targeted investments, we would need to be able to gather sufficient data so that we can project the likelihood of the organization investing in nano based nutra pharmaceutical research at a minimum these profiles would need to have items such as how they make R&D and product decisions, the factors that are most important, their targeted returns on investment, risk taking portfolio etc. How will they react to loan guarantee versus tax credit versus straight grants?

3. Where are we going to find this information? Intelligence plans put a lot of emphasis into the collection side; where to find the information and how to collect it. Fortunately for a project like this most of the information required to profile the companies should be readily available to the government. For example, they may have already applied for programs and a check into the program files and discussions with program officers who managed the program would help. Further, as part of the scenario exercise described above for Malaysia, key industry participants should have been invited. While at the event you will have heard from them where they are at in their research, how they make decisions, what they want from government and so forth. Integration of information already provided to the government through meetings, workshops,program applications and consultations from key companies should be readily available to use for development of these profiles. If not, the information will have to be collected by directly interviewing these participants.

By developing profiles on the key companies,designing the appropriate program then shouldbe relatively straightforward as the conceptwould be; develop the program that you know(based on in-depth company understanding) willcause them to make the investment decisionsneeded by your industrial policy.

It is unwise to develop industry assistanceprograms without this understanding andgovernment cannot simply assume that if theyput out a loan guarantee program or tax creditprogram no matter how generous they perceiveit to be, that industry will similarly find it desirable.In the next section, business analytics will be usedto further refine this element of program design.

The intelligence examples provided aboveprovide a snapshot into how intelligencetechniques can be applied to reduce industrialpolicy risks and increase the probability ofprogram success. The examples have been usedto understand the likely direction of thetechnology environment and the behaviouralprofiles of the targeted companies. However itcan also be used to understand customers,competitors, other governments, suppliers andother elements of the environment that areimportant to understand for industrial policyprogram success.


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Experts insights

“

”

Fasttransformative science andtechnologyby 2020

Business AnalyticsBusiness analytics is currently in vogue as a buzzword for the use of data to inform decisionmaking in organizations. It its current incarnation,it is tied closely to the use of data miningtechniques to analyze what some refer to as "bigdata"—large complex data sets that mightprovide insights if mined properly. In reality,business analytics has been used in organizationsfor many years, and hundreds of different techniquesare available—all focused on optimizing one ormore organizational outcomes.

How does business analytics play into thescenario discussed above? If a policy initiative isto encourage businesses to invest in nano-nutrapharmaceuticals, a variety of analytic techniquescan be used to anticipate the actual take-up ofthe provisions of the policy. We'll discuss tworelatively simple techniques to illustrate theintegration of foresight, competitive intelligenceand business analytics within the context ofnational policies.

Two aspects deserve consideration: estimation ofthe expected value of the policy and evaluationof the likelihood that participants who are expectedto avail themselves of the policy will behave inways that will provide the expected value.

Recall from the intelligence section,company profiles were used as abasis to determine what types ofprograms would cause theintended behaviour. In this sectionwe refine this and further reduceprogram uncertainty but use ofeconometric models. These modelswill be applied to understandconsumer behaviour (the eventualcustomers of nano based nutrapharmaceuticals) and thelikelihood of companies acceptingour policy instruments toencourage appropriate nano basednutra pharmaceutical research.

Econometric models are typically used toestimate the social and economic benefits to bederived from a policy. But the models rely on

data gathered from stakeholders related to thepolicy environment. One relatively new approachto gather data is "sentiment analysis". Thisapproach, based on analysis of qualitativeinformation appearing on millions of websitesand blogs from the intended audience helps toidentify opinions related to the outcomes beingpromoted by the policy. In addition toforecasting techniques such as scenario planningand roadmaps, sentiment analysis can provideguidance as to the attitudes prevalent in aparticular population. It can be used for example,to predict the expected take up of provisions ofthe policy. Assuming that expected policyoutcomes include the launching of businessesdeveloping nano based nutra-pharmaceuticalproducts, analysis of consumer sentiment canprovide clues of potential customer acceptance. In addition, government policy makers cananticipate how the businesses they expect toparticipate in the initiative will make their owndecisions using business analytics. For example,if banks are to honour loan guarantees, they willevaluate the risk associated with the loan. Loanrisk algorithms have been developed by manybanks that can be used by the policy makers tosimulate banker behaviour related to the policy. With this information in hand, we can go onestep further and simulate the decision processused by businesses who might take advantage ofthe loan guarantees. Businesses typically invest innew products in order to turn a profit.Investment decisions can be quantified throughthe use of a variety of analytic models, one beingthe "net present value" calculation. This approachdiscounts future expected cash flows of an initialinvestment to estimate potential returns. Thecalculation is as follows: $I –[$R /(1+i )t]Where $I=initial investment, $R=expected returns (cashflow) from sales of the product, i=expectedinterest rate during the time period, and t=# ofcompounding period. As a practical example,supposed the business would need to invest

$400,000, but, based on a loan guarantee fromthe government, banks would advance a loan forhalf of that amount to be paid back at apreferential interest rate at some point in thefuture. The company estimates cash flows for thefirst 3 years after full production of $100,000,$150,000 and $250,000.

Assuming a 6% interest rate (added to theprincipal investment amount), the NPV works outto: $469,931-$437,743 (discounted cash flow) fora total of -$32,188. With the loan guaranteed bygovernment, assume the interest rate charged onthe loan is reduced to 3%, the cost of the loanadded to the $400,000 investment is now$432,358 leading to an NPV of +$37,573. Thedecision rule for NPV calculations is to invest inprojects with a positive cash flow (realizing thatthe decision maker might have a number ofprojects with positive cash flow).

Ultimately, using the formula to simulate abusiness person's decision model can help policymakers to better predict uptake and moreaccurately define the parameters of a policy. Thedata used to establish sensitivities around thismodel will have come from the intelligenceprofiles developed earlier.

Government policy makerscan anticipate how the

businesses they expect toparticipate in the initiative

will make their owndecisions using business

analytics.


17

Experts insights


18

Sentiment analysis can also be used as a longrange scanning tool to anticipate when changesto the policy framework might be needed. Whatdoes this approach do exactly? Tools such asIBM-Cognos Consumer Insight (CCI) will gathermillions of comments (facts and/or opinions)from websites, blogs and tweets. Using acombination of Natural Language Processing andArtificial Intelligence, CCI will extract combinationsof words from the various sites and "score" thecomments so to speak as positive or negative.The program can also create clusters of opinionsbased on criteria established by the analyst.Therefore, CCI can cluster and score opinions bythe banking, business and consumer sectorsproviding insight into the evolving sentiment inthese 3 groups important to the policy.

Business analytics therefore hassupported the intelligence developedearlier and served to further reduceuncertainty by providing the abilityto process millions of pieces ofinformation contained in blogs andother discussion sites on the net andby providing tools to model likelyinvestor behaviour based onsophisticated algorithms.

Tracking Policy Effectiveness:The Integrated Policy DashboardUp to this point, forecasting, intelligence andbusiness analytics have been shown as key toolsuseful for reducing industrial policy designuncertainty and increasing the probability of itssuccess. But the use of these tools does not endwith the development and implementation ofthe policy. These tools can also be used to createan "integrated policy dashboard". Such adashboard can help reduce uncertainty duringthe implementation period by providing up-to-the-minute information on the outcomes of thepolicy. But forward-looking information can alsobe integrated...i.e., the long range scanninginformation discussed in the previous section.

What is a dashboard and how do you develop it?A dashboard is a display of key performanceindicators that help institutions steer theiractivities towards their declared strategicoutcomes. To develop a dashboard, we first

clarify objectives, define related measures, andthen define what you do with the measures.

Many different structures are used fordashboards. The model depicted in table 5defines inputs, outputs, intermediate andultimate outcomes: a well-known planningstructure in governments. One of the benefits ofthe dashboard is to alert policy makers aboutperformance against objectives, but also toidentify the factors that influence thoseobjectives. The colour scheme in is based onvariance analysis (actual versus target). If actualresults are on (or better than) target, thedashboard returns a green. Yellow normallyindicates 10-15% off target, and red is returnedwith actual results are off by more than 15%.Obviously, any number of different structures canbe used for a dashboard; table 5is a simpleexample to illustrate the use of such a tool fortracking policy effectiveness. An important pointto realize about the dashboard is that it tooprovides an occasion to use business analyticstools to better understand policy performance.In this case, we would be using causal models todefine the drivers of outcomes that we seek. Wecan see for example, that a time lag existsbetween "advice and counselling" (referring tothe number of people who have sought adviceon the program) and applications. One periodafter advice and counselling goes from yellow togreen (meaning that we are on target), thenumber of applications goes green. This mightbe strictly coincidence, but depending on thetype of data available, the relationship can betested through regression modelling or a myriadof non-parametric techniques. In addition to thebusiness analytic elements of this dashboardwhich arises from analysing a myriad of datacontained inside the government and on theinternet (for continued sentiment analysis), wecould add information obtained on a continualbasis from the intelligence effort. For example,when our employees attend industry events (e.g.tradeshows, conferences and workshops) theywould continue to update the profiles on thecompanies, the technology roadmap and thetechnology driver analysis described in theintelligence section.

For example, each year Malaysia sends adelegation that includes government officers tothe Bio International Convention in the UnitedStates. This is the largest gathering ofbiotechnology practitioners in the world and

includes some 50,000 delegates from around theworld. 125+ educational sessions, over 1800exhibitor booths, dozens of government booths,and various presentations. An event such as thisone provides opportunity to find out what othergovernments are doing in their nano based nutrapharmaceutical programs, where the industry isat in terms of the roadmap and also how fastscience and technology is evolving. It providesinformation on where the industry is at today andwhat research is being done today. Byintegrating information from events such as thiswithin the context of a dashboard it becomespossible to identify if the initial assumptionsmade in the development of the industrialprogram in terms of type of technology needed,where the industry is going, what othergovernments are doing and so forth is stillcorrect. Changes noted either through eventmining, sentiment analysis and other suchtechniques then provide the early warningneeded to determine if the industrial policy is ontrack or whether it needs to be changed. Forexample if the speed of transformative scienceand technology appears to be speeding up at theglobal level, additional funds may need to beallocated to speed up development in Malaysia.

The program dashboard can thereforebe used to reduce timeline inducedmarket uncertainty by integratingreal-time information on marketdevelopments obtained both fromexternal sources (e.g. events) andinternal sources. Program uptakeuncertainty is also monitored on adaily basis to identify if programtargets are being realized.

Experts insights


19

Experts insights

ConclusionIndustrial policy is fraught with uncertainty dueits reliance on external environmental elementsfor its success. Foresight, intelligence andbusiness analytics taken together provide thetoolkit to better understand this uncertainty andcan help lead to more successful industrial policy.This is especially important in today’s industrialenvironment where activities arising outside yourcountry can impact technology directions,market attractiveness and so forth. Foresight andIntelligence with their external environmentfocus provide the tools to among other thingsunderstand the direction markets are going in,profile your local industry to determine whatpolicy instruments can work on them, and betterunderstand how technology is going to evolve.Signals picked up today through an externallyfocused intelligence effort can be used toconfirm conclusions reached in longer termforesight initiatives such as scenarios, roadmapsand scans thereby providing the informationneeded to establish the longer term orientedindustrial policy needed in science andtechnology related industries.

As has been shown in this article, you need tounderstand the environment of tomorrow to

develop the industrial policy of today as theproducts and services that domestic companieswill launch as a result of the policy have to matchthe needs and realities of the market at the timeof product/service launch. Not the needs andrealities at the time of industrial program launch.In many cases the different between these two(product/service launch vs. industrial programlaunch) can be ten or more years.

This article has also shown how through foresightexercises, intelligence and business analytics it ispossible to learn enough about the targets of theintended industrial policy (e.g. the companiesthat are to use the loans, or tax credits etc.) so thatthe right level of incentives can be set toencourage the companies to commit to thepolicy direction.

Finally, dashboards which use a mix of internallygenerated information arising from companyprogram requests and interactions with thedepartment coupled with externally gatheredinformation such as from blogs, wikkies andconferences can be used to identify if theprogram is on target long before problemscan arise. These sources integrated into a dashboard so that in real time the Department oragency can identify

1) If the projected industry direction (e.g. Market demand, speed of technology development) is changing – thereby reducing timeline inducedmarket uncertainty;

2) How the intended targets (local companies) are using the program, what issues they are having with it, questions they are asking etc- thereby reducing program uptake uncertainty.

