How brain drain distorts the future economy

Malaysia is transitioning towards a knowledge-based economy where the production of goods and services is based primarily on knowledge-intensive activities that will advance technical and scientific innovation.

The Knowledge-Based Economy Master Plan, launched in 2002, was to sustain a rapid rate of economic growth and enhance international competitiveness and for our country to move away from production-based economy. 

Nevertheless, Malaysia will continue to rely largely on low-cost foreign labour. Many industry players are pushing the government to simplify immigration procedures to bring in foreign workers as they are reluctant to wean off from low-cost business models as investments in technological advancement machines and operations necessitate a large sum of money. The resistance to change reflects the dearth of highly qualified positions which contributes towards underemployment among many Malaysians.

Despite the lack of accurate data, it can be assumed that the underemployment rate is larger than it should be given the recent growth of the gig economy. According to the Department of Statistics Malaysia, the number of unemployed graduates is trending up, reaching 33.9% or 1.55 million in 2021, with graduates' unemployment rate standing at 4.1%. 

Research shows that a surplus of unskilled labour will result in excessive labour emigration from the country's educated population, which will eventually impact state productivity and economic growth.

According to Bank Negara Malaysia, Malaysians are not being paid enough for the level of productivity we are producing, with many workers being underpaid. It also reported that Malaysians have been underpaid for decades where Malaysian employees were paid the least for the same level of production compared to their regional peers in Singapore and South Korea.

The issue of brain drain has been a prevailing one, afflicting almost all industries. In essence, it is an external migration of the educated part of the country’s population. Infectious disease expert professor Adeeba Kamarulzaman highlighted that Universiti Malaya loses at least 30 of its medical graduates to Singapore each year, and that it costs the country almost RM1 million per student to train.

In 2011, the government set up TalentCorp to help stem brain drain and attract Malaysians back home via its returning experts programme. It has managed to bring back home only 3,600 Malaysians since its establishment in 2011 – a lukewarm response which shows that despite the initiative and many others, Malaysians who are emigrating are not interested in the prospect of gaining employment here. 

It is time for both the government and employers to reconsider offering highly skilled individuals enticing incentives in order for our talents to remain in this country, such as through financial rewards or attractive career advancement opportunities. They should also recognise highly skilled Malaysian workers in vital sectors that can harness a knowledge-based economy.

Strengthening the social safety net and providing support will make working in this country more attractive, especially for young individuals and families. As is to be expected, young employees in particular place emphasis and high priority on a supportive and positive work environment that encourages rewards innovations, creativity and hard work. 

Malaysia must make significant investments in top-notch training and educational initiatives to guarantee that it has a workforce that is qualified to fulfil the demands of modern economy. The Human Resource Development Fund needs to accelerate its efforts to offer high-quality training and upskilling programmes, publicising its range of projects extensively, and making itself accessible to all working Malaysians. 

With Malaysia's shift towards becoming a knowledge-based economy, technological development allows firms and companies to increase their productivity. Leading technology agencies like NanoMalaysia and the Malaysia Digital Economy Corporation must help businesses and organisations across all industries to increase their readiness, knowledge and adoption of technology. The promotion of research and development initiatives through tax exemption, for instance, will definitely lure multinationals and investors as this move contributes towards cost reduction. 

For companies, tackling underemployment requires them to take the utmost care of their workers. Their employees should be given jobs based on their interests, calibre and academic merits. The designation and post assigned to a worker plays an important role in the performance and efficiency of work.

Companies should acknowledge local talent or highfliers who can drive innovation to unlock workers’ reserve of creative energy. Such energy must be unlocked, deployed and channelled until a circle is created in which the workers and their companies can flourish together. 

A strong political will is, indeed, required to help address this long-standing issue. The government can go on explaining the initiatives to prevent brain drain but these just don’t compete with those opportunities available abroad.

Malaysia has made significant investments in infrastructure but it has yet to achieve scientific development, technological and innovative capability to retain or to recover the human capital that it has generated. Therefore, close cooperation between the government and employers and a review of the existing policies are vital to bringing back and retaining young talents, to push Malaysia towards becoming a high-income nation. 

Adriana Asmaa’ Mohd Ezanee is a research analyst at Institut Masa Depan Malaysia.

The views expressed in this article are those of the author(s) and do not necessarily reflect the position of MalaysiaNow.