This document provides an introduction to a book on innovation systems in Southeast Asia. It discusses the concept of national innovation systems and how it has influenced policymakers in the region. While the concept was initially developed by European researchers, it has since caught on in Asia. The document then summarizes some of the key findings from chapters in the book that analyze innovation systems in six Southeast Asian countries. Some common themes identified are that governments continue to play a leading role in developing innovation systems, policies still focus on linear models of innovation driven by public research, and efforts are being made to strengthen linkages between actors but with limited success so far. The introduction sets the stage for comparative analyses of national innovation systems in Southeast Asia.

1. Chapter 1
Introduction:
Innovation Systems in Southeast Asia
Apiwat Ratanawaraha
Introduction
More than twenty years after Christopher Freeman’s book on Japan’s
national innovation system (Freeman, 1987), the concept of innovation
systems today has spawned a considerable volume of scholarly literature
and influenced innovation policy makers around the world. Although
European researchers such as Freeman and Bengt-Åke Lundvall are
credited with starting this intellectual tour de force, the idea caught
on, and Asia soon followed suit. Several regional conferences, notably
the annual “Asian Network for Learning, Innovation, and Competence
Building Systems” (ASIALICS), have helped to focus the attention of
researchers and policy-makers on this theme.
The literature on innovation systems in Asia is already
substantial. The National System of Innovation (NIS) concept has
become widely known in this dynamic region through Freeman’s semi-
nal book on Japan and through the work of Freeman and Lundvall.
A growing body of literature specifically on Southeast Asian innovation
systems is also emerging. A number of conference papers, journal ar-
ticles and books have been published. Examples include Rasiah (1999)
on Malaysia’s national innovation system, Intarakumnerd et al. (2002)
on Thailand’s national innovation system, Chairatana and Bach (2003)
on Thailand and Vietnam and on manufacturing innovation activities
in Malaysia and Thailand, Diez and Berger (2003) on regional and
sectoral innovation systems in Malaysia, Singapore, and Thailand, and
Mani (2004) on financing innovation in Malaysia and Singapore. An

2. 2 Introduction: Innovation Systems in Southeast Asia
edited volume by Lundvall, Intarakumnerd, and Vang (2006) examines
innovation systems in a group of Asian latecomers, three of which
are Southeast Asian countries (Indonesia, Singapore, and Thailand).
Academic recognition of the NIS concept is now firmly established.
The increasing influence of the NIS concept in Asian countries
is also apparent in the policy arena, where policy frameworks are evolv-
ing rapidly in an attempt to embrace systemic and structural approaches
to promoting innovation. Six countries in the Association of Southeast
Asian Nations (ASEAN) have already referred to the concept of in-
novation systems in formulating their recent science, technology, and
innovation (STI) policies. These countries include most of the major
economies in the region, namely, Indonesia, Malaysia, the Philippines,
Singapore, Thailand, and Vietnam.
Although such progress is indeed impressive, there are still
considerable knowledge gaps that call for further research. First,
the European innovation system model is based on its own unique
socio-economic, institutional and cultural environment. By adopting
such a model in framing national innovation policies in Southeast
Asia’s vastly different political, institutional and cultural contexts,
policy-makers may have discounted the significance of such factors as
determinants of success.
Second, the levels of analysies in the literature, as well as the
target of policy instruments, are generally the national and regional
levels. Thus, the innovative capacities and competitiveness of nations
tend to be compared using aggregate national-level data, which can
mask wide disparities in development and access to innovation support
structures and services among different areas within each country.
Third, innovation policies in Southeast Asia, even when framed
within the innovation system concept, are generally not well integrated
with other development policies, including those addressing infrastruc-
ture, the environment and poverty eradication. As long as national
innovation policies and their implementation mechanisms do not
achieve policy coherence with existing policy contexts, the overall
impact will certainly be constrained in terms of their potential benefits

