Brain drain and reversing the trend

Published in BusinessToday, Astro Awani & Asia News Today, image by BusinessToday.

Arguably, the structural problem of brain drain (i.e., outward migration or emigration by the highly-skilled and highly-qualified) in Malaysia is, ultimately, caused by (perceived) institutionalised discrimination (rightly or wrongly).

It’s supposed to be a given based on the evidence, experience and analysis (statistical and logical) and, therefore, the one unifying factor that’s the common denominator pushing Malaysians to migrate in search of better opportunities and quality of life.

The historical roots could be traced back to the tragic May 13 ethnic clashes in 1969 that also saw the beginning of the systematisation and augmentation of affirmative action in favour of Bumiputeras in nearly all spheres of the national life – as embodied by the New Economic Policy (NEP).

Based on anecdotes and research, political and economic implications of institutionalised discrimination that’s biased against the non-Bumiputeras – Chinese Indians, and Eurasians – characterises the motivation and centrifugal force towards so-called “greener pastures”.

There’s no shortage of anecdotes comprising both advice and stories of non-Malays being frustrated and fed up with the situation in the country. It’s common to hear from relatives, friends, neighbours, acquaintances and others about their treatment and experience as non-Malays.

And how voting with our feet is still the most viable option.

Even with the downfall of the Umno-Barisan Nasional regime beginning in 2008, many non-Malays feel that the status quo remains.

Based on general statistics, approximately 55% of non-Malays are to be found in Singapore, with up to 15% preferring Australia alongside 10% and 5% choosing the US and UK, respectively. Other destinations include Hong Kong, Brunei, Taiwan, Canada, and New Zealand. In recent years, China has also been added to the list.

Brain drain has been growing at an average rate of six per cent per annum.

Over the years – since 1970 – there’s now an estimated two million Malaysians living and working abroad.

This hasn’t been compensated with a similar inflow – since as it is we’re heavily dependent on the foreign or migrant labour force for our economic model of development.

No systematic study has been organised so far on this but it’s recognised that the economic costs of the brain drain to Malaysia would be lower GDP and, therefore, in the region of billions by now.

The setting up of Talent Corporation (Talent Corp) within the framework of the New Economic Model (NEM) and the Tenth Malaysia Plan (10MP) to attract talent by positioning Malaysia as a competitive talent hub and also reverse the brain drain particularly via the Returning Expat Programme (REP) was to parallel the role of Malaysian Investment Development Authority (Mida) in attracting capital, i.e., foreign direct investment (FDI).

We already have a single and focal point agency that serves as strategic bridge and gateway for stakeholders in the public and private sectors and armed with the mandate to nurture, attract, and retain talent (p. 92, Talent Road Map 2020).

Moving forward, revitalising the role and function of Talent Corp should be a lynchpin in our fresh effort to reverse the brain drain trend.

In conceptualising the policy measures, reversing and stemming brain drain should be seen as an integral aspect of our human capital development in continuity with past structural reforms.

However, it’s critical also the conceptualisation shifts gear by “45- to 90-degree angle” so that the policies geared towards local talent repatriation is built and developed on the wider policy base of foreign talent attraction.

As correlates, ensuring that Malaysia is a strong magnet for talent, regardless, will be a more productive and effective way of reversing the brain drain (whether in the short- medium- or long-term).

Basically, we need to reverse what lies at the heart of our deeper structural problem, i.e., the shrinking “talent pool” (critical mass of highly skilled and highly-qualified professionals) in the country.

According to Talent Corp, “[i]n contrast to cities that host many expatriates, Malaysia’s highly skilled expatriate base has been shrinking since 2004” at a compound annual growth rate (CAGR) of -9% (p. 83, Talent Road Map 2020).

At the same time, there needs to be proper “preventative” measures that seeks to nip the problem in the bud.

Towards that end, EMIR Research would like focus on the following policy recommendations:

1. Scholarships

Firstly, the “preventative” measures (structural reforms).

Based on the evidence, the grouses and dissatisfaction that leads to the eventual our brain drain lies in education – specifically in the transition from secondary to tertiary education.

