Research Development Framework & Mechanism for Research Cultivation for Sri Lanka

1. Research Development Framework & Mechanism for Research Cultivation for Sri Lanka Ai Kawamura EX Research Institute Ltd 2 September 2013

2. Contents Research Development Trend in Japan Research Development among Government, Industry and Academia in Japan For Strengthening Research Development Framework in Sri Lanka

3. 1. Research Development Trend in Japan

4. 1.1.International comparison of Research and development (R&D) expenditure • Total amount of R&D expenditure, USA has been the top in the world. • Japan has been spending the largest R&D expenditure to GDP in the world although it decreases after Lehmanshock. 【Total R&D expenditure】 【Total R&D expenditure ratio to GDP】 100 billion JPY (nominal, purchasing power parity conversion) Japan USA Korea 3.4 (08) USA Germany 2.8 (09) Japan17.3 (09) UK 1.9 (08) China 1.5 (08) China14.1(08) Germany 9.6(09) Korea 5.1 (08) UK 4.7 (09) Data: Main Science and Technology Indicators (OECD) and a survey by the Ministry of Internal Affairs and Communications of Japan JPY: Japanese Yen

5. 1.2. International comparison of public & private expenditure ratio • The ratio of Japanese R&D expenditure to GDP is at the highest level (3.6%). • Conversely, the government pay only 20% for the amount and the rest is by the Private sectors including companies and universities. 【Total R&D expenditure to GDP】 【Governmental R&D expenditure to GDP】 of GDP Private Government Private company (70%) Private university (10%) Govern-ment (20%) Japan Korea USA UK China Japan Korea Ger-many Ger-many USA UK China Data: OECD statistics (except Japan), a survey by the Ministry of Internal Affairs and Communications of Japan (for Japan), Year: 2008 (2009 for Japan)

6. R&D expenditure of Japanese companies decreased for 2 years after the Lehman Shock. In 2009, it drastically decreased. • R&D sectors are being restructured to improve efficiency and to make some products in short term development. 1.3 Changes of the R&D environment in Japan 【Total R&D expenditure of the companies】 (100 billion JPY) (Fiscal year) Data: a survey by the Ministry of Internal Affairs and Communications of Japan (for Japan)

7. 1.4 Shorter period of R&D in Japan • 90% of the R&D investment is currently for short term research development, and if this continues, very little chances for innovative new products to come. • According to an inquiry (700 companies), more than 40% of them replied that short-term R&D was increased. Breakdown of R&D conducting companies 10% 90% Improving the technologies (less than 3 years to set up a project) Example: Automobile model changes Spring /Summer model of cell phone “Improving-existing-technology” research “Developing-markets” research “Non-continuous” research Researches involving innovation but the markets are large (5~10 years) Researches involving highly challenging technologies and the market is uncertain(more than 10 years) *Estimated by the answers from top 50 companies in R&D investment to apply to the three categories above

8. 1.5 Importance of long-term projects by the government • Investment ratio in long-term research by public and private sectors in Japan is 7:2. • The government can play a major role in the big risk but big potential research, in which companies cannot invest much • In the past, the government invested much in the technologies which had big risks but potential, leading the private sectors. R&D investment by the companies (1.2 trillion JPY) ○Past big projects  There were long term projects more than 10 years with big investment. <Example> Solar cell (the Sunshine Project) Total 100 billions JPY (1974~1992, 19 yrs) Heat pump (the Moonlight Project) Total 14.3 billions JPY (1978~1991, 14yrs) Fuel cell (the Moonlight Project, the New Sunshine Project) Total 63 billions JPY (1981~2000, 20yrs) 1.2 trillion JPY Total investment in long-term research by public and private (4.4 trillion JPY) Government 7 .. Companies 2 *Data based on a statistics and the answers from companies(2009)

9. 1.6 Importance of Government-let Projects with a Long-term Perspective • World’s most advanced technologies such as solar cell and heat pump were successfully developed with the government’s substantial and dynamic supports with a long-term perspective and private companies’ efforts. R&D as Govt.-led Projects ・No.1 in the global market share between 1999 and 2007. ・The amount of domestic production in 2009 was 1,500 MW(approx. 800 bn.). 2nd in the global market share (14.1%). New Sunshine Plan (1993~2002) Dev. of manufacturing process Input approx. 70 billion JPY Sunshine Plan (1974~1992) Growth substrates(single crystal silicon) etc. Input approx. 100 billion JPY Solar Cell Companies’ own development The First Oil Crisis In 1973 Housing subsidies (1994~) Moonlight Plan (1978~1991) waste heat utilization systems, super heat pumps etc.   Input approx. 14.3 billion JPY • Commercialization of  EcoCute ・ Cumulative sales up to 2009 was about. 2 million units ・ More than 150 billion JPY industry • Subsidies for installation • approx. 78 billion JPY Heat Pump Companies’ own development Commercialization of  ENE FARM Moonlight Plan New Sunshine Plan (1981~2000) Dev. of fuel cell tech, Input approx. 63 billion JPY practical applications system dev, applied research, verifications etc approx. 83 billion JPY Fuel Cell • Subsidies for installation • (2009~) Companies’ own development

10. NEDO’s inside products will contribute to solving environmental/energy problems! NEDO’s 18 products to address environmental/energy challenges Expected to reduce the amount of 130 million kL of crude oil Usagein 10 years (2011-2020) * Energy supply in 2010: 570 million kL/y Expected to reduce 440 million tons of CO2 emissions in 10 years (2011-2020) *JP emits 119 0 mil lion tons/y (2008) The world’s largest wind farm Highly-efficient power generation at waste incineration plants  Eco-cement Photovoltaic power Wind power High efficiency and mega solar waste problems Destruction technology for fluorocarbons Household fuel battery Household heat pump supplying equipment Promotion of energy-saving at high performance industrial furnace manufacturing facilities Lithium-ion battery for vehicles Clean diesel cars Development of heat storage air conditioning systems Digital photocopying machines with less standby power consumption Industrial heat pump  highly-efficient anaerobic biotreatment technology Sulfa free light oil   Membrane separation technology for activated sludge process    Sewage-disposal plant Highly-functional vacuum heat Insulation materials

