Upgrading skills at the heart of Malaysia’s new development plan

The latest development plan in Malaysia has placed human capital at its core, setting ambitious objectives to improve professional training and education as the country works towards a broader vision to join the ranks of developed economies by 2020.

Under the 11th Malaysian Plan (11MP), unveiled on May 21st by Prime Minister Najib Razak, a series of policy initiatives have been launched with the aim of enhancing inclusiveness towards an equitable society, improving wellbeing and accelerating human capital development.

The success of the five-year plan, which covers the period between 2016 and 2020, will also be judged within the context of the government’s Vision 2020 programme, which was first set out in 1991 by then Prime Minister Mahathir Mohamad with a view to the country becoming a fully developed nation with 30 years.

Training, education opportunities

Among its objectives, the new development plan foresees annual growth averaging 5.6% in the next five years, higher than the 5.3% growth estimated at the end of 2013 for the same period. At this rate, average monthly household income would rise to RM10,540 ($2800) by 2020, up from last year’s RM6141 ($1630), while per capita GNI would reach RM54,100 ($15,690), raising Malaysia well above the developed economy level set by the World Bank of $12,745.

To achieve this, the 11MP has identified the need to reshape the national workforce, expand the skills pool and redirect the economy towards a higher-rate of production.

As part of the plan, the government is aiming to increase labour productivity from RM77,100 ($20,487) to RM92,000 ($24,446) per worker by the end of the five year period. To meet this target, a higher proportion of the labour force would need to be skilled – 35% by 2020 and rising to 40% by 2030, a level the government says will be achieved through increased spending on education and vocational training. According to the plan, up to 1.5m new jobs will be created between 2016 and 2020, with 60% of these requiring vocational education and training (TVET) skills.

According to a government study, it is estimated that skilled workers make up only a quarter of the labour pool at present, less than half the level of neighbouring Singapore. To address this issue, the 11MP envisions stronger cooperation between the public and private sectors, both through the provision of increased educational and training programmes as well as more opportunities for internships.

“The government will intensify collaboration with industry to increase intake in TVET, improve the quality of programmes and institutions, and improve the sector’s overall branding and profile,” according to the plan.

Bigger role for private sector

The sharpened focus on TVET could provide opportunities for private educational services, while supporting companies through additional funding for vocational training. However, industry participants are calling for greater dialogue between the private and public sectors to help implement changes.

“The government is investing extensively in upskilling Malaysia’s workers, but to achieve this aim there needs to be effective communication between public and private stakeholders,” C M Vignaesvaran, CEO of the Human Resources Development Fund told OBG. The agency, which operates under the Ministry of Human Resources, is charged with spearheading the development of Malaysia’s human capital.

Employers will continue to benefit from soft loans through the Skills Development Fund (SDF), which was first introduced under the previous 10-year plan. The upgraded programme will enable employers to play a larger role in the design of curricula, ensuring that training programmes are user-led, rather than driven by the state. The SDF provision was also doubled in the latest plan to RM1bn ($265m).

To meet the demand for skilled workers, the plan also envisages increasing the annual TVET intake to 225,000 students by 2020, up from 164,000 in 2013.

New vocational programmes will also be directed towards the acquisition of skill sets that match the requirements of a developed economy. Currently, at least 160,000 graduates between the ages of 20 and 24 are unemployed − 40% of the total jobless pool, according to official data issued in mid-May. The challenge for the government and the private sector will be to ensure that young Malaysians who undertake vocational training have a profession to pursue when they graduate.

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