These techniques and the kind of dashboardbeing suggested in this article give decisionmakers the information they need to better alignindustrial programs and policies with the realitiesof the local (Malaysian), regional (Asian) andinternational environment.

ReferencesiFreeman, C. and Soete, L. (1997). The Economics of IndustrialInnovation. London: Pinter.

Hall, J. and Martin, M. (2005). Disruptive Technologies,Stakeholders and the Innovation Value Chain: a Frameworkfor Evaluating Radical Technology Development, R&DManagement Journal, 35 (3): 273-284.

Hall, J., Matos, S. and Martin, M. Managing the Technological,Commercial, Organisational and Social Uncertainties ofInnovation: Hurdles and Levers. Proceedings of the R&DManagement Conference, Windermere, England, July 2006.

Martin, M. (1994). Managing Innovation and Entrepreneurshipin Technology Based-Firms. Wiley, New York

Teece, D. (1986) Profiting from technological innovation.Research Policy, 15, 285–305.

Table 5 sample Dashboard

SAMPLE DASHBOARD

Financing

Advise andcounseling

July

April

Jan

July

April

Jan INPUTS

SentimentIndicators-Banking

SentimentIndicators-Business

July

April

Jan

LONG RANGESCANNING

Jobs created

July

April

Jan

ULTIMATEOUTCOMES

Inquiriesiesiri

Proposals

July

April

Jan

Proposals

Applications

July

April

Jan

OUTPUTS

July

April

Jan

Jo

Businesseslaunched

Productscommercialized

Universitytraining programs

Business clusters

Requests forcommercialization

funding

INTERMEDIATEOUTCOMES

July

April

Jan

July

April

Jan

July

April

Jan

July

April

tngnkin

GONGG RANGEASCAANNING

SentimentIndicators-Consumers

JanJuly

April

Jan

July

April

Jan

July

April

Jan

I.M. NasirSenior Principal Analyst IIHead of Rail Industry, Industry Intelligence & [email protected]

BYMohd Nurul AzammiDeputy DirectorNational Foresight [email protected]

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Cover story

FUTURE RAIL 2030:Shaping the Futureof MalaysianRail Industry


Cover story

BackgroundFuture Rail 2030: The National Rail Industry Roadmap is a joint initiative between the NationalForesight Institute (NFI), an organisation under Malaysian Industry-Government Group for HighTechnology (MIGHT), and Land Public Transport Commission (SPAD) to chart the way forwardfor the rail industry development in Malaysia until 2030. The initiative is timely for Malaysia asthere is an increasing concern globally on megatrends such as climate change, urbanization andpopulation growth, congestion, oil scarcity and hike of energy price, to name a few. The debateson these trends have created a strong feeling that rail is going to be an important modeof transport in the future.

SHAPING THE FUTURE OF MALAYSIAN RAIL INDUSTRYForesight methods – namely road mapping,were used in developing the plan which generally answers three (3) major questions: (1)Where are we now? (2) Where do we want to go?and (3) How can we get there? Scenario buildingprocess was used in answering the secondquestion.

All related parties (Government, Industry andAcademia) were consolidated through astructured process to produce a consensus view on desired state of Malaysian Rail industry in 2030. A series of workshops, which consists of more than 50 participants from various organisations, had been conducted to identify 15 drivers that will shape the future of the local rail industry. However through consolidation, only nine (9) drivers of change were selected as follows:

i. Policy and Institutional Framework. Similar to other industries (such as aerospace and maritime), rail industry involves cross-ministerial/agencies. There is need for a mechanism to effectively coordinate, facilitate and monitor the growth of the industry based on consensusvision, goals and development strategiesat national level.

ii. Technology and Human Capital Development.It relates to current and future workforce that will be supporting the local industry development. Apart from manpower, technology is one of the critical means to ensure sustainability and competitive advantage of the industry in the future.

iii. Multimodal and Integrated Transport.It is about enhancing efficiency of national transportation leveraging on rail

networks and its advantages. This can only be rationalised through an integrated arrangement and system for movement of passengers (multi-mode of public transportation) and cargos (integrating airport – seaport – ground transportation).

iv. Market Competition and Value Added Products / Services.Survival of local players to face intense competition in the same playing field with other established international competitors from both domestic and global rail market. The need to grow senseof innovativeness and climb up in supplychain to produce high value products.

v. Connectivity and Tourism. Train as a preferred mode of transport by the public is also affected by the availableconnectivity. In Malaysia, it is just an optionbut not in other developed countries where it has become a necessity.

vi. Safety and Security. Train is a medium used for transportinga mass number of people and goods which involve high risk, either due to external factors e.g. terrorism or internal factors e.g. derailment, collision. Nowadays,train is getting faster than before and able to reach more than 350 km/hr which requires reliable systems in place.

vii. Localisation and Globalisation.The growth of the industry is fuelled bya number of business opportunities secured in domestic and global market. Sizable investment has been made by the Government imposed the element of local content. There is a need to develop local capabilities and reduce heavy dependency on foreign products for future sustainability.

The rail industry in Malaysia is currently small in terms of rail track networks and number of related organisations although its operation startedway back in 1885. Lack of a clear policy, vision and direction of its development has been one of the major factors contributing to the current

state of the industry. The Government of Malaysia has invested more than RM50 billion in rail related equipment since 1990s and the number willcontinue to grow until 2020 through committed investments under Greater Kuala Lumpur initiative of economic Transformation Programme (eTP).Therefore, local rail support industry must leverage on upcoming investments to strengthen required capabilities for future sustainability. “A journeyof a thousand mile begins with a single step” (Lao Tzu); nevertheless, there is a need to pull and consolidate all fragmented hopes and wills ofstakeholders to revitalise the rail industry in Malaysia.

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Cover story

viii. Sustainability.As energy scarcity continues to dominate the discussion around the globe (so as climate change due to green gas emission), urbanisation growthproportionate with the increase in population and congestion in cities. These are megatrends that will affect the existing policy and sentiment of people to move towards greener alternatives.

viiii. Geopolitical.The idea of Trans-Asia networks will give a significant impact to the way current logistics are working. Malaysia as a part ofthe network need to prepare itself and capitalise on potential opportunities resulted from this initiative.

Through the process of cross-impact analysis, the highest influence among the drivers rated by the workshop participants are Policy and Institutional

Development, Multimodal & Integrated Transport, Market Competition and ValueAdded Products/Services and Localisation& Globalisation. Each of these five (5) key drivers forms a main framework to developa desire scenario(best case scenario). Theremaining drivers other than mentionedabove will be a part of the narration wherever it is related.

THE WAY FORWARDBeside the above “Best Case Scenario”, a list of potential surprises were identified that could become the wild cards or lead to other alternative futures. Subsequent to the scenario building workshops, the stakeholderswere grouped based on major composition of the rail industry – rolling-stocks, signalling & train control, electrification, rail tracks and infrastructure, human capital development

and maintenance, repair and overhaul (MRO). Development opportunities were identified interms of capabilities enhancement, technologydevelopment, potential market and critical skillsrequired by local workforce. Strategies and keyinitiatives were developed and later testedagainst the above scenarios.

In order to finalise the plan as well as to facilitate the implementation of the key initiatives, a committee known as Future Rail 2030 Committee was established. It consists of selected representatives from major rail operators, manufacturers, MRO services, related Government agencies, academia andregulators. The roles of the Committee amongothers are to provide strategic advice, monitorthe progressive achievement of the roadmaprecommendations, and share of information onthe latest and future rail related initiative.

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Cover story

Scenarios of Key Drivers• Policy and Institutional Framework

In 2030, a total of RM180 billion worth of new rail infrastructure was invested by the Government since it was announced by the Chairman of SPAD in 2012. This explains the Government’s commitment to provide the best rail transportation service on par with other developed countries. Recently, the regulatorunveiled additional upgrading and expansionprogrammes of existing networks that will improve accessibility and capacity in several destinations for both passengers and cargos.

In order to support the growth of the industry, the Government through SPAD has developed and adopted set of rail standards. This was resulting from past joint initiative with Standard Malaysia and SIRIM. These standards are applied to strengthen the technical specifications which are currently being used in various procurement exercises. To date, there are already technical specificationsdeveloped by the regulator for different type of rolling-stocks e.g. light, heavy and high speed rail. As a result, all new systems, equipmentsand components, regardless of which operator owns them, are common in terms of technical specification. The remaining legacy assets that are still mixed of standards andspecifications will go through refurbishment and upgrading program.

Road-mapping initiative back in 2012 has provided a clear vision, direction and laid downvarious programmes for the implementation of the key initiatives. To date, more than 90 per cent of the recommendations have been implemented. This is due to an effective coordination and implementation by a central organisation through the National Rail Industry Council. All programs or proposals which are successfully implemented have beensupported by various ministries, Governmentagencies with active participation by the industry and the academia.

• Technology and Human CapitalDevelopment

In 2030, Malaysian rail industry has expanded from about 50 to more than 100 related organisations. In addition to the growth of the industry, a sizeable investment made by the Government has also created huge job opportunities for Malaysian workers. High technology, sophisticated, and sleek design of current trains compared with the past 20 years has presented a new image to the public. These will serve as “feel good” factors that largely drive a huge number of young graduates of today to choose a career path in this industry. Besides, the attrition rate will remain very low for a long time as workers tend to stay in the industry when it is being constantly fuelled by a wealth

of projects. Nevertheless, migration of local experts to abroad is something that is inevitable. An outpour of job openings in Middle East requires various types of manpower with different levels of skills to fill vacancies urgently. This has not detriment the industry, instead Malaysia has been exporting the skilled manpower all over the world.

In ensuring sufficient supply of workforce in the industry, there are several skills training institutes established by the Government that continuously produce semi-skilled workers. This is on top of training institutions which are owned by major train operators. A look at white collar jobs show some universities are offering rail engineering as an optional major for final year and as full course post-graduate studies at Master and PhD levels respectively. However, there are avenues for graduates in general engineering fields who are interested to find jobs in the rail industry as well as opportunities for semi-skilled workers keen on furthering studies at a higher level within the same gamut. The Centre of Excellence for Rail which came into fruition from the enhancement of a training institute under KTMB back in 2013 has providedsuch an avenue for industry hopefuls. It is equipped with the latest facilities and provides students with the most updated knowledge on train technologies which are recognisedby most of the global rail companies and associations. This is achieved through continuous

partnership with foreign technology providers and experts from various rail organisations in Malaysia. All of the syllabuses used are reviewed by a panel of experts in order to ensure that they meet the current and future need of the industry.

The technology development initiative since 2012 has not yielded many discoveries through research and development (R&D) activities. However, new technologies have been acquired through a procurement mechanism called Offsets and reverse engineering. Almost all of the procurements endeavoured by the Government with a total value at RM180 billion imposed the offset program as a mean to

expedite the industry growth and further to achieve the aims as stated in the national rail industry development roadmap. Local rail industry players and operators enjoy the healthy benefits derived from the Government investment programs. Besides that, offsets also result in several joint technology development projects between local universities, local industry players and foreign technology partners on certain key areas. Correspondingly, reverse engineering ventures have been undertaken on critical parts. Funding for R&D is not an issue as it is now being allocated and coordinated under National Science & Research Council (NSRC) which also registers rail-related technology development under one of the R&D priority list. Some of the technologies acquired have contributed towards the improvement of energy efficiency, speed and comfort, inter-operability, as well as enhance the reliability of current rail operation.

• Multimodal and Integrated TransportIn 2030, the rail networks that are formerly converged within Klang Valley have expanded nationwide to cover other states in Malaysia. Upgrading and adding lines from the main trunk of KTMB tracks from north to south have now stretched from west coast to east coast of Peninsular Malaysia. There are also a number of spur lines that connect major ports with major industrial parks in East Coast Economic Corridors (ECER), the North Coast Economic Corridors (NCER) and Iskandar Malaysia in the south. Parallel to the existing trunk line, high speed rail which is operated by a private company is fast gaining popularity. Currently, the train is serving Singapore – Johor – Kuala Lumpur route and it plans to expand up to Bangkok. Based on rapid urbanisation progress especially in Selangor, Johor, Penang, Melaka, Perak and Negeri Sembilan, the intra-city or light rail networks soon start to face the same situation as Klang-Valley fifteen years ago. In East Malaysia, there are also on-going projects developing railway tracks in Sarawak and expansion of existing tracks in Sabah. The train will be a medium to transport raw materials for energy sectors and passenger transportation especially for eco-tourism.

