Malaysia’s brain drain reaching critical stage

Twin problems – Malaysia’s brain drain is exacerbated by a languishing economy at home and as well as attractive work opportunities in countries from the UK to Taiwan. Luke Watson/Wikimedia Commons
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By Vanitha Nadaraj

Even the super-rich are planning to leave Malaysia. A study shows that 26% of Malaysians who have US$30 million of investable assets are planning to migrate within the next 10 years. This is much higher than the average rate of 16% in the region.

The super-rich have been “impacted hard by the challenging economic climate brought upon by the fall in global oil price and ringgit devaluation”, according to The Wealth Report 2016 by global property consultancy Knight Frank.

Economic reasons are the main push. The recruitment agency Hays said that 84% of Malaysian jobseekers are willing to pack up and leave for an overseas job just so that their lives would be better.

Meanwhile, a World Bank study showed that 72% of those Malaysians who have migrated do so for better career opportunities.

More than two million people have emigrated since Malaysia’s independence in 1957. As of 2011, about one million Malaysians are overseas – a substantial number considering that the present population of Malaysia stands at just under 30 million.

There are those who live abroad while retaining their citizenship, and there are those who have renounced their citizenship. A good indication on the proportional increase in Malaysians leaving their country can be deduced from the number of withdrawals from the Employees Provident Fund (EPF). In 2014, there were 1,787 withdrawals by Malaysians leaving the country; in 2015, there were 2,206.

The EPF withdrawal figure is just a drop in the ocean. One million Malaysians have left for greener pastures. The majority of them want to remain as Malaysians and will return to the country once their children have received their education abroad, and when they have made their money.

Push factors

One of the most quoted statistical fact is that about two out of 10 Malaysian professionals eventually leave the country. Malaysia has reached a critical stage in this process of brain drain, and the government needs to formulate workforce policies that will address this matter, to ensure that it attains its goal to be a high-income country within four years.

Gone are the days when Malaysia enjoyed 9% economic growth, back in the 1990s. The country’s economy is now languishing due to an undervalued ringgit that is causing major capital outflows, and is seeing depleting revenues due to plunging commodities prices.

All this is causing businesses to struggle. So far this year, there have been more than 6,500 employees from 114 companies who have been laid off. About 78% of them are from the finance and insurance sectors.

Last year, more than 20,000 employees lost their jobs, primarily from the restructuring of Malaysia Airlines, and also due to the slump in oil and gas prices. There will more people laid off this year, according to the Malaysian Employers Federation.

With growing strain on the economy and on businesses, the lure of greener pastures overseas becomes ever more enticing for Malaysians.

Greener pastures overseas

In 2013, almost half of all the high-skilled Malaysians who moved overseas went across the Causeway, to Singapore. The rest went to Australia, the US, the UK, Canada, among others. These professionals tend to return to the country where they studied.

For the UK, Malaysia is the 13th top country of origin of immigrants, with an estimated 9,000 Malaysians have arrived there to work in 2013. Malaysia is the only Southeast Asian country listed among the top 15 countries of origin of migrants to the UK.

Taiwan may soon be the latest addition in the list of countries benefitting from Malaysians emigrating. Beginning this year, the country has made it easier for overseas Chinese professionals to work in Taiwan, to help overcome its white-collar worker shortage.

Talent is scarce

According to recruitment company PageGroup Malaysia’s managing director Paul Cooper, Malaysia has attracted many international organisations in setting up facilities in the country over the last five years. He attributes this to “improved infrastructure, citizens’ strong education, proficiency in English and relative cost effectiveness”, especially when compared to Singapore in that last attribute.

“If Malaysia continues to see a shortage in talent, these organisations will move away to set up facilities and invest in neighbouring ASEAN markets including Philippines, Vietnam and Thailand though most companies seem to be adopting a wait-and-see approach at present,” he says in an email response to ASEAN Today.

The Malaysian government has indeed realised the lack of talent in Malaysia due to this brain drain. In 2011, it set up Talent Corporation, an agency to address the dearth in talent, and to lure Malaysians overseas to return to meet the manpower needs.

In the last five years, TalentCorp managed to attract a dismal 3,600 professionals and skilled workers back to the country. Its task is getting tougher with the current economic and political situation.

Local businesses need to pull up their socks

The private sector has a role in this. Cooper says: “In order to retain Malaysian talent in the country, companies should drive up strong retention strategies. Local businesses should continue to emulate multinational corporations and looking at non-financial benefits, such as a clear career path and building a stronger company culture, to encourage greater loyalty.”

“What we have seen in Malaysia in the past is a mid-management gap – big bosses and lots of workers. The MNCs have a middle management structure in place, and more local companies should start looking at that to support this shift.”

Cooper also pointed out the edge Malaysia has over Singapore. “The country should also leverage Singapore’s high cost of living, and to encourage companies to place regional and even global positions here.

“More and more initiatives like the InvestKL Principal Hub initiative should be considered for the betterment of the economy,” he adds. The Principal Hub is a centralised base for companies operating as a nerve centre to conduct its regional and global businesses in the Greater Kuala Lumpur region.

TalentCorp needs to restrategise and find ways of overcoming the recent challenges, local businesses need to embrace new management styles that encourage human capital development and more businesses need to be lured into the country.