Malaysia: Filling the Skills Gap to Meet the Demands of a Growing Economy

July 20, 2015


To become a high-income country, Malaysia’s work-force development policies have to keep up with the skills demands of a dynamic economy. A World Bank report finds that tapping into the highly educated Malaysian diaspora and skilled expatriates in the country can help provide the talent needed to ensure that skill gaps don’t widen.

-    The number of Malaysians living in OECD countries is increasing – from 121,000 in 1990 to 311,000 in 2010.  
-    Malaysians living abroad that have completed tertiary education fell slightly but remained stable in the last decade – from 56.5% in 2000 to 54.5% in 2010.
-    72% of Malaysians report that career opportunities are their main reason for living abroad.

Middle income countries like Malaysia are liberalizing their immigration and labor market policies to facilitate movement of skilled workers. From China and India to Nigeria and Brazil, countries are eager to tap into talent abroad.  In Malaysia, the government agency Talent Corporation Malaysia Berhad (TalentCorp) is implementing programs to reach out to Malaysian talent abroad and expatriates with sought-after skills.

-    The Returning Expert Program (REP) targets highly-skilled Malaysians abroad who are interested in returning to Malaysia. These include people in a wide range of occupations, from engineers and bankers to specialist doctors and accountants.
-    REP hopes to attract professionals the country needs by providing fiscal and other incentives to their return to Malaysia, such as a 15% flat income tax for five years and permanent residency for foreign spouses and children.
-    The Residence Pass-Talent (RP-T) attracts and retains foreign talent in Malaysia, especially in key sectors like oil and gas, business and education.
-    RP-T offers a range of benefits including a ten-year pass to live and work in the country, flexibility to move from one employer to another, and eligibility for spouses to work.

REP and RP-T are examples of what can be achieved with a rigorous, evidence-based approach to identifying sought-after skills and prioritizing migration management policies. To facilitate the return of more Malaysian professionals from abroad and retain top foreign talent, the report recommends specific improvements to increase the effectiveness of both programs. These include:

-    Focusing more on connecting Malaysians to job opportunities by breaking down information barriers and facilitating interactions between applicants and recruiters, through job portals and career fairs.
-    Developing a common platform to identify and continuously monitor critical occupation and skills shortages that informs migration and workforce development policies and programs.
-    Increasing efforts to meet the broader family needs of returning Malaysians, such as enabling non-national spouses to work and facilitating schooling of children.
-    Expanding the eligibility of expatriates by removing the requirement of a minimum three years of prior experience before working in Malaysia.