The idea of “seamless journey” which seems to be almost impossible to implement in the past has now become a reality. The train has been conveniently integrated with most public transportations such as buses and taxis linking all major hubs in Peninsular Malaysia. Today, a passenger is able to swiftly travel from one destination to another, even embarking on trains by different operators with the purchase of only one ticket or using a dedicated travel prepaid card (subjected to conditions). This facility is now expanded to other states in Malaysia outside Klang Valley. The Government investment on upgrading

All related parties(Government, Industryand Academia) wereconsolidated througha structured processto produce a consensusview on desired stateof Malaysian Railindustry in 2030.

and expansion of rail infrastructure has changed public perception and preference on train over other types of transportation. This is largely due to improvement in punctuality, comfort and duration taken to reach a destination.

Apart from passenger transportation, rail freight has made a significant impact on being the choice of businesses to transport massive cargos to their final destinations. The effective cargo distribution benefits wide upgrading and expansion undertaken by the Government in the previous decades. Raw materials, customized cargo containers, semi-finished and finished products can be transported from various seaports such as Port Klang, Port Tanjung Pelepas, the Kuantan Port, the Penang Port as well as major airports in the country. All of these will have been impossible to achieve had it not been for the efficient clearance process by the Royal Custom. In anticipation of this, Malaysia will have gradually become the preferred regional distribution hub for freight transported from eastern and western regions.

• Market Competition and Value Added Products/ServicesThe year 2030 witnesses upgrading and building rail infrastructure activities mushrooming worldwide, driven by the need to address rapid urbanisation in major cities (such as in China, India and Middle-East), climate change, congestion, to name a few. Malaysia is not excluded from this trend as a sizeable investment in rail has been committed by the Government of Malaysia since 2012 to stretch a span of two decades to enhance the social and economic activities in the country. A number of rail projects in the pipeline has lured local and foreign rail

suppliers to bid a piece of the contracts. Flashback to fifteen years before, intense competition is seen only among foreign suppliers where local industry players have almost no chance to compete directly due to unattractive track record, limited capability and product credibility. Today, the situation has changed. Local champions identified, groomed and developed for the past 20 years have positioned Malaysia as one of the respectable competitors in global rail market. Strong grasp over design & development and system integration capabilities have enabled local players to enhance their products competitiveness and support life-cycle of the asset more effectively. The local rail industry widened its offering from monorail to heavy rail products has successfully secured contracts in South East Asia, Brazil, India and Middle East as it is dubbed to have ‘Japanese quality, China price’. In view of this, most of the recent contracts tendered by the Government are awarded to players either for new purchases or refurbishmentof existing assets. Track records are no longer an issue and the competitive advantages are due to its cost, quality of products and after sale services. Even more important is the multiplier effects to the country’s economy as well as achieving national aspirations.

• Localisation and GlobalisationIn 2030, the Government’s enforcement on local content in the procurement of rail assets has yielded positive impact to long-term industry development. Although a small percentage has been committed during the previous procurement back in 2010, the strategies employed since then have generated significant increase in figure from 5 to 10 per cent to more than 40 per cent today. The identification of strategic areas to be developed through road mapping exercise in 2012 have been fully completed that it enables all non-critical and to certain extend, critical items to be developed locally and certified internationally. Cross-industrial strategy by leveraging on well-established and mature local industries such as automotive, telecommunications, advanced materials, aerospace and others help to

further expedite the growth of the rail industry. Besides that, initiative to enforce common technical specification and adoption of dedicated standards have an impact in terms of creating critical mass of rail components which indirectly justify local players especially small, medium enterprises (SMEs) to invest or diversify in this business. Moreover, the situation has mitigated trade imbalance where the export has moved slightly above than the import figure. Most of MRO activities are no longer carried out by train operators, instead by a third party to improve train availability. Recent study showed that serviceability of train operation is at more than average of current best practices around the world. Local MRO players have expanded its ability to fully perform Level 3 maintenance and to certain extend modification, upgrading and testing without intervention from OEMs. Malaysia is nowbeing one of the authorised maintenance centres in the region certified by most top train producers.

In view of pressure being cost effective and high demand of rolling-stocks in Asian region,western train and equipment manufacturers were searching for a suitable location to setup their new production line. Apart from cost and market driven, easy access to pool of skilled workforce, raw materials, IP protection, strong IT facilities and being geographically strategic have tremendous influence on selection of the location. Malaysia fulfils most of the criteria especially being located at the heart of South East Asia, thus making the country one of the attractive destinations for investors. Furthermore, the Government have launched target FDI on selected foreign rail suppliers to fill the critical gap in the local and regional supply chain. Today, most of components, parts andsystems made by world top rail producers/suppliers are distributed from Malaysia.

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Cover story

Similar to otherindustries such asaerospace andmaritime, rail industryinvolves cross-ministerial/agenciesand is need for amechanism toeffectively coordinate,facilitate and monitorthe industry growthbased on consensusvision, goals anddevelopment strategiesat national level.

AerospaceMalaysia Innovation

Centre (AMIC),A standing research

institute of excellencewhich established in

November 2011

Industry insightsIndustry insightsIndustry insights


26

National AerospaceBlueprint (1997)

which emphasized on theimportance of aerospace

industry towardsthe globalization andon the value chain of

production

Towards Greenand SustainableAeronautics

BYAbd. Rahim Abu Talib, Ph.DChief Operating OfficerAerospace Malaysia Innovation Centre (AMIC)[email protected]

Industry insightsIndustry insightsIndustry insights

OverviewAwareness regarding the need to have a

sustainable future has been discussed anddebated in many international forums among thegovernment agencies, non-governmentalorganisations as well as private industries. Manyinitiatives have been planned and implementedin the past decades to ensure the moderndevelopment in high end technology will lead toa sustainable way of life in the context of social,environment and culture. Aerospace industries inparticular have played a major role incontributing to the fast development in today’smodern life. The direct and indirect impact fromthe aerospace industries, along the value chainfrom processing raw materials, design,fabrication, manufacturing, assembly, installation,application, and maintenance until the end of lifeof the components, does play a role in affectingthe modern development. Green AviationSummit 2010, organised by NASA AMES ResearchCentre, put up challenges for green aviation andfocussed on the environmental impact ofaviation. Noise and emissions reduction, fuel burnreduction, alternative fuels and environmentallyfriendly airspace operations were among otherissues being discussed and presented.

Aerospace Malaysia Innovation Centre (AMIC), astanding research institute of excellenceestablished in November 2011, is activelyfocusing its efforts on the three areas which havebeen labelled as ‘research roadmaps’ in order totackle some of the current most importantchallenges and helps to set up the pathway forthe future aerospace industry. These researchareas consist of jet fuel production frommicroalgae, innovative manufacturing ofaerospace composite structures, and advanced

green materials for aerospace (Fig. 1). Continuousand dedicated research in these fields willprovide AMIC with an international recognitionof its expertise in working towards sustainabilityof the aerospace industry

Since the launch of the National AerospaceBlueprint (1997) which emphasized on theimportance of aerospace industry towardsglobalization and on the value chain of

production, Malaysia has a clear pathway towardsa sustainable future in aerospace industrythrough highly competitive research activities.AMIC is a unique research innovation centre thatassists researchers in the industry and universitiesto expand and potentially be the benchmark forthe whole wide aerospace research in near future.This article will provide a brief overview of AMICinitiatives towards green and sustainableaeronautics.

Figure 1 AMIc research and technology focus area

InnovativeInnovativemanufacturingof aerospace

structures

Innovativemanufacturingof aerospace

structures

Jet fuel

microalgae

Jet fuel

microalgae

AdvancedAdvancedgreengreen

material formaterial foraerospace

Advancedgreen

material foraerospace

ru turstructuresu ustructures

J t fuJet fuelJ uJett fuel

mm r a amicroalgaem a amicrroalgae

p aaof aeer p


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Global oilconsumption increases

from 85 millionbarrels a day in 2006to 118 million barrels

per day in 2030.

NASA AMESResearch Centre

put up challenges forgreen aviation and focussed

on the environmentalimpact of aviation


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Jet Fuel from Micro Algae

The Need for alternative to Fossil FuelsThere is a general consensus within the literaturethat fossil fuel feedstock used for the productionof aviation-grade kerosene fuel are dwindling.Koh and Ghazoul (2008) expect a peak in oilproduction scenario within the years 2010-2020,assuming that global oil consumption increasesfrom 85 million barrels a day in 2006 to 118million barrels per day in 2030. Nygren et al.(2009) projected that civil aviation traffic growth

will increase at a rate of 5% per year, while fuelconsumption will increase at 3% per year. Lee et al.(2009) however projected that aviation trafficgrowth will increase by 4.5% to 6% per year overthe next twenty years, with traffic doubling every15 years. It is projected that the rate of discovery ofnew feedstock for petroleum will drop significantlyby the middle of the twenty-first century (Daggett,et. al, 2007), and that current production trendswill be unable to meet future demand for fossilfuels. Despite the improvements in aircraft fuelefficiency since 1960, further efforts need to bemade in order to mitigate the dependency ontraditional fuel sources and to replace current

petrol-based fuels. Furthermore, there is an increasingneed for independent energy security among oil-importing countries, due both to fluctuating oilprices as well as the finitude of oil reserves in oil-producing countries.

There have been several test flights by airlines inpartnership with aircraft and engine manufacturersto determine the performance of their planesusing biofuel, in either a 100% or 50-50 blendcapacity. Figure 2 shows some of the test flightmade by various airlines using blends of biofuel.

Industry insights

2008Greenflight, USA - Fuel: 100% Recycled Cooking Oil

Virgin Atlantic

Fuel: Brazillian Babassu Nuts and Coconut Oil

Air New Zealand

Fuel: 50-50 blend

Jet A andJatropha Oil

2009Continental, USA

Fuel: 50-50 blend Jet A and Algae-Jatropha Oil

Japan Airlines

Fuel: blend of Camalina Oil andJet A

2011NASA

Fuel: biofuel from chicken and beef tallow

2012Lutfhansa

Fuel: blend of biofuel

2014Virgin Atlantic

Fuel: waste gases-derived

2015British Airways

Fuel: waste derived fuel and micro algae

Figure 2 Airline Test Flights Using Biofuel

What is Microalgae?

Algae fuel is a natural alternative fuel in replacingthe scarcity of fossil fuel. Microscopic algae, ormicroalgae, which does not have roots, stems orleaves can easily be found in freshwater andmarine systems, has been identified as being themost promising and the only source that couldpotentially produce biofuel in the quantities thatare needed (Hu, 2012). Currently, biotechnologistsand researchers from various institutions areactively conducting vast research in extractingthe lipids (oil) from microalgae in production ofbiofuel for diesel engines. These researchactivities are being closely followed with keeninterest by aviation companies includingEuropean Aeronautic Defence and SpaceCompany (EADS) that identified algae had been

identified as an economical source for future ofjet fuel. This was highlighted by Mr Louis Gallois(past CEO of EADS) during his visit to Malaysia inApril 2012. Last year European airlines, biofuelproducers and the EU Commission signed a pactaiming to produce two million tonnes of biofuelfor aviation by 2020.

Some of the reasons for the selection ofmicroalgae as an alternative for jet fuel are:

• Algae fuel has minimal impact on fresh waterresources and is relatively harmless to theenvironment.

• Algae can help to reduce the CO2 emission.

• The entire algal organism uses sunlight to produce lipids or oil, hence beneficial inproducing mass capacity of fuel.

• Unlike other fuel alternative such as soybeans,algae can easily grow wherever there is fresh water and converts carbon dioxide into carbon-chain molecules (in producing oil) very quickly and efficiently.

Future research work is expected to focus on theestablishing of conditions for a sustainableproduction of jet-fuel from microalgae inMalaysia, dedicating specific efforts on some hardpoints such as algae strain selection (oilextraction and oil conversion) and improving theglobal production chain through follow-up of thetechnical, environmental and economicalbalances of the microalgae pathway.


