The Malaysian Insider
October 10, 2013

The huge presence of foreign workers in Malaysia has led to static wages, according to the WEF report. – The Malaysian Insider pic, 10 October, 2013.The huge presence of foreign workers in Malaysia has led to static wages, according to the WEF report. – The Malaysian Insider pic, 10 October, 2013.Affirmative action policies and an overreliance on cheap foreign labour have led to Malaysia’s best and brightest leaving to find greener pastures, particularly in Singapore, according to a new report released by the World Economic Forum.

The Geneva-based body’s Human Capital Index evaluates such things as quality of healthcare, infrastructure and education, in order to gauge a country’s ability to develop a skilled workforce.

Its 2013 report ranks Malaysia at the 22nd spot in a list of 122 countries. Topping the list is Switzerland, followed by Finland, Singapore, the Netherlands and Sweden. Asean countries in the list include Thailand which is placed at number 44, Indonesia (53) and the Philippines (66).

The report notes that Putrajaya’s affirmative action policies as well as cheap migrant labour have kept Malaysia from achieving a skilled workforce to compete with its smaller and richer neighbour, Singapore.

The presence of foreign workers, mainly from Indonesia and Bangladesh, has left business owners with little incentive to increase wages or upgrade operations to boost productivity, according to the report.

Recruitment consulting firm Kelly Services has revealed recently that 20% of Malaysia’s highly educated population now opted to leave the country for richer economies, frustrated by the lack of opportunities at home. Many have settled in neighbouring Singapore. The exodus of local talent means that Malaysia faces a shortage of skilled professionals, including bankers, researchers and engineers.

Economists say Malaysia’s economic potential has been stifled by affirmative action policies which favour Bumiputeras. Critics say the policies, introduced in the 1970s to eliminate poverty and close wealth gap between Malays and other communities, have only enriched a handful of individuals close to the ruling coalition.

Prime Minister Datuk Seri Najib Razak has vowed to dismantle the policies, promising economic reforms under the New Economic Model. But his recent announcement of the RM20 billion Bumiputera Economic Empowerment Programme has riled up critics who said he was backtracking on his pledge.

WEF founder Klaus Schwab, in launching the latest report, said developing of skills and talent is the key for a country’s future.

Kelly Services has on the other hand revealed that 60% of foreign immigrants in Malaysia only had primary school education or less. Malaysian universities have recently slipped in global rankings. None of them made it in the top 400 universities in the 2013-14 Times Higher Education World University Rankings. – October 10, 2013.