Agricultural Innovation in Developing East Asia

Page 135

Enhancing Institutional Capacity for Innovation | 103

support for the development of venture capital, and tax incentives or grants to correct market failures that lead to underinvestment in R&D (OECD 2013). Often, measures to support firms to innovate combine both support to capacity and financing, as explained in the subsequent paragraphs. Policies and instruments to foster greater private investment and inclusion of diverse stakeholders have been applied to varying extents in the region. As discussed in the section “Providing the incentives and breaking the barriers to increase private sector R&D,” significant regulatory and institutional barriers impede firm innovation in developing East Asia. Several measures have been pursued to enable greater private investment and innovation, including R&D-based tax incentives, competitive research grants and support to PPPs, incubators (including IPR protection), and, to some extent, loans and risk capital. Networking support is not prominent; however, many instruments aim to engage diverse actors and thereby provide incentives for networking and partnerships. R&D tax credits hold promise for overcoming market failures. More than two-thirds of OECD members provide tax incentives for R&D. Available evidence on the effectiveness of R&D tax credits is mixed, but they can be an effective mechanism for overcoming market failures resulting in underinvestment in private R&D (Hall and van Reenen 2000). Malaysia, the Philippines, Thailand, and Vietnam offer tax incentives for firms that undertake R&D and provide R&D services, which may also apply to the agri-food sector (box 6.10). Although Indonesia does not have an R&D-based tax incentive scheme, a range of tax incentives are available to Indonesian companies seeking new investments in Indonesia (Ernst & Young 2013; OECD 2017b). Firms (and other innovators) can also be supported in the early stages to overcome the challenges of creating and commercializing innovations. See box 6.11

BOX 6.10

Research and development–based tax incentives for innovation In Malaysia, companies that provide research and development (R&D) services are eligible for Pioneer Status (income tax exemption) or an investment tax allowance for qualifying R&D capital expenditures. A double tax deduction is available for R&D revenue expenditure incurred by companies carrying out in-house R&D or expenditures for the services of approved R&D service providers. There are also a variety of financial assistance schemes. In the Philippines, R&D expenditures may be treated as a current expense, deductible at 100 percent, or a deferred expense ratably distributed over a period of not less than 60 months, as chosen by the taxpayer. Moreover, the 2012 Investments Priorities Plan identified R&D activities as investment priorities that promote the economic development of the Philippines. Enterprises engaged in R&D activities Source: Ernst & Young 2013; OECD 2017b.

(as an R&D service provider) that qualify for registration with the Board of Investments may be entitled to a four-year income tax holiday and other incentives. Thailand provides a 200 percent deduction for the cost of engaging approved Thai R&D service providers with no requirement for foreign-majority-owned companies to own the results of the R&D activities. Companies providing eligible R&D services may also be entitled to other incentives. In Vietnam, newly established companies in high technology, science, and research domains are entitled to a reduced tax rate for 15 years, which can be extended to 30 years, subject to approval. There is also a one-year exemption for income derived from performing R&D, the sale of products during test production, and products made from new technology applied for the first time in Vietnam.


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in East Asia

9min
pages 216-221

interventions in Indonesia

2min
page 210

F.5 Research-extension links and knowledge brokers in Vietnam F.6 Applied Research on Innovation Systems in Agriculture

2min
page 209

F.4 Innovation brokers

2min
page 208

F.3 International networks in East Asia

2min
page 207

E.3 Three-dimensional printing of food and machinery F.1 Foreign private agricultural research and development in

8min
pages 202-205

E.2 Food fortification, reformulation of food, and functional foods

5min
pages 200-201

in East Asia

9min
pages 196-199

D.6 The impact of water users associations on farm production, income, and water savings in northern China D.7 Climate-smart agriculture practices for key crops and

3min
page 188

D.4 Sustainable rice production practices D.5 Precision application of inputs: Innovations and challenges with

3min
page 186

smallholders in China

2min
page 187

D.3 Practices to mitigate environmental risks

2min
page 181

7.3 Good practices for policies on agricultural extension services

2min
page 161

innovation

3min
pages 164-165

innovation

2min
page 163

Vietnam

5min
pages 166-169

B.1 Convergence of One Health with several national and international approaches to managing emerging infectious diseases and other biothreats D.1 Current triple win innovations in use or in the early stages of adoption

15min
pages 172-179

Strengthening innovation policy and governance

2min
page 157

A growing need for transformative innovations

3min
pages 155-156

References

10min
pages 149-154

Notes

6min
pages 147-148

6.4 Enabling environment for agricultural innovation in select countries

7min
pages 144-146

6.12 Agricultural tertiary education reform in China

5min
pages 138-139

6.14 Thailand’s National Innovation Agency

2min
page 142

Importance of the enabling environment to innovation

2min
page 143

innovation

2min
page 136

6.10 Research and development–based tax incentives for innovation

2min
page 135

Innovation capacity and skills for long-term sustainability Better resource use and innovation outcomes from stronger

2min
page 137

services and integration of E-extension

7min
pages 130-132

International collaboration for a regionwide response to agri-food system challenges Returns to innovation increased by reform of agricultural extension

2min
page 129

and the private sector in China

2min
page 128

in transforming and urbanizing countries

5min
pages 126-127

sector R&D

2min
page 125

6.5 Biotechnology research and development in Indonesia

2min
page 123

6.6 Vietnam’s vision for greener high-tech growth

3min
page 124

Asian countries’ response to emerging needs Providing the incentives and breaking the barriers to increase private

2min
page 119

6.4 Drivers of agriculture sector growth in China

3min
page 122

agricultural development

5min
pages 115-116

Notes

2min
page 106

innovations

1min
page 101

References

11min
pages 107-112

Readiness of developing East Asian countries to embrace transformative innovations

2min
page 100

5.11 Emerging but struggling food e-commerce

5min
pages 95-96

5.12 Lab-grown meat and other protein alternatives

3min
page 97

Introduction

1min
page 113

innovation capacities in East Asian countries

1min
page 102

value chain

2min
page 91

5.6 New breeding techniques

7min
pages 86-88

Food consumption and nutrition: From basic sustenance to personalized nutrition The economic, environmental, health, and social feasibility of

2min
page 94

testing

5min
pages 92-93

5.3 Blockchain applications in the agri-food system

2min
page 84

5.2 Vinaphone-managed mobile-based farm assistant

2min
page 83

5.7 Urban agriculture in East Asia’s agri-food systems

3min
page 89

production practices

2min
page 67

environment matters

3min
page 72

agro-industry services

2min
page 73

changing the technology landscape

5min
pages 81-82

examples of digital technology applications

1min
page 80

4.3 Integrated soil-crop management practices

5min
pages 68-69

Limited trade-offs between agricultural innovations that foster environmentally sustainable production and productivity Challenges to smallholders’ adoption of innovations fostering

2min
page 66

by COVID-19

5min
pages 48-49

East Asian agri-food systems need to embrace innovations that foster productivity, sustainability, and health

1min
page 55

Undisputed success of past agriculture productivity and food security achievements

1min
page 63

2.1 The main drivers of emerging infectious diseases

3min
page 50

Threats to the agri-food system’s productivity and sustainability Food safety and persistent nutrition problems as new sources of food

1min
page 43

3.1 Schematic presentation of agricultural innovation system

2min
page 58

management of emerging infectious diseases

2min
page 60

sector and the overall economy

2min
page 59
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