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Industry insights

Innovative ManufacturingMalaysia aerospace industry should concentrateits efforts on the innovative manufacturing ofaerospace composite structures and producinglighter aircrafts. As lighter aircraft consumes lessfuel, the increase use of composites in air craftsstructures (50% of the structure in the A350 forexample) is the most effective way to reduce fuelconsumption.

Malaysia is already playing a very important andactive part in manufacturing and supplying ofcomposite materials for international aircraftbuilders. Composite Technology ResearchMalaysia (CTRM) which, in volume, is the fourthcomposite part provider of Airbus.

Figure 3 shows the development of differenttypes of materials used in the aviation industry.The manufacturing of such new advancedmaterials requires intense research anddevelopment.

Aluminium*since 1920s

Aluminium Composite* Carbon Fibers, Fiberglass

Fibers, Kevlar Fibers

Composite Bio-Composite*Kenaf materials

Bio-Compositesince 1920s Carbon Fibers, Fiberglass

Fibers, Kevlar FibersKenaf materials

Advanced Green MaterialsMaterials for Gas Turbine Engine

It is known that both thermal efficiency andpower output are influenced by the maximumcycle temperature and pressure ratio of the gasturbine engine. Broadly speaking, the maximumtemperature has a more important effect on thepower output whereas the pressure ratio hasgreater influence on the thermal efficiency(Endres, 1973). Thus, the use of new materialswith high temperature withstanding capabilitiesis likely to improve the thrust-to-weight ratio ofthe aero-engines. For aero-engines, materials arechosen to satisfy the lightest design thattechnology allows for the given loads andtemperatures prevailing. Figure 4 illustrates theuse of different materials in gas turbine aero-engines.

The quest for more efficient gas turbines hasbeen constantly motivated by the perpetualdevelopments in a wide range of engineeringfields including turbine design, combustionanalysis and structural ceramics. Figure 5 showsthe increase in operational temperature ofturbine component over the years (Schulz et. al,2003). The performance of the gas turbine can beenhanced by increasing the Turbine InletTemperature (TIT) thereby improving the thrustto weight ratio while minimizing the specific fuelconsumption. Thermal Barrier Coatings (TBCs) are

used to improve the gas turbine efficiency byeither increasing the turbine inlet temperature atthe present metal temperatures or by reducingthe coolant requirements while maintaining thecurrent turbine inlet temperatures. Additionally,the life of the component can be extended.Thermal Barrier Coatings are also being used inother components of the jet engine such as incombustors, liners and hot gas impingementprotection on stationary components.Furthermore, current aircraft cannot fly in ashesbecause the turbine blades would be blocked

due to their structure with the actual TBC. Toovercome such shortcomings; another reliableThermal Barrier Coating material is required. Upto now, silica aerogel has not been investigatedas a Thermal Barrier Coating material andtherefore a positive result of this research willattract aerospace industries in many ways.Maerogel has been invented in Malaysia byProfessor Halimaton Hamdan, in 2008 and has acost reduction of 80% in its production comparedto the traditional silica aerogel.

Figure 4 Materials for gas turbine aeroengines (Rolls-Royce, 1996)

Figure 3 Materials used in the fabrication of structure and non-structure aircraft components


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Aerogel is accepted as one of the best insulationmaterials by most industry experts as it can holdhigh temperature – up to 3,000 Fahrenheit. Aerogelis also accepted as a very good sound-proofingmaterial, and known as the lightest solid material.It is extremely porous and very low in density.Hence, aerogel makes good thermal insulator.

There are a few types of aerogel such as cryogel,spaceloft and pyrogel (Figure 6). As the cost ofproduction for aerogel is expensive, Malaysianresearchers are trying to develop a new aerogelfrom rice husk as a substitute material to reducethe cost of production.

Eco-efficiency is a key to address aerospaceindustry sustainability and environmental impact.A significant part of eco-efficiency relies on theuse of new greener materials. This innovation ofthe new Malaysian aerogel from the rice husk isknown as Maerogel. Maerogel is advantageousfor the aerospace industry because:

• Its quality is superior compared to current aerogel.• It is environmental friendly as the basic ingredients

are from rice husk.• It uses cheaper alternative material – rice husk.• It provides better insulation compared fibreglass.• It is nanocatalyst.

ConclusionGreen sustainable aeronautics can only beachieved by continuous effort and support fromall parties including the public, government,industries and research community. It is hopedthat the future activities in and around aerospaceindustries would be in line with the theme tohave a quieter, cleaner and more economicalaerospace transportation.

Figure 5 Increase in operational temperature of turbine component over the years (schulz et. al, 2003)

800

1950 1980 1970

Tem

pera

ture

(o C)

1980

Year

1990 2000 2010

900

1000

1100

1200

1300

Conventionallycast Alloys

Wrought Alloys

Directionally SolidifiedAlloys

Single CrystalAlloys

TBC benefits

Thermal Barrier Coatings

Industry insights

Maerogelfor very high-temperature

applications

(m.p up to 1200oC)

Pyrogelfor high-temperature

applications

(up to 650°C)

Spaceloftfor mid-temperature

applications

(-200°C – 200°C)

Cryrogelfor low-temperature

applications

(-200°C - 90°C)

Figure 6 Different thermal barrier coating temperature performance

ReferencesAir Wise, (2012) Lufthansa ends biofuel trial with Us flight, Jan9. (web source: news.airwise.com) Daggett, D.L., Hendricks, R.c.,Walther, R. & corporan, e., (2007) Alternate Fuels for use incommercial Aircraft. In 18th IsABe conference (IsABe). Beijing,china: national Aeronautics and space Administration.

endres W., (1973) Design Principles of Gas Turbines. Proceedingsof the symposium on High Temperature Materials in Gas Turbines.Baden, switzerland: elsevier scientific Publishing company.

Halimaton H., (2011), silica Aerogel, UsPTO Patent 7,897,648.Hu, Q., (2012) Towards overcoming the major bottle neck ofalgal biofuel: Algal feedstock supply, Alternative Aviation Fuelin Asia conference and AseAn Algae Biofuel Initiativesconeference (BIOFUeL 2012), Biopolis, singapore, 15-16 Feb.

Koh, L.P. & Ghazoul, J., (2008) Biofuels, biodiversity, and people:Understanding the conflicts and finding opportunities. Biologicalconservation, 141(10): 2450-2460.

Lee, D.s. et al., (2009) Aviation and global climate change in the 21stcentury. Atmospheric environment, 43(22-23): 3520-3537.

Malaysian Aerogel (Maerogel), (web source:www.zeolite.utm.my/zeomal/maerogel.html) nygren, e., Aleklett, K. & Höök, M., (2009) Aviation fuel andfuture oil production scenarios. energy Policy, 37(10): 4003 - 4010.

Rolls-Royce plc. (1996), The Jet engine, Birmingham: RenaultPrinting co Ltd.U. schulz, c. Leyens, K. Fritscher, M. Peters, B. saruhan-Brings,O. Lavigne, J.-M. Dorvaux, M. Poulain, R. Mevrel, and M. caliez,(2003) some Recent Trends in Research and Technology ofAdvanced Thermal Barrier coatings, Aerosp. sci. Technol.,7: 73-80.

Contributor Authors:1) norhuda nordin2) norhayati Mohd Zaini3) Adikkhairul Azha Mansor4) ezanee Gires5) nadiir Bekkhun

(source nAsA)


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Industry insights

MYBiomass: A Unique Model for aGreener Future

BYPuvaneswari RamasamyManaging [email protected]


32

Industry insights

Resolved to enter the world's exclusive club of "developed" countries by 2020, theGovernment is already on the fast lane to be at the forefront of advances in pioneeringhigh value green chemicals biorefinery through coordinated aggregation based on theunique business model by MYBiomass Sdn. Bhd. This company is a special purposevehicle under the Malaysian Biomass Initiative (MBI) through the Global Science andInnovation Advisory Council (GSIAC) which was endorsed by the Malaysian PrimeMinister, Y.A.B Dato' Sri Mohd Najib Tun Abdul Razak.

During the 2nd GSIAC meeting in New Yorklast May, Felda Global Ventures Holdings

Berhad (FGVH), Sime Darby Berhad and MalaysianIndustry-Government Group for High Technology(MIGHT) have agreed on Testing and TechnologyAdaptation Collaboration through MYBiomassSdn Bhd to conduct tests in converting oil palmbiomass into green chemicals building blocks.

FGVH and Sime Darby will each own a 40 percentstake in MYBiomass Sdn Bhd while MIGHT takesup the remaining 20 percent stake.

The plaque signing ceremony by Prime Ministerwas joined by Felda Global Ventures HoldingsBerhad Group President/Chief Executive OfficerDato' Sabri Ahmad, Sime Darby Bhd. Presidentand Group Chief Executive Dato' Mohd BakkeSalleh, MIGHT President and CEO Mohd YusoffSulaiman as well as MYBiomass Sdn BhdManaging Director, R.Puvaneswari.

MYBiomass will bea focal point in supplyingbiomass and providingintermediateopportunities betweensuppliers, technologyproviders, anddownstream users.

From left to right: YBhg Dato’ Sabri Ahmad (Group President/CEO, FGVH), Mohd Yuso� Sulaiman (President & CEO, MIGHT ), YAB Dato’ Sri Mohd Najib Tun Abdul Razak (Prime Minister of Malaysia),

YBhg Dato’ Mohd Bakke Salleh (President & Group Chief Executive, Sime Darby) and R.Puvaneswari (Managing Director, MYBiomass)

Testing Collab oration b et ween Felda G lobal Ventures Holdings B erhad, Sime Darby B erhad and MIGHTthrough MYBiomass S dn Bhd

O �cial ly Witnessed by the Honourable Prime M inister of M alaysia New York , USA, 16 May 2012


33

Industry insights

The collaboration is a testament to the commitmentof two of Malaysia's biggest plantation conglomeratesin championing the MBI, which was advocatedthrough the GSIAC and endorsed by the Hon.Prime Minister towards the advancement of thebiomass industry in Malaysia. MIGHT andMYBiomass Sdn. Bhd. were instrumental insuccessfully implementing a unique andworkable Public-Private Partnership (PPP) model.

MBI is expected to make a substantial contributionto the production of potentially high value greenchemicals for local and international downstreamusers. Such effort is expected to possibly benefitindustries including pharmaceuticals, materialsand energy.

MBI also addresses the potentials of moving upthe value chain in the biomass industry by promoting

sustainable supply of biomass feedstock to endusers at competitive cost. Even though thecountry is expected to be rich in biomass, theavailability and accessibility however has becomea serious challenge, especially in moving up thevalue chain of biomass profitability. And,although there are many other sources ofbiomass available in Malaysia, oil-palm basedbiomass will be the initial focus.

With this unique model, MYBiomass will be a focalpoint in supplying biomass and providingintermediate opportunities between suppliers,technology providers, and downstream users.

This noble initiative blends well with theinvolvement and great support by the GSIACinternational members in the development ofMYBiomass's role within the context of MBI. Thisinclude council members Roger Wyse, ManagingDirector of Burril and Co. also co-chair of MalaysianLife Sciences Fund (MLSF), Anthony J.Sinskey,Professor of Biology, Health Sciences & Technologyat Massachussets Institute of Technology (MIT) aswell as Aalt Dijkhuizen, Chairman of the WageningenUniversity and Research Centre (WURC).

This initiative also has been supported by MOSTI,KeTTHA, MOF, EPU, MIDA, MPOB, SIRIM, BiotechCorp,AIM and academia.

The model is essentially an enhanced Public-Private-Partnership (PPP) model, with the uniqueness ofhaving not just local support, but also renowned

international bodies and figures. The model alsostemmed from a national initiative and thussupported by a Council chaired by the PrimeMinister himself.

The potentially winning formula is attributed to theapplicability of the model, based on theincorporation of elements from successful supply-chains. Pull-and-Push elements such as keyupstream, midstream, and downstream players arekey components of the model in ensuring thedevelopment of a potentially high-value greenchemicals value-chain. Such players include largeplantation companies i.e. biomass producer, abiomass aggregator and distributor, technologypartner(s) for the conversion of biomass to chemicalbuilding-blocks, and downstream off-takers andproduct manufacturers.

In developing an economical supply-chain,MYBiomass Sdn Bhd also conducts studies on manyparts of the value-chain such as preliminary marketstudies, aggregation test-runs, testing on conversiontechnologies, biomass-removal studies and many others.

