The impact of migration
By Ding Jo-Ann
dingjoann@thenutgraph.com
WITH the recent attack on churches, a Catholic school and a Sikh gurdwara, migration is likely to be on the minds of some Malaysians. Despite government assurances that "everything is under control", diminishing respect for rights as demonstrated by the "Allah" issue has naturally caused consternation among educated Malaysians.
At the same time, Prime Minister Datuk Seri Najib Razak says Malaysia must become a "high-income" economy so that it can stave off decreasing prosperity and standards of living. Indeed, a government-commissioned 2007 World Bank report on Malaysia's education system and economy says Malaysia has "no choice" but to change its economic model.
Malaysia, the report said, can no longer compete with the lower wages in developing countries like China and Vietnam.
But with mass migration and the loss of skilled Malaysians, is it realistic to expect Malaysia to compete with developed economies? Will enough skilled Malaysians stay on so that Malaysia can escape the middle-income trap?
Skilled workers crucial
Malaysian Institute of Economic Research executive director Datuk Dr Mohamed Ariff Abdul Kareem says skilled workers are crucial to move the economy up the value chain.
"When foreigners come looking to invest, they look for people with skills ... If skilled people are leaving to go elsewhere, this will be a spoke in the wheel for us," says Ariff in a phone interview.
Malaysian Employers Federation executive director Shamsuddin Bardan adds that while the number of unskilled foreign workers has increased, the number of skilled expatriates has dwindled.
Services)"In 2000, we had about 80,000 expatriates [in Malaysia]. By 2008, there were only about 38,000. Coupled with that, our professionals are also moving overseas," he says. Shamsuddin tells The Nut Graph in an e-mail interview that there are currently about 785,000 Malaysians working overseas.
Recruitment agency Kelly Services' vice-president and country general manager Melissa Norman confirms that the oil and gas, Islamic banking, and high technology sectors have faced challenges in finding suitable skilled labour.
"Countries such as China, Vietnam, India, Singapore, Australia and certain Middle Eastern countries have benefited from our brain drain," says Norman.
Wider economic ramifications
Other than the skills shortage, mass migration of skilled Malaysians also has wider economic ramifications.
Rating Agency Malaysia's group chief economist Dr Yeah Kim Leng says those emigrating tend to be in the high-income bracket with higher spending capabilities. "[Their] absence will have a negative impact on consumption and consequently on the country's overall domestic demand," he says.
"Emigration also causes a withdrawal of capital," Yeah adds. "When [skilled Malaysians] relocate, they bring with them whatever wealth and savings they have. It would contribute to the outflow of capital from the country."
Low pay, discrimination, corruption
One of the factors affecting Malaysia's unattractiveness to skilled workers is the relatively low wages compared with developed countries.
Shamsuddin says: "In the US, Malaysian professionals could earn about US$100,000 a year, which is about RM340,000 a year. They would need to earn about RM28,300 a month here [to match that]."
In addition to the wage packages, Yeah says emigration can be worsened if there are discriminatory policies and loss of confidence. "Loss of confidence can be triggered by various factors such as rising crime rates, corruption, deteriorating quality of life and general concerns over the longer term prospects of the economy," he says.
"The underlying reasons for migration must be examined. Although most countries face this problem, country-specific reasons need to be looked at in greater depth."
"It's not just monetary," says Ariff. "It goes beyond dollars and cents. [Emigration] is not confined to any particular group. It's everyone; even Malay [Malaysians] are leaving."
Long-term solution
The 2007 World Bank report also cited the lack of scientists and engineers, and lack of capacity for innovation as some of Malaysia's greatest weaknesses in moving to a knowledge-based economy.
"If we can't bring those abroad back home, we have to somehow increase our own supply. It will require a massive shift in the education system to supply these skills in the long term. The system needs to be completely overhauled," Ariff says.
However, he notes that there seems to be a lack of political will in this direction.
Ariff says the lack of skilled workers in Malaysia will be especially felt once economic conditions improve. "Once the economy grows, we will feel the impact because we need [skilled talent] for the economy to expand," he says. "Either we have to bring people home or attract skilled foreigners."
YeahHe notes, however, that employing foreigners is only a stopgap measure.
... and the good news?
With the economic crisis hitting developed nations hard, Yeah posits that emigration to developed countries may have reduced for now. "In fact," he says, "if developing economies can step up growth and lure back their own as well as foreign talents, a [brain drain] reversal may be in the works."
Norman agrees that skilled Malaysians would be returning to Malaysia as a result of the global economic crisis. "The question is, are there sufficient numbers to stem the brain drain?" she asks.
Additionally, Yeah notes that the policies in attracting skilled professionals back to Malaysia have yet to show results. "We have to give it a couple of years, but implementation needs to be more effective."
Shamsuddin encourages Malaysians to return. He argues that since it is still a young nation, many opportunities remain available. However, he says if Malaysians choose not to return, they can still contribute their ideas and expertise from abroad.
Running faster
The 2007 World Bank reports that many of Malaysia's fiercest competitors are working diligently to improve their higher education and national innovation systems. The report states that Malaysia will have to run even faster than its neighbours if it does not want to lose ground, what more to gain ground.
Although the outlook appears daunting, the World Bank report concludes it is by no means impossible. All we need to do, it says, is upgrade our university systems, develop innovative production modes, and address skills shortages that hamper efforts to produce more sophisticated goods and services.
With a UBS Securities Asia Limited report stating that there has been massive capital outflow from Malaysia in the last 12 months, these steps are more crucial than ever to ensure Malaysia's economic survival. But with a government that is constantly mired in issues arising from bad policies favouring majority over minority rights, will we still have the resources to think about global competitiveness, and move to the next level?
