Let talent pool drive investments, says economist

 

Almost 5,000 Malaysians relocated to Australia last year in search of greener pastures. (Bernama pic)

PETALING JAYA: An economist has suggested that Malaysia focuses on getting investments that are aligned with the needs of the country’s talent pool to ease brain drain.

Yeah Kim Leng of Sunway University said the country could channel its efforts to getting high quality direct domestic investments (DDI) and foreign direct investments (FDI) in medium and high-tech industries to generate employment for skilled workers.

Among those industries are chemical and petroleum production, he said.

Yeah said FDIs have accounted for most of the high-tech investments while the contribution of DDIs has been “lacklustre”.

“Investments in the manufacturing sector in Malaysia have overwhelmingly been attributed to FDIs,” he told FMT Business.

He said 97% of high-tech investments and 82% of total investments in the sector in 2020 to 2022 had been FDIs.

“(The contribution of) DDI has been lacklustre and its revival is crucial to complement that of FDI that has been instrumental in the creation of high-skill and high-wage jobs,” he added.

Data from the Malaysian Investment Development Authority (Mida) shows that from 2020 to 2022, investments in high-tech industries amounted to RM202 billion. FDIs accounted for RM196.2 billion of those investments.

Why Malaysians emigrate

Yeah, who serves as an advisor at the finance ministry, said it is talent-driven investments that have helped Singapore to consistently capture a significant proportion of annual FDIs that flow into the Asean-10.

The good news is that Malaysia’s growth has not stagnated. “But we could have reached a higher potential and achieved high-income status earlier had the brain drain been curtailed,” he said.

FMT Business reported recently that more Malaysians are emigrating to Australia for a variety of reasons, including better economic opportunities, political stability and a better quality of life.

According to Statista, a total of 4,890 Malaysians relocated to Australia in 2023, a significant uptick from 2022, when approximately 2,930 Malaysians made the move.

Contrarian view

Fellow economist Geoffrey Williams, who offers an opposing view on brain drain, pointed out that the number of Malaysians leaving for greener pastures abroad is still lower than the global average.

Williams of Malaysia University of Science and Technology pointed to the Human Flight and Brain Drain Index 2023 that shows that Malaysia scored 4.1 points compared with the world average of 5.17.

“Malaysians go overseas because it is better, whereas foreigners come here to replace them because they prefer Malaysia to other options. The talent replacement is net positive, so there is no brain drain,” he told FMT Business.

However, he said, it is becoming increasingly difficult to attract foreign talent due to the less attractive environment in Malaysia.

He cited problems such as the confusion over the Malaysia My Second Home (MM2H) programme as well as restrictions on ownership of companies and even homes.

“Other factors are ‘Malaysians only’ job advertisements, the exclusion of foreigners in professional and leadership roles, social issues and anti-foreigner sentiments,” Williams added. - Mkini