** Areas for International Support * Malaysian Govt New Enabling Initiative

RegulationIncentives &Infrastructure

• Pre-treatment• Biomass to Sugars/Oils• Biomass to Intermediates• Biomas to End-product• Biomass to Energy

• Harvesting• Mechanization technology• Transportation

• End-product manufacturing• Spin-offs

PoliciesEcosystem Enablers

MalaysianAcademia &ResearchInstitutions

LocalCapacityBuilding

DownstreamSMEs

Tech SMEs Upstream SMEs

Technology Feedstock

Off-taker

CentralisedBiomass Hub

Centres ofExcellence

(COEs)

• MoF• MIDA• MOSTI• KeTTHA• EPU

GSIACPlatform

InvestorPool **

AcademiaPool **

TechnologyPool

HumanCapitalPool **


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Following the MBI model, MYBiomass businessmodel includes policy makers in providing aconducive environment for the growth of theindustry such a relevant monetary incentives andinfrastructure supports. It requires the involvementof key Ministries, agencies, academia, and authoritiesfrom relevant economic corridors.

Apart from being a purely business-driven model,the framework also outline capacity-buildingelements to local parties such as academia, and localresearch institutions. Unlike other profit-basedbusiness models, a mature MBI supply-chain is alsoexpected to have spill-over benefit to local SMEs.

Thus, having both a holistic and focused businessapproached at the same time, the model is auniquely workable given the full support of all thementioned parties.

Last May, MYBiomass has shipped 12 tonnes ofoil palm biomass to a pilot plant facility in Italy,which is part of the initial stages of testingcollaboration. The joint venture is currentlystudying and evaluating process feasibility ofconverting oil palm biomass into green chemicalbuilding-blocks. The selection of an Italian-basedtechnology partner was based on commercialreadiness and scale of production.

The first batch of shipment comprises 12 tonnesempty fruit bunch pellets, to be followed byfronds and trunks.

The initial collaboration that has brought two ofthe biggest oil palm plantation companies in theworld into an alliance represents a potential for amuch bigger cooperation in the near future thatcan create and transform the entire greenindustry in Malaysia.

The shipment to a leading foreign technologyprovider is intended for pilot-scale testing on theconversion of oil palm biomass. The Malaysianfeedstock will be tested for its suitability for usein the production of sugars which could beprocessed further into high-value green chemicals.

Currently, much of Malaysia's oil palm industry isdedicated to the production of Crude Palm Oil(CPO). However, coordinated aggregation ofbiomass and pioneering of high value greenchemical biorefinery could lead to a substantialboost in productivity and value creation in the sector.

This has a 360 degree impact on everything fromjobs in plantations to downstream activities inlogistics and transportation and, perhaps mostimportantly, new, high-value, knowledge-basedgrowth in these science and technology relatedfields of the bio-economy.

Besides harnessing economic opportunities, thisinitiative will also create research potential andpromote the development of human capitalin the country.

As the focal point for biomass feedstockaggregation and supply, MYBiomass will also actas a long-term purchaser of oil palm biomass andbrings biomass to market for further optimisationof the resources by moving it into higher valueprocesses.

It is also expected to contribute substantialrevenue to gross national income from industrialchemical, product manufacturing and greenchemical sectors while addressing environmentalissues at the same time

Industry insights

Trends & Issues

Malaysia Reporton Small Hydro Power (SHP)


36

BYMohd Afzanizam Mohd BadrinHead of Horizon ScanningNational Foresight [email protected]

Electrification Rates:Electrification rate (%): 99.4Population without electricity: 0.2 million

Country Overview:SHP Definition: 1 MW up to 10 MW1

Population: 28.3 million Area: 329,961 km2

Capital: Kuala LumpurGovermment Type: Constitutional

monarchyOfficial Language: Malay

Currency: Malaysia RinggitMajor Energy Sources:

Natural gas and coal

In 2009, the Authority has developed the NationalRenewable Energy Policy and Action Plan. The

policy and action plan aimed at creating sustainableenergy trough renewable resources. The documentoutlined five (5) objectives comprising elements ofenergy, industry and environmental3:

(1) To increase RE contribution in the nationalpower generation mix;

(2) To facilitate the growth of the RE industry;

(3) To ensure reasonable RE generation costs;

(4) To conserve the environment for future generation; and

(5) To enhance awareness on the role andimportance of RE.

Installed SHP Plants and Ownership:Today, there are twelve large scale hydropowerstations and fifty eight mini scale hydropowerstations in Malaysia. TNB Energy Services Sdn Bhd(TNB-ES), a wholly owned subsidiary of TenagaNasional Berhad (TNB) has been trusted to operateand maintain 30 numbers of mini hydro stationsthroughout the Peninsular of Malaysia with totalinstalled capacity of approximately 16 MW4.

Trends & Issues


37

Renewable Energy Policy:The Energy Commission (EC), a government monitoring agency of the nationalrenewable energy development has set an increase in the percentage of electricitygenerated from renewable energy to 5.5% compared with less than one per centcurrently. The higher percentage was achievable through the establishment of thesustainable Energy Development Authority. The authority was formed as a statutorybody under the Sustainable Energy Development Authority Act 2011 [Act 726].

SHP Resource Potential:Overall, the renewable energy (RE) industry hasthe potential to generate RM70 billion in revenuefor the country by 2020. The RE sector is expectedto create a host of spin-off benefits, including thecreation of 52,000 jobs for the economy6.Although Malaysia had successfully benefitedfrom the renewable resources for electricitygeneration, small-hydro has yet to be fullyexploited. With hilly topography running almostthe entire length and width of the country, andabundant number of streams flowing to foothills,Malaysia has a lot of small-hydro potential. Todate Malaysia had utilized this potential mainly inthe range of large and mini hydropower but veryfew in the micro hydro range.

In Malaysia, a total of 149 sites with estimatedmicro hydro potential of 28.9MW were identified8.

The experts are also in the opinion that thesuitable small-hydro projects would be thosebased on the run-off-the-river schemes of sizesof up to 10 MW to 30 MW in capacity.

Currently, Malaysia has abundant water resources.The annual rainfall for Peninsular Malaysia is24000mm, Sabah 2360mm and Sarawak 3830mm.This translates into an annual average wateravailability of about 28,400m3 per capita.

There are some 150-river systems in PeninsularMalaysia and about 50 river systems in Sabah andSarawak9. Malaysia’s principal rivers are theKinabatangan (564 kilometres in length), Rajang(560 kilometres), Pahang (434 kilometres), Baram(400 kilometres), Lupar (230 kilometres), andLimbang (196 kilometres). A recent study identifiedthe renewable energy resource potential inMalaysia for hydro is estimated to be RM506million/year10. It is also predicted that by the year

2020, most rivers and waterways will be fullyutilized especially for the generation of electricity.

To assess the suitability of a potential site, thehydrology of the site needs to be known and asite survey carried out to determine actual flowand head data. Hydrological information can beobtained from the meteorology or irrigationdepartment usually run by the national government.However there are some challenges in small-hydro plant. Water scarcity would happen in thenext 10 to 15 years as more rivers become dry,silted or polluted. Research and development areessential in facing those future challenges. Focusshall be given to the on current run off river (e.g.upgrading capacity of existing hydro plant),relook at design and engineering (e.g. systemdesign and component), introduce new concept(e.g. run on river, waste water, water falls, waterreservoir) as well as hybrid systems (e.g. hydro-solar, hydro-hydrogen).

Historical Development and PlannedFuture Development:The hydropower utilization for electricitygeneration in Malaysia started in July 1900 whena small hydroelectric plant was constructed onthe bank of Sempam River near Raub, Pahang, bythe Raub-Australian gold mining company. Theutilization of hydropower in Malaysia to supplyelectricity for domestic use however, was onlycommercially available around the 1970s.

To date, the Government through the Ministry ofEnergy, Green Technology and Water (MEGTW) isseriously looking at renewables as an alternativeenergy source. The 8th Malaysia Plan (2001-2005)and 9th Malaysia Plans (2006-2010) hadintroduced several programs such the SmallRenewable Energy Program (SREP), the BiogenFull Scale Model (Biogen FSM) DemonstrationProject and the MBIPV program. Among the mostpopular technologies for RE in Malaysia is themini-hydro (87.7MW), biomass (using palm oilempty fruit bunches), biogas (from palm oil millseffluent) and municipal solid waste.

Currently, hydro-generated electricity is suited forremote applications i.e. villages. Small hydro isoften used to replace diesel generators or othersmall-scale power plants or to provide electricityto rural populations. Some rural areas, however,are distant from the electricity generation andtransmission infrastructure.

In these cases, use of distributed powergeneration technologies such as solar hybridpower generation or micro hydro-electricity toprovide access to electricity is greatly viable.These solutions have been applied inapproximately 17% of the new connectionsduring 2010-201212. The target is to provide fivetimes as many houses with electricity ascompared to what had achieved in the 2006-2008 timeframe.


38

Trends & Issues

Table 2 Installed capacity of Mini-Hydro Power stations in Malaysia7

Location No. of Project Capacity (MW)

Peninsular Malaysia Kedah 1.556Perak 3.207Terengganu 1.936Kelantan 3.158Pahang 3.504Sub-total 13.361

East Malaysia Sabah 8.335Sarawak 7.297

TOTAL 28.993

Table 1 List of Mini-Hydro stations (TnB) in Peninsular Malaysia

No Station Town State Capacity (kW)

1 Sg. Ulu Langat Kuala Lumpur Kuala Lumpur 2,2002 Sg. Kerling Rawang Selangor 9003 Sg. Benus Bentong Pahang 3004 Sg. Perdak Bentong Pahang 3645 Sg. Sempam Raub Pahang 1,2506 Sg. Sia Raub Pahang 5487 Sg. Pertang Raub Pahang 4928 Sg. Ulu Dong Raub Pahang 5509 Sg. Rek Kuala Krai Kelantan 27010 Sg. Sok Kuala Krai Kelantan 58811 Sg. Lata Tunggil Kuala Krai Kelantan 70012 Sg. Renyok Jeli Kelantan 1,60013 Sg. Kemia Jerteh Terengganu 52614 Sg. Brang Kuala Berang Terengganu 42215 Sg. Tersat Kuala Berang Terengganu 48816 Sg. Cheralak Dungun Terengganu 50017 Sg. Bil Tanjung Malim Perak 25818 Sg. Kinjang Tapah Perak 34919 Sg. Kenas Kuala Kangsar Perak 53220 Sg. Asap Kuala Kangsar Perak 11021 Sg. Gebul Kuala Kangsar Perak 12022 Sg. Chempias Kuala Kangsar Perak 12023 Sg. Lawin Lenggong Perak 27024 Sg. Temelong Lenggong Perak 87225 Sg. Tebing Tinggi Selama Perak 17826 Sg. Mahang Selama Perak 48327 Sg. Kupang Baling Kedah 21628 Sg. Mempelam Baling Kedah 39729 Sg. Tawar Besar Baling Kedah 54030 Sg. Mentawak Pulau Tioman Pahang 500

TOTAL INSTALLED CAPACITy 16,643

There are also few public licensed mini hydro installations by private sector such AMDB Perting HydroSdn Bhd, Sg Perting, Bentong, Pahang (4.2MW), Syarikat Esajadi Power Sdn Bhd, Sg Kaingaran,Tambunan, Sabah (2.5MW), Sg. Kadamaian, Kota Belud, Sabah (2MW) and Sg. Pangpuyan, Kota Belud,Sabah (4.5MW)5.

