Malaysia losing skilled talent to overseas markets

 

Talent migration, or “brain drain”, continues to be a major challenge to Malaysia’s human capital development, as the country faces a persistent outflow of skilled local talent abroad. NSTP/MOHAMAD SHAHRIL BADRI SAALI

KUALA LUMPUR: Talent migration, or "brain drain", continues to be a major challenge to Malaysia's human capital development, as the country faces a persistent outflow of skilled local talent abroad.

In its Malaysia Economic Monitor April 2026 report titled "Raising the Ceiling, Raising the Floor: Jobs Agenda as a Productivity Agenda", the World Bank revealed that more than half of the 1.86 million Malaysians living overseas are employed in skilled and semi-skilled occupations.

The report identified Singapore, Australia, the United Kingdom (UK) and the United States (US) as the preferred destinations for Malaysian talent.

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Highly educated graduates in fields such as technology, engineering and management are among those most sought after in developed economies, often recruited through skills-based migration policies.

According to the World Bank, the continued outflow of skilled workers highlights Malaysia's limited capacity to absorb highly skilled talent within the domestic economy.

At the same time, local employers remain heavily reliant on foreign workers, who predominantly fill low-skilled roles.

"Malaysia has a large number of foreign workers, and most of them are low-skilled, meaning the country is effectively a net exporter of skills.

"This suggests that while Malaysia continues to produce skilled workers, some are unable to access high-productivity or high-paying opportunities domestically and instead move to labour markets where their skills are better utilised and rewarded," the report said.

The report also pointed to growing signs of talent migration among Malaysian inventors and innovators.

It noted that Malaysia's innovation capabilities are increasingly being leveraged by foreign firms, as the number of patents created by Malaysians but owned by foreign applicants has risen significantly worldwide.

In contrast, patents owned by Malaysian applicants have remained largely stagnant, while jointly owned patents have declined.

As a result, the share of patents involving Malaysian inventors owned by local entities fell from about 62 to 63 per cent in the early 1990s to below 20 per cent by 2020.

The World Bank further noted that foreign-owned patents involving Malaysian inventors have consistently outperformed locally owned patents in terms of global quality indicators.

"This shows that inventive capability and talent do exist in Malaysia, but they are increasingly being absorbed by foreign companies that are able to offer better-quality opportunities to attract top talent.

"By comparison, Malaysian firms appear less competitive in attracting and retaining the country's best inventors," it said.

Overall, the World Bank said Malaysia's relatively weak performance in technology creation and commercialisation over the past decade suggests that the key constraints lie not in the lack of talent or inventive capability, but in the business environment shaping the growth and competitiveness of domestic firms. - NST