By Ding Jo-Ann
dingjoann@thenutgraph.com
WITH the recent attack on churches, a Catholic school and a Sikh gurdwara, migration is likely to be on the minds of some Malaysians. Despite government assurances that "everything is under control", diminishing respect for rights as demonstrated by the "Allah" issue has naturally caused consternation among educated Malaysians.
At the same time, Prime Minister Datuk Seri Najib Razak says Malaysia must become a "high-income" economy so that it can stave off decreasing prosperity and standards of living. Indeed, a government-commissioned 2007 World Bank report on Malaysia's education system and economy says Malaysia has "no choice" but to change its economic model.
Malaysia, the report said, can no longer compete with the lower wages in developing countries like China and Vietnam.
But with mass migration and the loss of skilled Malaysians, is it realistic to expect Malaysia to compete with developed economies? Will enough skilled Malaysians stay on so that Malaysia can escape the middle-income trap?
Skilled workers crucial
Malaysian Institute of Economic Research executive director Datuk Dr Mohamed Ariff Abdul Kareem says skilled workers are crucial to move the economy up the value chain.
"When foreigners come looking to invest, they look for people with skills ... If skilled people are leaving to go elsewhere, this will be a spoke in the wheel for us," says Ariff in a phone interview.
Malaysian Employers Federation executive director Shamsuddin Bardan adds that while the number of unskilled foreign workers has increased, the number of skilled expatriates has dwindled.
Services)"In 2000, we had about 80,000 expatriates [in Malaysia]. By 2008, there were only about 38,000. Coupled with that, our professionals are also moving overseas," he says. Shamsuddin tells The Nut Graph in an e-mail interview that there are currently about 785,000 Malaysians working overseas.
Recruitment agency Kelly Services' vice-president and country general manager Melissa Norman confirms that the oil and gas, Islamic banking, and high technology sectors have faced challenges in finding suitable skilled labour.
"Countries such as China, Vietnam, India, Singapore, Australia and certain Middle Eastern countries have benefited from our brain drain," says Norman.
Wider economic ramifications
Other than the skills shortage, mass migration of skilled Malaysians also has wider economic ramifications.
Rating Agency Malaysia's group chief economist Dr Yeah Kim Leng says those emigrating tend to be in the high-income bracket with higher spending capabilities. "[Their] absence will have a negative impact on consumption and consequently on the country's overall domestic demand," he says.
"Emigration also causes a withdrawal of capital," Yeah adds. "When [skilled Malaysians] relocate, they bring with them whatever wealth and savings they have. It would contribute to the outflow of capital from the country."
Low pay, discrimination, corruption
One of the factors affecting Malaysia's unattractiveness to skilled workers is the relatively low wages compared with developed countries.
Shamsuddin says: "In the US, Malaysian professionals could earn about US$100,000 a year, which is about RM340,000 a year. They would need to earn about RM28,300 a month here [to match that]."
In addition to the wage packages, Yeah says emigration can be worsened if there are discriminatory policies and loss of confidence. "Loss of confidence can be triggered by various factors such as rising crime rates, corruption, deteriorating quality of life and general concerns over the longer term prospects of the economy," he says.
"The underlying reasons for migration must be examined. Although most countries face this problem, country-specific reasons need to be looked at in greater depth."
"It's not just monetary," says Ariff. "It goes beyond dollars and cents. [Emigration] is not confined to any particular group. It's everyone; even Malay [Malaysians] are leaving."
Long-term solution
The 2007 World Bank report also cited the lack of scientists and engineers, and lack of capacity for innovation as some of Malaysia's greatest weaknesses in moving to a knowledge-based economy.
"If we can't bring those abroad back home, we have to somehow increase our own supply. It will require a massive shift in the education system to supply these skills in the long term. The system needs to be completely overhauled," Ariff says.
However, he notes that there seems to be a lack of political will in this direction.
Ariff says the lack of skilled workers in Malaysia will be especially felt once economic conditions improve. "Once the economy grows, we will feel the impact because we need [skilled talent] for the economy to expand," he says. "Either we have to bring people home or attract skilled foreigners."
YeahHe notes, however, that employing foreigners is only a stopgap measure.
... and the good news?
With the economic crisis hitting developed nations hard, Yeah posits that emigration to developed countries may have reduced for now. "In fact," he says, "if developing economies can step up growth and lure back their own as well as foreign talents, a [brain drain] reversal may be in the works."
Norman agrees that skilled Malaysians would be returning to Malaysia as a result of the global economic crisis. "The question is, are there sufficient numbers to stem the brain drain?" she asks.
Additionally, Yeah notes that the policies in attracting skilled professionals back to Malaysia have yet to show results. "We have to give it a couple of years, but implementation needs to be more effective."
Shamsuddin encourages Malaysians to return. He argues that since it is still a young nation, many opportunities remain available. However, he says if Malaysians choose not to return, they can still contribute their ideas and expertise from abroad.
Running faster
The 2007 World Bank reports that many of Malaysia's fiercest competitors are working diligently to improve their higher education and national innovation systems. The report states that Malaysia will have to run even faster than its neighbours if it does not want to lose ground, what more to gain ground.
Although the outlook appears daunting, the World Bank report concludes it is by no means impossible. All we need to do, it says, is upgrade our university systems, develop innovative production modes, and address skills shortages that hamper efforts to produce more sophisticated goods and services.
With a UBS Securities Asia Limited report stating that there has been massive capital outflow from Malaysia in the last 12 months, these steps are more crucial than ever to ensure Malaysia's economic survival. But with a government that is constantly mired in issues arising from bad policies favouring majority over minority rights, will we still have the resources to think about global competitiveness, and move to the next level?
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