1. Technology Report - Hydro (below 10MW), Final Report - Renewable Energy Technology Roadmap 2010, Malaysian-Industry Government Group for High Technology, pp. 79

2. Population and Housing Census, Malaysia 2010, (2010 Census), Department of Statistics of Malaysia

3. National Renewable Energy Policy and Action Plan 2009, 4. Ministry of Energy, Green Technology and Water, pp. iii

Info Kit, TNB Energy Services Sdn Bhd5. Status of SREP Projects in Malaysia 2009, Energy

Commission of Malaysia6. Speech by Minister of Energy, Green Technology and

Water, Sustainable Energy Forum 2011.7. National Energy Balance 2007, Energy Commission on Malaysia

8. Nathan Raman, Reconnaissance Study to Identify Micro Hydro Potential Sites in Malaysia, Department of Mechanical Engineering Universiti Tenaga Nasional (UNITEN), 2010

9. Environmental Health Focus: Managing the Environmentfor Health in the Asia Pacific

10. Prof. Ir. Dr. Ibrahim bin Hussein, Micro Hydro Potentials in Malaysia, Science Fund (Project Code: 03-02-03 SF0035),2009, pp. 4

11. Small Renewable Energy Program (SREP), Energy Commission of Malaysia

12. PEMANDU Lab Highlights: Rural Basic Infrastructure.

13. Technology Report - Hydro (below 10MW), Final Report

- Renewable Energy Technology Roadmap 2010, Malaysian-Industry Government Group for High Technology, pp. 85

14. Kellog, W., Nehrir, M.H., Venkataramanan, G. & Gerez, V. Optimal Unit Sizing for a Hybrid Wind/Photovotaic Generating System. Electric Power Systems Research, Vol 39, 1996, pp. 35-38.

15. Borowy, B.S. & Salameh, Z.M., Optimum Photovoltaic Array Size for a Hybrid Wind/PV System, IEEE Transaction on Energy Conversion, Vol. 9, No. 3, 1994, pp.482-488.

16. AMDB Power Sdn Bhd, 4MW AMDB Perting Mini Hydro Project, Version 1.0, 2008, pp. 19.


39

Hydropower and Sustainability/EIA:At the national level, one of the challenges facedby small-hydropower projects is the affect ofcollective action and participation of users andindustry players. In addition to that, the access towater and the use, control and diversion of waterflows is subject to federal and state regulations.There are other regulations that apply to physicalalteration of a stream channel or bank that mayaffect water quality or wildlife habitat. The hydro-power systems must not create any pollutionwhen they are operating.

It is well known that ecological impact of small-scale hydro is minimal; however the low-levelenvironmental effects must be taken intoconsideration before construction begins. Propercaution must be excised in order to ensure therewill be no damaging impact on the local ecologyor civil infrastructure.

Small-hydro projects can play a role in encouragingsustainable watershed management. In ensuringthose factors are put into consideration, REdevelopers are required to adhered proceduresand processes of other agencies such as theDepartment of Environment (DOE) for environmentalimpact assessments, State Authorities for landconversion approvals and for water abstractionrights and permissions (in mini-hydro) and localauthorities for structural plan approval.

Although hydro power technologies are highlydeveloped, sustained and more innovative researchis always needed. Research on siltation such ashow to solve high sedimentation problems of theriver should be carried out. Other importantaspects such as the design of the turbine, effects ofsmall-hydro on rivers, underground tunnels anddischarge also need to be researched.

Barriers: Despite the overall benefits of renewable energytechnologies particularly hydro-power, its fullexploitation is constrained by certain practicallimitations. For example, some of the wellrecognized issues in the water sector includelocalized water shortages during dry seasons,pollution affecting more than half of Malaysia’srivers, climate change as well as institutional and

regulatory complexity and inconsistency. The commonbarrier in the development of mini/micro hydroproject is capital cost which is relatively higher thanconventional power plant. Maximizing local contentby utilizing locally manufactured components anddesigning correct components selection and sizingwith appropriate operation strategy will alternativelyreduce the project costs. Financial and technicalassistance is relatively important in facilitating thedevelopment of small hydro power in Malaysia.

Meanwhile, in the commercial sector, manydevelopers of renewable energy projects do notsurvive and their projects abandoned due toproject variation.

Malaysia appears to be facing a number ofspecific challenges, including:

(1) Difficulty in obtaining financing at competitiverates;

(2) Financial institutions are unfamiliar with newtechnologies;

(3) High financing cost;

(4) Public perception that renewable energy is still experimental; and

(5) Uncertainty in renewable resources. A key challenge is to ensure sufficient continuoussupply of the sources.

In summary, the main barriers for renewable energycan be summarized as:

(i) Awareness(ii) Government Policies(iii) Financial Support.

Trends & Issues

Table 3 status of sReP Projects in Malaysia (as at December 2011)

No Category No. of Project Capacity (kW)

1 Biomass Empty Fruit Bunches 17 168Wood Waste 1 5Rice Husk 1 10Solid Waste 1 5

2 Landfill Gas 3 3.163 Biogas (agro-based) 7 25.854 Mini-hydro 13 87.75 Geothermal 1 30

TOTAL 44 334.71

Table below lists the status of Small Renewable Energy Program (SREP) implementation in Malaysia,as of end 201111. Several RE projects approved have already made a significant progress.

Table 4 Factors Affecting the sustainable Hydro Power 13

Social Remote areas has limited access Focus more on rural areasto energy supply

Political Bureaucracy issues and problems Involve many parties to gel approval to build e.g. land acquisition a hydro plant as identified sites

Economy Small-hydro is the most economical Engineering and design can be site specific,RE but it depends on availability of the simpler the better for remote communitiesin-situ resources

Technology Operation and maintenance Technical authorities and local authorityEnvironment River is subject to silting, polluted Need to address this issue

with waste

References

40


Although Malaysia have done reasonably wellto take advantage of our maritime features

and harness economic benefit from the sea andits bountiful resources, a lot more could be doneto enhance the contribution of the maritimeindustry to the nation’s economy.

Malaysia enjoys many advantages that can beoptimally harnessed to make it a globallycompetitive maritime nation. We are blessedwith being in a strategic location in betweenStraits of Malacca and South China Sea that linksEast and West maritime trade. We have a longcoastline, good infrastructures, good institutionalframework, political stability, rich with naturalresources, flourishing manufacturing sector andrelatively low cost of production, to name a few.

Malaysia has notched impressive success in themaritime industry. In recent years, we haveemerged in the top five in the list of countrieswith the busiest port traffic among developingcountries. Container throughput at local portshas been growing steadily, averaging around 15mil. TEU (twenty foot equivalent unit) in the lastthree years and is expected to reach 21 mil. in2012. With Port Klang and Port of TanjungPelepas ranked 13th and 17th respectively in thelist of world’s busiest container ports in terms ofvolumes handled in 2011, Malaysia can indeed beproud of our ranking among the giants in thecontainer sector.

This success owes in large part not only toMalaysia’s strategic location in a dynamic economic

region and along busy shipping lanes but also toastute planning and strong support from theGovernment to the maritime industry. Malaysiahas put in place several policies and a stronginstitutional framework to develop its maritimeindustry. These include the policy to makeMalaysia a maritime nation, the introduction ofCabotage Policy that reserves the carriage ofdomestic seaborne trade to local shipowners,and the designation of Port Klang as a NationalLoad Center. The Ministry of Transport Malaysia,through its Maritime Division, is the lead agencyresponsible to develop a modern, safe andcompetitive maritime industry, and can takesome credit for Malaysia’s achievements in theport and shipping sectors.

Keeping upwith the Trendsin Maritime Sector.Nazery Khalid, Senior Fellow at Maritime Institute ofMalaysia (MIMA) discusses the trends anddevelopments affecting seaborne trade andemphasizes the need for stakeholders to stay abreastof them in order to be competitive

Whether we realize it or not, Malaysia’s economy would not be the diverse, strong and flourishingeconomy it is today and we would not be able to have access to a variety of goods at reasonable prices.Without safe, secure and clean seas, global trade, marine tourism, fishery and offshore activities wouldbe disrupted and our economy would be poorer for it.

Trends & Issues

41


Getting a good gripThere is a multitude of factors that affectseaborne trade and shipping patterns. Malaysia’sfortunes as a trading and maritime nationdepend on the ebb and flow of internationaltrade and finances, economic developments,production and consumption patterns, andshipping trends, among many others. Thestakeholders in the maritime industry aremanifold, including regulatory authorities,shippers, shipping companies, portowners/operators, shipbuilders and shiprepairers, oil and gas companies, componentsmanufacturers, financial institutions and maritimesupport service providers.

In the complex and interdependent ‘universe’ ofthe global maritime industry, each stakeholdercan be affected by developments in sectorsbeyond their own. As such, it is imperative thatthey pay keen attention to and get a good gripof trends and developments which directly orindirectly affect the maritime industry.

Being the world’s 24th largest trading nation(World Trade Organization ranking, 2010),Malaysia’s trade performance is heavilyinfluenced by the state of the economy of itstrading partners. Malaysia is not immune fromthe global recession and Eurozone crisis affectingeconomies worldwide, despite its economyperforming reasonably well in recent years. Thedemand for Malaysia’s exports has slowed downand is expected to further soften this year. Thiswill affect the number of shipping calls hencethroughput at the nation’s ports, andsubsequently impact a host of activities thatsupport the maritime industry.

There are several developments that affect themaritime industry that warrant close inspectionas they are and could be detrimental to Malaysia’sinterests. A solid grasp of the dynamics of thesepotentially game-changing developments iscrucial to prepare the local stakeholders in themaritime industry for the challenges andeventualities and to put them in a position toreap the opportunities that may arise therefrom.

For a start, the rise of China as a global economicpower and as a nation with growing maritimeambitions must be closely analyzed. Its rapaciousdemand for raw materials and consumer goodsand prolific production of manufactured goodshas been among the most influential factorsshaping today’s global trade and economiclandscape and the maritime industry. Malaysiahas certainly benefited from the rise of China, asevidenced by growing transshipment cargosinvolving China trade at our nation’s mainseaports and growing Chinese demand for ourexports. However, there could be cause forconcern for us should shipping services servicingChina trade change pattern and trend. PortKlang, the nation’s largest port, and PTP, its

transshipment hub, are the first stopover formerchant ships en route to China from the Westand the last port of call in the China-West voyage.Should ships from China sail full load from itsports to destinations out West, there would belittle need for them to stop at Malaysian ports topick up cargos. This would result in a drop oftransshipment cargos handled by our ports andcould cause adverse effects to the port ownersand to Malaysia’s economy.

The worry that China’s economy will grow at aslower rate in 2012 arising from sharp drop for itsproducts from Eurozone, its largest tradingpartner, is set to send shockwaves to a worldeconomy still reeling from the global recession.Should the Chinese economic juggernautstutters, the impact to Malaysia’s ports will beconsiderable. Transshipment trade, which has beenone of the growth sectors to our ports, will dropand drag down total throughput of our ports.

The prospect of the US economy, still the world’slargest by far, continuing to be in the doldrumsis another source of worry for Malaysia. With theUS being our tenth largest trading partner, we aresure to feel the heat from the dismal condition oftheir economy.

Consider also the potential impact of this othermajor development in the maritime industry; thewidening of Panama Canal. This massiveengineering project will result in bigger merchantships being able to sail through the vital shippinglane. This is set to change the shipping patternsin the American continent and may sendreverberations elsewhere. Cargos landing atports along the West Coast of the United Statesmay not need to be hauled across the continentto the East Coast, as is the practice now. A widePanama Canal will enable cargos from East Asiato be shipped from ports along the Pacificseaboard to those along the Atlantic seaboard.This could see ports in the Caribbean and Gulf ofMexico flourishing and could well trigger a seriesof chain effects that may affect Malaysia’sinterests in the Trans-Pacific seaborne trade.

Worth evaluating also is the dynamics that couldbe triggered by the thawing of the ice sheet inthe Arctic that has carved a passage for ships.This new route will see ships able to sail fromJapan and northern China to northern Europe,and vice versa, bypassing the traditional East-West shipping route through South China Seaand Straits of Malacca. Although it is by nomeans guaranteed that the ‘Arctic route’ willensure cost-efficient and economically viablemerchant shipping across the pole, it would notbe wise to dismiss outright the possibility of theroute flourishing and not to ponder itsimplications on Malaysia’s seaborne tradeinterests. How would our ports fare if shippinglines between East and West bypass the Straits ofMalacca and South China Sea in preference of the‘Arctic route’?

Trends & Issues

However, there is much room forimprovement to make Malaysia atruly competitive maritime nationand to optimally harness itsfeatures, location, advantages andinfrastructures and for themaritime industry to attain greaterheights. As competition heats upfrom regional ports to attractshipping lines and handle morecargos, Malaysian ports andplayers in the maritime industrymust invest in capacity and humancapital and improve theirproductivity, efficiency andcustomer service in order to retainand win bigger market share.