3. Apiwat Ratanawaraha 3
for development and their contribution to economic growth and
competitiveness.
These knowledge gaps must be addressed in order to
enhance the concept’s practical value under varying implementation
environments. A detailed analysis of the ASEAN experience in
implementing innovation systems could also provide important lessons
for emerging economies in other regions, precisely because they share
more similarities with one another than they do with the European
innovation systems. Therefore, a research project examining these
issues seems both justified and imperative, at a time when policy-
makers are not yet ready to fully embrace existing models of innovation
systems without tailoring them to fit local contexts. Against such a
backdrop, a three-year policy research project entitled “Towards Innovative,
Liveable and Prosperous Asian Megacities,” was initiated with funding
from Canada’s International Development Research Centre (IDRC).
The first stage of the project comprised an assessment of the
current status of ASEAN innovation systems in six countries, namely
Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The focus was on institutional evolution, the significance and impact of
path dependency, and key factors in the success or failures of innova-
tion systems. The second step is to map the organizational, structural
and institutional factors that define the anatomy and change of city
innovations and systems in six megacities: Bangkok, Ho Chi Minh City,
Kuala Lumpur, Singapore, Jakarta, and Manila. The main tasks are to
identify and link the drivers of creativity, innovation and entrepreneur-
ship, and then to analyze the specific strengths and weaknesses and
drivers of dynamism in each megacity. The third step involves building
future scenarios for ASEAN city innovation systems based on on-line
Delphi survey data and a series of scenario-building workshops. Two
levels of scenarios are envisaged: city level and ASEAN-wide. This step
enhances our understanding of the role of city and foresight methods
in designing appropriate and effective innovation systems.
This edited volume is a product of the first phase of the
project. This book is the first in the series “Chulalongkorn Southeast Asia
Innovation Systems Series.” The second book will focus on city

4. 4 Introduction: Innovation Systems in Southeast Asia
innovations and systems in six megacities in Southeast Asia and
the third on future scenarios of city innovations and systems in
those cities. Leading scholars and practitioners from research and
educational institutions in Southeast Asia contributed to this volume.
Our contributors not only review the existing literature but also assess
the current situations of innovation systems and policies in each country.
This volume offers comparative pictures on innovation systems
in Southeast Asia, as the region develops into a key strategic produc-
tion and service hub for all of Asia. We focus on how each national
innovation system evolves and transforms to join global value chains,
and its trajectory as it shifts toward a more integrated and advanced
innovation system. Our contributors reviewed the current status of
ASEAN innovation systems by exploring institutional evolution, the
impact of path dependency and key factors in the success or failures
of innovation systems in each country.
The review aims to enhance our understanding of the past and
present development of innovation systems in the ASEAN countries,
particularly focusing on the overall paradigm, analytical framework,
sectoral development, change drivers and impacts, and systemic evo-
lution. Individual country reviews contribute to the broader picture of
innovation system development in ASEAN and will lead to the next
stage, that is, the development and application of a common analytical
approach for innovation systems at the ASEAN and city levels.
Analytical framework
In writing each chapter, we asked our contributors to examine five
key aspects of an innovation system. The first aspect concerns the
identification of key actors in the system and their roles in knowledge
creation, diffusion, and utilization. The types of actors could range from
firms, government agencies, universities, research institutes, associa-
tions (industrial, trade and professional), and financial intermediaries
and markets.
The second aspect concerns interactions and linkages among
actors, including (1) inter-firm linkages (both horizontal linkages
between competitors and vertical linkages between producers and

5. Apiwat Ratanawaraha 5
suppliers, and between producers and consumers); (2) linkages between
transnational corporations and local firms; (3) linkages between firms
with different sizes (large, medium, and small firms); and (4) linkages
among tripartite sectors (firms, research organizations, and
government).
The third aspect is the institutional settings that govern
innovation systems, such as legal (competition and anti-trust laws),
intellectual property rights (pro-protection or pro-diffusion), regulators,
and metrology and standards. We also asked our contributors to evalu-
ate the issue of trust (between firms, between firms and other actors),
entrepreneurship, and innovation culture (risk-taking, acceptance to
failure, acceptance of innovation by consumers, etc.)
The fourth aspect relates to systemic learning, structural shift,
external shock, trends, and market sophistication, all of which may
affect the development of an innovation system.
Finally, our contributors examine the innovation system
policy in each country, focusing on whether there are official innovation
policies in the forms of plans, directives, ministerial statements, or other
documents that focus on innovation systems at the national/sectoral/
regional levels. Another related issue is whether these policies/plans
adopt the innovation-system approach, such that systemic failure and
deficiency are addressed. We also asked our contributors to examine
which actors are crucial to determining policy directions and imple-
mentation, and how.
The scope is truly broad, and each paper in this volume may not
address all the above issues at similar depth. Some of them too require
further empirical research beyond the scope of our current research
project. Nonetheless, we hope the papers elucidate the main charac-
teristics of national innovation systems in the six selected ASEAN
countries, and the challenges faced by policymakers. We summarize in
the following sections of this chapter some key findings, highlighting
commonalities and contrasts among the six countries.