11. NEDO’s inside product scope 1.7 NEDO’s support approaches Company A Company B NEDO’s R&D Project Targeted to METI ’s FS JST’s R&D Project NEDO’s R&D Project In-house improvement In-house development Put on the Market Put on the Market Company C Company E Grants from NEDO In-house dev. In-house imp. In-house dev. In-house imp. Use the outcomes Put on the Market NEDO’s R&D Project Univ. D D Univ. Put on the Market Company F NEDO’s Verification Projects in Overseas In-house dev. In-house imp. Put on the Market overseas expansion

13. 2. Research Development among Government, Industry and Academia in Japan

14. 2.1 Government initiative • Development of Database of Researchers • Establishment of Technology Licensing Organization(TLO) • Fostering Government – University Coordinators • Establishment of Industrial clusters (18 clusters in Japan): • Each cluster aims at a specific area such as manufacturing, bio, recycle and IT. • A cluster consists of various agencies such as Universities, research institutions, business supporting agencies, government agencies and incubation agencies for venture companies • Universities and companies can be benefitted from matching opportunities to have commercial meetings and exchanging information

15. 2.2 Private companies’ initiative(1) • Comprehensive collaboration with University • Advantages for companies: It creates opportunities for information exchange, networking and identifying technical seeds of the University • Disadvantages: Little substantial outcomes without concrete objectives • Calling for proposals from Universities: Previously as CSR, recently as a part of business strategy to identify the appropriate technology(ies) / researchers for their technical (industrial) needs

16. 2.2 Private companies’ initiative(2) • Banks – University collaboration: Network between banks and universities to assist companies who have technical challenges in their business activities • Others • Company investment for collaboration research which aims at patent acquisition or commercialization • Providing research facility designed based on industrial needs

17. 2.3 Key factors for successful collaboration (from Successful cases) (1) • Intensive communication • Setting the research goal among all the related organizationsby close communication … • Repeat the discussions many times to set the goal among all the related organizations including government agencies • Keeping frequent communication… • Temporary assignment of human resources from company to research institution(at regular intervals, long term) • Sending intern(s) from university to companies • Building up mutual trust… • Regular meeting to make sure continuous project management

18. 2.3 Key factors for successful collaboration (from Successful cases) (2) • General conditions of the successful cases • Technical Leadership is taken by companies. • The case where companies need technology seeds for their new product development rather than just for improving their current activities. • First approach is made by companies based on their business strategy. • Top management of companies have strong interest. • Appropriate cooperative structure of the University. • Enthusiastic key person(s) to take actions.(act as a coordinator between the University and the company)

19. 2.4 Collaboration Management Structure in the case of company’s initiative Company ・Good goal / Business plan ・Identification and selection of the best partner (Researchers) Company ・Good goal / Business plan ・Identification and selection of the best partner (Researchers) Speed, Time, & Cost Sharing the Same Goal and Targets Sharing the Same Goal and Targets Research partner Good technology (good judge is important) Research partner Good technology (good judge is important) Collaboration management Collaboration management [Before Start] Thorough preparation (very important) • [Implementation Stage] • Intensive collaboration management especially through close communication • Sharing the same goal & target Source: Prepared based on Shinko Research report

20. 2.5. Challenges in Collaboration Activities • In general, researchers do not have enough field work and industrial work experiences. • What kind of products have marketing potential • Operation and maintenance work and cost • Economical view point • User friendliness etc • Difference in speed of actions between companies and research institutions (this can also be managed by good coordination and close communication) • Efforts and investment is the must for commercialization of the new products. • Top management policy and philosophy. • Common understanding for the final target and objectives and goal

21. JICA’s Technical Assistance to India: • “Visionary Leaders for Manufacturing (VLFM)” • Project aims at the followings: • Human development in manufacturing industry (Visionary SME) • Fostering Visionary leaders who can change institutions and society • Innovative change of manufacturing in India • Period: 2007~2013 (2nd phase will start) • The first project of government, industry and academia in India • Prof Shoji Shiba, project leader of VLFM was awarded the PadmaShri in March 2012, which is the most honorable award in India.

22. 3. For Strengthening Research Development Framework in Sri Lanka

23. 3. For Strengthening Research Development Framework in Sri Lanka (1) • Government: • Creating matching opportunities between companies and researchers (needs and seeds) • Establishing funding framework for research development (especially the area which has big potential/needs but high risk/long-term research is necessary where companies cannot invest) • Establishing human development scheme to accelerate the interaction between industry and research institutions etc

24. 3. For Strengthening Research Development Framework in Sri Lanka (1) • Universities, Research Institutions： • Cultivating specialists (pressure container , heat exchanger, etc) • Strengthening management system to efficiently conduct the collaboration research between companies • Cultivating the technological seeds which will satisfy the company/industry needs • Companies/Industry： • Taking technical leadership based on the needs for research collaboration with research institutions • Planning and implementing the long-term and firm project plan as a project owner • Top management commitment

25. 3. For Strengthening Research Development Framework in Sri Lanka(2) • All the parties: • Intensive communication among all the parties. • Setting the research goal based on the consensus among all the parties (Repeat discussions) • Keeping frequent communication (including personnel exchange) • Building up mutual trust (including regular meeting) • Each entity should have clear role to achieve the same goal & target. • Having the long term vision to contribute to the society using technologies.

26. Thank you