The government today announced tax breaks and other incentives to encourage investment in biotechnology, seen as one of the key drivers of the country's development.

Prime Minister Abdullah Ahmad Badawi announced the establishment of the Malaysian Biotechnology Corporation under a council headed by himself, which will identify and assist good value ventures.

"The Malaysian government has recognised the importance of biotechnology for some time now," he told the opening session of a BioMalaysia 2005 conference in the administrative capital of Putrajaya.

"We see it as one of the key drivers of the country's development, now and for the future."

Noting that in biotechnology "the journey between discovery to cashflow is a long one, sometimes longer than the patience of conventional private sector investors," he pledged strong government support.

"The Malaysian government commits itself today to undertake the role of developer and catalyst of the country's biotechnology sector," he said in a speech announcing a national biotech policy.

Centres of excellence

Abdullah outlined nine "thrusts" of the policy, the first three of which aim to "shift the country's agriculture, healthcare and manufacturing sectors to the high-tech stage."

Others include the establishment of "biotechnology centres of excellence" for research and the application of "competitive 'lab to market' funding and incentives to encourage committed participation from academia and the private sector, including government-linked companies."

The government would provide matching grants for biotech research and development and commercialisation, including financial support in patent application.

"To encourage biotechnology investment from private sector corporations, the government is offering 100 percent group tax relief or deduction on qualifying investments in biotechnology," he said.

To increase access to funds for biotech companies, "venture capital participation will be strengthened and entry to the capital markets will be enhanced (to allow for) the special characteristics of of biotech companies with its long gestation periods and higher risk profiles."

Abdullah said he was determined "to make Malaysia a key player on the world's biotech and life sciences stage" but he was also realistic in acknowledging that the country was a new and small entrant in the global business.

Allocation of RM4 billion

The newly-appointed chairman of the Malaysian Biotechnology Corporation, Ahmad Zaharuddin Idrus, told the conference later that the biotech sector was expected to contribute 2.5 percent of gross domestic product by 2010, four percent by 2015 and five percent by 2020.

"It is anticipated that over the next 15 years, 100 reputable biotech companies will be established in Malaysia," Ahmad Zaharuddin, who is also science advisor to the prime minister, was quoted as saying by the Bernama news agency.

The total public and private investment under the new national biotechnology policy is expected to be around RM30 billion, with 60 percent from the private sector and 40 percent from the public sector, he said.

"Based on global analysis, the government has to play a key role in spearheading the development. As such, an allocation of four billion ringgit is expected for the first five years to undertake the initiatives," he said.