6. 6 Introduction: Innovation Systems in Southeast Asia
Overall findings
With the above analytical lenses in mind, a list of findings can be
generalized from the individual chapters, as follows.
Still the traditional paradigm, and the usual suspects
The concept of national innovations systems has become familiar among
a group of Southeast Asian researchers since the late 1990s. Many of
these scholars have connection with Science and Technology Policy
Research (SPRU) at the University of Sussex, where Chris Freeman
taught, and/or Aalborg University where Bengt-Åke Lundvall still
teaches. Many graduates from SPRU and other European schools have
returned to their home countries, influencing the academic and policy
directions in the fields of STI studies and policies. In turn, Europe’s
influence on the STI communities in Southeast Asia is also apparent,
with a number of academic publications published about the status of
national innovation systems in this region.
However, it took years before the concept of innovation system
gained sufficient momentum to be officially embraced and recognized as
a policy framework in Southeast Asia. As of 2011, all the six countries
reviewed in this volume have, to a greater or lesser degree, adopted
some sort of systemic approach to devising and implementing innova-
tion policies. In Malaysia, the concept was described in Malaysia’s
Second National Science and Technology Policy in 2003, one year
before the Ministry of Science, Technology and Environment (MOSTE)
was renamed to the Ministry of Science, Technology and Innovation
(MOSTI) to indicate the importance of innovation. In the case of Thai-
land, the 2005 National Science and Technology Strategic Plan referred
to the NIS concept for the first time, and that Plan formed the basis for
subsequent institutional and policy changes for developing Thailand’s
innovation system policies. In the Philippines, in contrast, it was not
until 2007 at the National Innovation Summit that the NIS concept
gained official recognition among policymakers. As for Indonesia, the
term “National Science and Technology System” dominated the field
and there was a clear separation between S&T policy and industrial
policy. Only in 2008 was the NIS concept officially adopted at the

7. Apiwat Ratanawaraha 7
National Science and Technology Meeting. In Vietnam, the NIS concept
is catching on, as the government prepares for its national STI plans.
It is clear from our contributors’ chapters that the State
continues to play a leading role in developing national innovation
systems. Specifically, the central STI agencies are the key actors that
devise the policy framework and implement policies and programs for
developing innovation systems.
Continuing the linear model of innovation: public-sector driven
and supply push
Even though the region’s governments have paid increasing attention to
the importance of innovation in the past few years, the general concep-
tual model underpinning policy frameworks remains unchanged. The
analyses by our contributors show that with the exception of Singapore,
innovation policies in most countries have still not departed from the
traditional model of innovation, equating innovation with R&D and
prioritizing public R&D institutions and universities.
Typically, policy measures for R&D funding and human capital
development focus mainly on R&D capabilities and outputs within
public R&D institutions, regarded as the main producers and suppli-
ers of technological knowledge. Private firms are considered as end-
users or “consumers” of such knowledge, and have to wait until useful
knowledge spills over from or is actively commercialized by public
R&D institutes. According to this “pipeline” paradigm, private firms
have only a limited role in generating cutting-edge technologies, let
alone in shaping STI policies. Some very large corporations, such as the
Malaysian Palm Oil Board and Thailand’s Siam Cement Group, may
have succeeded in generating their own innovations, but they tend to
be exceptions to the rule.
As our contributors argue, science and technology remain as the
pillars of the STI policy context. As with many development concepts,
the NIS concept was not adopted as a stand-alone concept within STI
policies, but has rather been melded with other concepts in the fields
of industrial and economic development, notably catch-up, triple-helix,
and cluster development.