Another global trend that is significantly shapingthe maritime industry landscape is thedeployment of growing size of merchant vessels.A combination of shipping economics,accommodating ship financing market, advent inshipbuilding technology and enhancement ofport capacity, productivity and efficiency hasconspired to fuel the bullishness of shipownersto commission the construction of bigger ships.The largest bulk carrier (carrying commoditiessuch as iron ore and coal) in existence today hasa whopping capacity of 380,000 DWT(deadweight tonnage) while the biggestcontainer ship in service can carry an amazing18,000 TEU containers. Such ships require portswith deep draft (harbour water’s depth) to enablethe ships to call at those ports, not to mentionadequate facilities like cranes and trucks and ahigh degree of productivity and efficiency toenable their massive cargos to be loaded andunloaded in the shortest time possible.

For Malaysian ports to be able to attract thesekinds of ships, the port operators and economicplanners must put in place the necessary features,facilities, equipment, manpower and land-basedsupport services to match the sheer size, capacityand complex handling requirements of thesevessels. Ports unable to accommodate the big vesselswill be bypassed by them and will be reduced toplaying a feeder role to larger ports where thesebehemoths can call. The loss of economicopportunities of being left out from the loop bythese ships could be significant to Malaysia.

In recent years, ports in the region haveembarked on aggressive expansion to serve theirusers better and in anticipation of growingdemand for shipping services and globalseaborne trade. Not only their operators areoffering features and facilities of internationalstandards, they are doing so at very competitive

rates. Malaysian ports can no longer bank ontheir advantages of strategic location, goodinfrastructures and competitive tariffs as otherports in the region can also boast of the samefeatures and are giving our ports a run for theirmoney. Never mind the world’s top threecontainer ports in Shanghai, Singapore and HongKong; Malaysian ports must now look over theirshoulders and face growing competition fromneighboring ports such as Laem Chabang Port inThailand and Tanjung Priok near Jakarta inIndonesia. As competition among ports toattract shipping lines and handle more cargosheats up, Malaysian ports must strive to leverageon their strengths and continuously improvetheir productivity and efficiency and providevalue-adding services to compete withneighboring ports.

The specter of mega-projects such as theconstruction of Kra Canal, landbridge in the KraIsthmus and oil and gas pipeline linking Chinaand Central Asian countries coming into fruitionmay also affect shipping traffic and cargothroughput at Malaysian ports especially in theStraits of Malacca. Granted, a project like KraCanal does not look like it is going to materializeanytime soon, if at all. However, a nuancedanalysis of these plans is warranted in order toanticipate the consequence and to shape thenecessary responses to safeguard Malaysia’smaritime and strategic interests should theseplans are realized.

The gradual but unmistakable shift towardsgreen practices in the maritime industry must begiven due attention too. Efforts to reducepollution and emission of green house gases(GHG) from merchant vessels and in othermaritime activities such as port operations,shipbuilding/ship repairing and the explorationand production of oil and gas demand stakeholders

in the maritime industry keep abreast of thetrends, issues and challenges in these areas andpay close attention to the international conventionsrelated thereto. As a council member of theInternational Maritime Organization (IMO), thespecialized United Nations body responsible forsafe, secure and clean oceans, Malaysia must leadfrom the front in contributing to the greening ofthe maritime industry and reducing its carbonfootprint. It must also be mindful of the potentialimpacts on its interests of international efforts tointroduce market-based mechanism to reduceemissions from shipping. This is a very technicalarea which Malaysia admittedly is not familiarwith but must strive to overcome the steeplearning curve to be in tune with developments.

Other challenges faced by the maritime industryinclude the tightening of financing for themaritime industry amid global recession andEurozone debt crisis; meeting manpowerrequirements; meeting increasingly complexdemand for shipping, ports and other maritimeservices; protecting the welfare of seafarers andoffshore workers; ensuring navigation safetyespecially in busy shipping lanes; addressing theimpact of climate change; overcoming the threatof piracy; and dealing with the threat of terror onmaritime assets. Dynamic changes in the portoperations and shipping business – as seen inchanges in ownership structure, business model,investment strategy and competition regime,among others – are shaping the landscape of themaritime industry.

Change, the only constantIn today’s complex world in flux, change, as thesaying goes, is the only constant. Those whoresist changes and are not prepared to adaptaccordingly will be left behind.

The trends and developments discussed unleashforces that are too strong for players in themaritime industry to resist. The forces emanatingfrom these changes have reshaped thelandscape of seaborne trade and the activitiesthat facilitate it, and will no doubt continue toreconfigure and influence the industry. Playersmust be ready, willing and able to adjust theiroperations, strategies and even mindset alongwith these changes or risk being out of touch,losing competitiveness and becoming irrelevant.The fast moving trends and developmentsaffecting seaborne trade and the maritimeindustry require Malaysia’s maritime industrystakeholders to always be on top of them. Theymust develop deep understanding of theunderlying factors affecting global seabornetrade and their business in order to be ready toface the threats and challenges they pose andreap the opportunities they present. Doing socalls upon them to come up with appropriatestrategies, allocate resources and preparecontingency plans to respond quickly and face theeventualities arising from these developments.

42


Trends & Issues

A wide Panama Canal willenable cargos from EastAsia to be shipped fromports along the Pacific

seaboard to those alongthe Atlantic seaboard.

This could see ports in theCaribbean and Gulf ofMexico flourishing and

could well trigger a seriesof chain effects that may

affect Malaysia’sinterests in the

Trans-Pacific seabornetrade.

BYAbdul Rahman HamdanPrincipal Analyst 1,Consultancy & Offset Management [email protected]

FUTURE OFSOCIAL MEDIA


44

Viewpoints

OVERVIEWOn 18th May 2012, Facebook became a publiclisted company and its stock has begun tradingon the Nasdaq Stock Market. Facebook priced itsIPO at US$38 per share and valued the companyat US$104 billion or RM325 billion. This value iseven higher than Yahoo, eBay and Grouponcombined. If this figure does not impressed youimagine this: With over 900 million users, ifFacebook is a country, it would be the thirdlargest country in the world after India and China.According to The Star, Facebook users in Malaysiaalone reached 12 million last year. The top fiveSocial Media channels in Malaysia according toBurson-Marsteller in 2011 are Facebook, Blogspot,Wordpress, Twitter and Metacafe, with Facebookrepresenting 75.5% of users reach.

Facebook heralded a new era of the media,hence the Social Media. It represents a new wayof disseminating information and contentsharing. The interaction of the traditional mediasuch as television, radio, and newsprint havealways been a one way interaction, with thepublic being at the receiving end. Interactionscan be done through these media but not on areal-time basis. Even by allowing interaction,limited freedom are given to the public as theeditors or content managers of these traditionalmedia control what should be and what shouldnot be printed or aired. This creates monopoly ofcontent and some politicians, or evengovernments, use this advantage as a tool forpropagating their interests to the public.

However, it is hard to appreciate the new mediaif you do not know the origin of the traditionalmedia. Basically, media is known as a method ofcommunication between people, commonlyused to distribute news, information and views.The need to disseminate information was wellestablished even when our species were living incaves. This can evidently be seen from the cavepaintings and stone manuscripts. The methodthen evolved into other forms of disseminationssuch as using homing pigeons and manuscriptsusing bones, clay tablets and papyrus. As peopledeveloped new technology for printing,newspaper was created and circulated to peopleand it remains as the popular choice of media forsharing information up until the 21st century,besides television and radio. And then theinternet was born. The main reason behind the

creation of the internet is basically forconnectivity between computer users. TheARPAnet, considered as the grandfather of WorldWide Web was created in 1969 with the objectiveof connectivity and data sharing. From thatsimple solution, the internet has now evolvedinto what is now known as Web 2.0.

The evolution of this media has one commonobjective – to connect with people through thesharing of information. Human beings are alwayscurious, and curiosity helps human species todevelop and advance through researches,explorations etc. We want to know what ishapplicationening around us and especiallypeople closed to us. We always want to knowwhat is happlicationening around us and to

people close to us. According to AnthonyRobbins, one of the basic needs of human beingis to stay connected with one another. We havethis dire need to know things around us that mayor may not affect us.

The success of the new media is that it allows theconnection to happlicationen among a largenumber of people in the world simultaneouslyand in real-time. One can now have an access toimportant real-time information of public interestsuch as a natural disaster or unimportant privateinformation such as a friend just went to thebathroom. Whatever the reason is, these newmedia represents a new level of connectivity thatcannot be obtained from the traditional media.


45

Viewpoints

WHAT IS SOCIAL MEDIA?Human beings have always been social evenwithout the aid of the internet. Previously, theneed for social engagement depended mostlyon social events and the traditional media. Onlywith the creation of the internet we learn to relyless on this traditional method. Social Mediaoffers us unique identities, but with global access.

The interaction is done in real-time and withinstant result. Andreas Kaplan and MichaelHaenlein define Social Media as “A group ofinternet-based applicationlications that build onthe ideological and technological foundations ofWeb 2.0 and that allow the creation andexchange of user-generated content.” Accordingto them, there are six different types of SocialMedia. The six types are Collaborative Projects,Blogs and Microblogs, Content Communities,

Social Networking Sites, Virtual Game Worlds andVirtual Social Worlds. Among the popular namesthat are usually associated with Social Media areFacebook, Twitter, YouTube, Foursquare,Wikipedia and Blogspot. The platform behindSocial Media is basically the internet that consistsof web-based and mobile based technologies.These technologies are used to translatecommunication into interactive dialogue amongthe users through a shared platform.

1 Facebook75.5%

2 Yahoo!

3 Blogspot 42.4%

Blogspot

TwitterWordPress

Facebook

15m 26m 170m

14,000m

50m 34m 13m 12m 6.1m

Malaysiakini

The Star Online

ChinaPress

The Malaysian Insider

BBC

4 Live.com 21.8%5 MSN

56.5%

Internet Population

Malaysia popolution - 26, 160, 25664.7% of malaysian use the internet. Internet users - 16,9000,000

Top 5 social media channels

Top 5 websites (%Reach)

Social mediaMainstream media

Facebook14,000m Page view

75.5% Reach

Blogspot1700m page views

42.4% Reach

WordPress15m Page views

16.1% Reach

Twitter26m Page views

7.6% Reach

Metacafe5.1m Page views

5.6% Reach

19.7%

Source: Burson-Marsteller Asia-Pacific

WHO ARE THE PLAYERS?There are several players who emerge quite earlyin the game such as Friendster and MySpace inthe early 2000. However, users are quick tochange their Social Media platform based oncurrent trends and popularity. As older playersgrew out of favour, new players emerged fromthe industry and became the new trend for theusers. Among notable players that have dominatedthe Social Media industry for recent years areFacebook, Twitter and YouTube. Google enterquite late into the picture with their Google Plusplatform. The latest giant to enter this industry areMicrosoft with the launch of So.cl. In Malaysia, among the notable player in theSocial Media industry is MOL Global Bhd which iscontrolled by Tan Sri Dato’ Seri Vincent Tan. MOLGlobal have acquired Friendster for US$39 millionin 2008 and later sold off the patents owned byFriendster to Facebook in exchange of 700,000shares in 2010. These were subsequently increasedto 3.5 million shares. In 2011, Friendster relaunchedits product as a social gaming platform.

WHAT’S NEXT?As time goes by, Social Media will be moreintegrated into our daily lifestyle. This ranges fromthe moment we wake up to brush our teeth, towhen we shop in our favourite mall. It will beubiquitous as the technology of internet basedmobile applicationlications gets much smallerand have stronger computer power. DennisCrowley, co-founder of Foursquare said, “Thefuture of Social Media is that the social graphbecomes so ubiquitous in everything we do thatwe stop using the term “Social Media”. The normalsocial experience of shopping will be furtherenhanced as we will be having at our fingertipsa river flow of information such as who amongyour friends have been there, what do theybought and their reviews on the products.