8. 8 Introduction: Innovation Systems in Southeast Asia
National focus, limited efforts in developing regional and local
innovation systems
For the most part, STI policies of ASEAN countries aim at developing
innovation systems at the national level, and do not attach high priority
to regional and local innovation systems. Indonesia has implemented
various decentralization programs since the late 1990s, and respon-
sibility for a number of governmental functions has been devolved
to provincial and local levels. But when it comes to STI policies, the
central government agencies still hold strong decision-making and
financial powers. As Dudi et al. (Chapter 2, this volume) argue, even
after a decade of decentralization effort, there is little evidence for the
emergence of regional and local innovation systems in Indonesia. Such
is also the case in Malaysia and Thailand. These governments may
have adopted the cluster approach to industrial development in specific
regions, but such policies do not adopt the innovation-system approach,
often resulting in piecemeal support for specific products or industrial
sectors. As such, the main actors in the innovation systems continue to
be the national, not regional or local, entities.
More efforts to create linkages, though still weak
Most countries covered in this volume have set up initiatives to fos-
ter linkages among universities/research institutes and industry. But
these measures have met with limited success: linkages are as yet
insufficiently strong or effective to help private firms enhance their
technology and innovation capabilities. Associations and other bridging
organizations still play limited roles in promoting linkages that aim at
building up internal technological capabilities. The common sentiment
among our contributors is that innovation policies should prioritize the
development of strategic linkages that foster private firms’ technology
and innovation capabilities. Such linkages could then serve as channels
for public R&D institutes to gain information to ensure their research
programs respond to actual industry needs.

9. Apiwat Ratanawaraha 9
Mixed roles of multinational firms in innovation systems
Multinational corporations (MNCs) could potentially play critical roles
in the development of innovation systems in Southeast Asia, as they are
sources of not only technological knowledge and know-how but also
of investment capital. But with Singapore as the only exception, there
is a consensus that multinational firms have in general not contributed
significantly to the development of national innovation systems in the
region.
The question thus arises of how ASEAN governments value
MNCs and their roles in building national innovation systems. Although
this is outside the scope of this volume, we discussed the issue at length
during our working sessions. It seems there are two broad approaches to
STI policies with respect to MNCs: techno-nationalism versus techno-
globalism. While all countries wish to enhance the technological and
innovation capabilities of domestic firms, existing policy frameworks
may not contribute to such an endeavor. The techno-nationalistic pol-
icy frameworks in Indonesia, Malaysia, and Thailand emphasize the
role of public R&D institutions, instead of investing in enhancing the
technological capabilities of large domestic corporations, as is the case
of South Korea. Singapore, in contrast, takes the techno-globalistic
approach to building up its national innovation system by attracting
foreign firms and talent to the country.
Institutional frameworks are taking shape
Governments in all countries covered in this volume have implemented
a variety of institutional changes to support their efforts to build up their
national innovation systems. These include organizational changes, new
regulations and laws, and programs to foster entrepreneurship. A few
generalized features are worth mentioning here.
Expanding organizational boundaries to include innovation,
instead of setting up a new agencies
It was existing S&T agencies, and not the industrial and economic
development agencies, that first adopted the NIS concept and led

10. 10 Introduction: Innovation Systems in Southeast Asia
efforts in setting up and enhancing national innovation systems in each
country. In Indonesia, it was the Ministry of Research and Technology
(MRT) and Indonesian Institute of Sciences (LIPI); in Malaysia, the
Ministry of Science, Technology and Innovation (MOSTI), to which the
term “innovation” was added in 2004 to demonstrate the importance of
Innovation; in the Philippines, the Department of Science and Technol-
ogy (DOST); and in Thailand, the Ministry of Science and Technology
(MOST) and National Science and Technology Development Agency
(NSTDA) spearheaded the innovation policy efforts.
Instead of setting up a new specialized agency, in most
cases, governments expanded the mandates of existing S&T agencies
to deal with innovation policies. This is consistent with the adoption (to
various degrees) by Southeast Asian governments of the “new public
management” model of public administration, which espouses smaller
and more efficient government. There are of course some exceptions. In
the case of Thailand, two new agencies have been set up to take charge
of innovation policies and programs, the National Science Technology
and Innovation Policy Office, and the National Innovation Agency
(NIA), respectively. Yet, these organizations inherit existing institutional
legacies, as staff at both agencies have in many cases transferred from
existing public S&T organizations, rather than from industry or other
development agencies.
This pattern of institutional evolution indicates the overarching
paradigm that dominates the academic and policy circles in South-
east Asia–­ hat in essence, innovation is an extension of science and
t
technology. Policymakers around the region tend to equate innovation
with technology and R&D. What we see as innovation “systems” in
this region have emerged from existing S&T institutions, often in a
piecemeal manner, and still based on the traditional linear innovation
paradigm.
Lack of financial institutions that support private R&D
All countries recognize the importance of financial intermediaries
in innovation systems, but private firms still face financial obsta-
cles that prevent them from engaging in innovative activities. In the