The Social Media has impact the way theindustries operate their businesses. Before theexistence of social media, the industry has alwaysrelied on traditional media such as television,radio and newsprint for their marketing. Buttoday producers and marketers are using socialmedia to introduce, promote, advertise, and evensell their products. Even the traditional media isjumping on the bandwagon and starting toembrace the Social Media by making it anintegral part of their business. This can already beseen in some Television programmes thatintegrate live tweets from their audiences.Among notable international publishers thathave already embraced Social Media are WallStreet Journal who leveraged on Instagramapplications to interact with their readers and TheEconomist who optimized Google Plus andYouTube to generate dialogues and debates. InMalaysia, Media conglomerate giant, Media Primacreated specific account in YouTube and

Facebook for each of their subsidiaries such asTV3 and Hot FM. Interactions are sometimesdone real-time during live programmes andinputs received are used to improve their shows.The Star, the publisher of one of the most widelycirculated newspaper in the country, introducedan application called iSnap. The creation of iSnapis designed for The Star to reinvent contentpublishing and bring alive the newspapercontent to its readers in a different and fresher way.

Through Social Media, learning experience willalso be enhanced as high quality education canbe accessed by almost anyone and anywhere.This was already shown by Khan Academy thatwas created in 2006 by Salman Khan, a graduateof MIT and Harvard Business School. By utilisingYouTube, the group provides free onlinecollection of video tutorials that covers various

subjects – from mathematics, history, healthcare,and economics to physics. People around theworld with access to internet will be able to learninstantaneously through this platform.

On the commerce front, the Social Media isalready making an impact to the commerceactivities. It is now creating a massive shift ofconsumer’s behaviour from just simply searchingfor information on product to searchinginformation on product based by peoplepreferences and review. For the last three years,we have witnessed the exponential growth ofregistered users of Social Media platform. Asbusinesses now started to learn about this newmedia, for the immediate future we will seeenterprises integrating with this Social Media andgrow their businesses by tapplicationing intothese platforms.


46

Viewpoints


47

FUTURE TRENDSSome of the current trends that are predicted toshape and ultimately change the landscape ofSocial Media in the future are:

Augmented RealityAugmented Reality (AR) is defined in theWikipedia as “a live, direct or indirect, view ofphysical, real-world environment whose elementsare augmented by computer-generated sensoryinput such as sound, video, graphics or GPS data.”The objective of Augmented Reality is to createa system whereby the user’s reality is combinedtogether with Virtual Augmentation. By using thistechnology, the world’s environment in wherethe users are currently interfacing can be duplicatedin a computer. The system allows the environmentto be augmented with additional informationthrough the use of smartphones, mobile computerand internet. Even though Augmented Realityhas not taken off quite yet, it is widely expectedthat it will be the main force in shaping the SocialMedia in the near future. The trend can alreadybe seen as Google has recently started thedevelopment of what they called Google Glass.It is a glass that is equipped with AugmentedReality technology and will give the users theexperience of a Virtual Augmented Reality lifestyle.

Location-based ServicesThe Computer has evolved from the MainframeComputing created in 1960s to DesktopComputing in 1990s and finally to Mobileinternet Computing. This is made possible by the

significant increase of computing power and theminiaturization of some of the electroniccomponents. The next decade will see the rise ofmobile computing when smartphones andtablets become more affordable. We will witnessmore hardware and software being developed tofurther assists people in terms of connectivity andmobility. Social Media will benefit from this as fluxof information will be channelled through thismedium. One example of a Social Media platformwhich took advantage of this is the Foursquareapplication. Created in 2009, the applicationserves as a Location-based Social Networkingplatform for mobile device users. Users can check-intheir current location or places of hangout and atthe same time give reviews of the place orproduct. Users can also use this application toconnect with friends nearby. As technology for internetmobility becomes much more sophisticated, it isexpected that a number of Location-based SocialMedia platform will also be developed.

ApplicationsWhen Apple introduced its iPhone in 2007, it alsointroduced iOS, a mobile operating system forthe iPhone. The user interface for the operatingsystem is based on multi-touch gestures andmovement supported by the iPhone internalaccelerometers. Apple also released a SoftwareDevelopment Kit (SDK) where developers can useit to create applications for the iPhone. Thisbusiness model has created a new revolution forthe creative multimedia industry whereby anydeveloper can now develop and market theirapplications in the Apple’s marketplace calledApplication Store. Many of today popularly usedApplications are the result from developersdeveloping applications for the iOS platform.Another popular mobile operating system isAndroid, a Linux-based operating system formobile devices. It was acquired by Google andsimilar to iOS, Android has a large community ofdevelopers that develop the applications forGoogle marketplace called Google Play. However,Android is different from iOS as it is open forlicensing to any smartphones and tabletsmanufacturers whereas iOS is exclusively forApple’s product. On the latest development,Microsoft is also joining the fray by introducingits own mobile operating system called Windows8. With these positive developments, it isexpected that, in the next decade, more andmore applications will be developed.

Intelligent RecommendationsServicesAs the Social Media platform grew, there will bean increase of user-generated content data in theinternet. This will result in the influx ofinformation flooding the daily users of theinternet every second of the day. A system isneeded to filter out this tremendous amount ofinformation and to customize and tailor it accordingto the need of the customer. Technology supportingthe system will be created to understand and

capture consumers’ behaviours and preferencesdown to the individual level. Enterprises canbenefit from this as they can identify and selectpotential customers and target audiences.Therefore it is inevitable that better and intelligentrecommendations services will be developed inthe near future.

Evidently, these intelligent recommendationsservices exist in current website and applications.Amazon.com provides one of the best pioneerexamples of this system. Each time a customerpurchased books or other items in Amazon.com,the website intelligently captured the user’spreferences and interest. The next time thecustomer logged into the website, the customer’slanding page will have advertisements on itemsthat are related to the user’s purchased history.Recommendations are also made by the websiteon what the customer should buy. Hence, in thefuture, instead of people browsing the internetfor information, the internet will basically ‘browse’people and deliver dedicated information.

Mark Zuckerberg, Founder of Facebook, said, “When you giveeveryone a voice and give people power, the system usuallyends up in a really good place.” As Social Media giveseveryone a voice and give people power it is, and probablywill remain, one of the most important medium ofcommunication that connect the people.

CONCLUSIONAs John Lennon once said, “You maysay I’m a dreamer, but I’m not theonly one. I hope someday you’ll joinus. And the world will live as one.”These words amplified the need tohave a platform for people in theworld to connect. In Lennon’s case,it was music that will bring peopletogether. Today it is the World WideWeb. It is inevitable that someday,almost every person in this worldwill be connected.

Viewpoints

Book Club

48

03/2012

Our world has changed... dramatically. Designershave unveiled the world’s first child-care robot;children as young as five are spending up to eighthours a day in front of screens; the average teensends as many as 2,000 texts a month; machinesare competing with our minds for employmentand soon they will compete for our affection.

We’re rocketing into the digital age at breakneckspeed: a culture of rapid response with no timefor reflection or focus. Losing the ability to thinkwith depth or empathy, we are in danger ofraising a new generation that has plenty ofinstant answers but no deep questions orrelationships.

Drawing on the latest research, this book looks atthe ways that screen culture is shaping the futureand changing the way we think. Future Mindsasks: are we becoming addicted to data and howdo we go about starting a digital diet, urgently?

In this book you’ll find thought-provoking andpractical suggestions about reclaiming the spaceand time to think deeply.

This is for anyone who’s curious about rethinkingtheir thinking or unleashing the extraordinarypotential of the human mind, whether you wantto find out about the benefits of boredom, themyth of multi-tasking, constant partial stupidityor the sex life of ideas.

This book is a picture of the world in 2025, asshaped by science and technology and based onforecasts and assumptions about that futureworld. Four enabling technologies will be centralto shaping the world of 2025, each introducingcapabilities that will extend far beyond theirimmediate applications to effect a network ofchange throughout society, much in the way thatthe introduction of the electric light and theautomobile at the turn of the century powerfullyshaped today’s world. These four drivers ofchange are information technology, materialstechnology, genetics, and energy technology.

A fifth primary driver of change, environmentalism,represents not new capabilities, but a changingworldwide orientation. An emerging pattern ofattitudes and beliefs about sustainability and usesof the Earth will direct the shape of the future aspowerfully as any of the four enabling technologies.

The world of 2025 can be broken down into threebroad population groups: World 1, including theaffluent advanced nations of Europe, the UnitedStates, and Japan; World 2, the middle, making upthe bulk of the world’s population, whoseimmediate needs and resources will be in relativebalance; and World 3, the destitute nations, thoseon the brink of starvation, living with the constantthreat of disaster. It is useful to categorizecountries within one of these three groups,bearing in mind that by 2025 a worldwide middleclass will have emerged, represented to someextent in every society.

In many of the middle-income and destitutenations, an affluent few will make up a thin crustliving essentially like those of World 1. World 1countries may have a corresponding but thinbottom layer of abjectly poor.

As the world grows increasingly interconnectedand inter-related by globalization, economic crisisand new technologies, the answer to thisimportant question depends largely on the pathstaken by the world’s major nations. In Futurecast,Robert J. Shapiro, a man world leaders and headsof industry look to for straight talk on the globaleconomic, political and financial affairs, sketchesthe future with a critical eye to tell us what ourworld will really be like over the next decade. Inthis brief time, he foresees monumental changescaused by three historic new forces globalization,the aging of societies, and America’s role as a solesuperpower with no near peer— that willdetermine the paths of nations and the lives ofcountless millions.

• The U.S. and China will be the world’s two indispensable economies, dominating the course of globalization.

• Globalization will continue to shift heavy manufacturing and millions of high-end service jobs from advanced countries like the U.S., to China, India, Indonesia, Mexico, Romania, Turkey and other developing nations.

• Europe’s major nations and Japan will face the prospect of serious economic decline and criticalproblems in their retirement pension systems, pushing them further towards the periphery of global economic and geopolitical power.

• Every major country—the U.S., Europe, Japan, China—will face critical problems maintaining their health care systems, and the entire world will face a slow-motion crisis over energy suppliesand the need to confront climate change.

In an unstable world, Robert Shapiro's Futurecastis a necessary road map to the coming years.

Future Minds

Publisher & date: Nicholas Brealey Publishing(November 16, 2010)By: Richard Watson ISBN-10: 185788549X ISBN-13: 978-1857885491

Publisher & date: Oakhill Press, 1998 By: Joseph Coates, Andy Hines, John MahaffieISBN: 1886939098

2025

Future Cast

Publisher & date : St. Martin’s Griffin Press, 2009By: Robert J. ShapiroISBN: 9780312352424ISBN: 10. 0312352425

2030

2040

2030

2040

BITSATOM

S

RELATIVE IMPORTANCE

CONSUMER IM

PACTCLUSTER OF TECHNOLOGIES

The node size indicates the predictedim

portance of a technology.The outline of a node indicates a consum

er im

pact larger than the technological novelty.A jagged outline indicates a cluster of sim

ilar technologies grouped together.

World population: 8 billion

Source: U.N. – http://bit.ly/7nqQkS

BRICs GDP overtakes the G7Source: Goldm

an Sachs – http://bit.ly/nc9Wqj

Exabyte storage standardSource: http://bit.ly/kPM

KMb

Terabit internet speed standardSource: http://bit.ly/kPM

KMb

World population: 9 billion

Source: U.N. – http://bit.ly/7nqQkS

Source: http://bit.ly/6MoQJc

$ 1.000 computer reaches the

capacity of the human brain

(± 1015 calculations per second)

Verticalfarm

ing

Sea-steading

Desalination

Carbonsequestration

Climate

engineering

Arcologies

Lunaroutpost

Mars

mission

Solarsail

Spaceelevator

Thoriumreactor

Travelingw

ave reactor

Biomechanical

harvesting

Artificialphotosynthesis

Space-basedsolar pow

er

Nano-generators

Enernet

Programm

ablem

atter

Molecular

assembler

Biomaterials

Nanowires

Anti-agingdrugs

Stem-cell

treatments

Nanomedicine

Artificialretinas

Gene therapy

Hybridassisted lim

bs

Domestic

robots

Embodied

avatars

Swarm

robotics

Utilityfog

Reprogramm

ablechips

Skin-embedded

screens

Retinalscreens

Optogenetics

Neuro-inform

atics

Imm

ersivevirtual reality

Telepresence

Interplanetaryinternet

Exocortex

Remote

presence

VR-onlylifeform

s

Machine-

augmented

cognition

Last updated:2012-02-25

BYSA

MAP THE FUTUREAs a strategic policymaker or stakeholder, you can help map outa desired future for Malaysia

This is an invitation by myForesight® to build a collective future.Do you find this magazine thought-provoking? Do you think wecould have done better? Perhapas you would like us to covera specific angle in the study of Foresight.

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