Revamping the scholarship practices and tertiary access policy is critical and of utmost priority. A paradigm and cultural shift is called for – that identify nurture talent regardless of ethnic background or profile.

Here, it’s no longer about the Bumiputeras needing to catch up but the nation as a whole.

Public Service Department (JPA) scholarships should be substantially increased for non-Bumiputeras.

In parallel, the scholarship schemes (and bond contracts) under and internship opportunities with government-linked companies (GLCs), government-linked investment companies (GLICs) and subsidiaries (locally, regionally and globally) should be expanded for non-Bumiputeras.

Last but not least, non-Bumiputeras should be groomed for leadership roles in the GLCs, GLICs and their subsidiaries.

In short, reversing the brain drain requires reversing this aspect of imbalanced policy practice in higher educational and employment opportunities.

2. Kuala Lumpur

Secondly, wider policy base of foreign talent attraction.

According to a PWC (PricewaterhouseCoopers) report entitled, “Greater Kuala Lumpur: Bridge between Asia and the World” (2017), Kuala Lumpur is among the top ten cities in Asia. We are ranked third among the upper middle-income countries (34 in total) on the Global Innovation Index (GII) by the World Intellectual Property Organization (Wipo) and at number 12^th in the World Bank’s Ease of Doing Business ranking. Ernst and Young’s “KL Calling 2020” report has highlighted that the capital city’s green and recreational space per capita is projected to double to 20m2 by 2020 with 2.5 million street trees targeted by 2030.

Although the high-speed rail (HSR) project has fallen through, Bandar Malaysia – which would have served as the terminus (i.e., first and last stop) station – should be revived, reconceptualised and repositioned to be KL’s self-contained talent hub together with the Tun Razak Exchange (TRX). This requires concerted effort by Invest KL and Talent Corp, among others, to attract capital and talent tailored-incentives such as special tax concessions.

A similar model to the HLX as a one-stop centre and ‘convergence point’ for technopreneurs and venture capitalists – which represents a PPP with the Malaysian Digital Economy Corporation (MDEC) – could be replicated within Bandar Malaysia.

Other examples include the Ministry of Federal Territories and KL City Hall can implement tax incremental financing (TFI) based on the status of Bandar Malaysia as a special zone – rates collected will be used only for that area.

3. Other smart cities

Thirdly, retaining (and reversing the outflow of) our local talent.

The government should consider forming a Silicon Valley for research and development (R&D) in the bio-medical and life sciences, green and renewable technologies, etc. This would geographically and infrastructurally synchronise with the Malaysia Vision Valley (MVV) 2.0 – which encompasses the new conurbation of Nilai and Seremban with new developments of new townships – thus enhancing liveability and ease of communication.

This Silicon Valley could be established as a Digital and Futurist Hub located in Cyberjaya not least too due to its proximity to both the concentrations of leading higher educational institutions (as key stakeholders as well) and Putrajaya.

The Hub would contain green infrastructure hosting laboratories, sandboxes, incubators, pods, etc. for innovations, experimentations, alongside creation of new and future technologies drawn from artificial intelligence (AI), nanotechnology, additive manufacturing, bio-medical engineering, computer-aided surgery, Geographic Information Systems (GIS), Internet of Things (IoT), Big Data, etc.

The Ministry of Science and Technology (Mosti) should commit to increasing our investment in R&D. Perhaps a target of 3% of our gross domestic product (GDP) should be set as an annual minimum.

According to the World Bank, Malaysia’s R&D &was only at 1.4% of gross domestic product (GDP) in 2016 from below 0.7% in 2006. It declined to slightly below 1% as at 2018 (“Assessing the Effectiveness of Public Research Institutions” 2020). In contrast, South Korea’s R&D spending was almost 5% of GDP, with Singapore at more than 2% of GDP.

The National Science, Technology and Innovation Policy 2021-2030, envisages efforts to intensify Malaysia from being technology users to technology developers intensifying local technology development and applications – which is only possible with higher R&D expenditure.

In the final analysis, higher R&D expenditure coupled with that critical shift in the cultural paradigm send a reliable signal to our local talent abroad that we are steadily evolving to fulfil our potential and ready to welcome them back home.

Jason Loh Seong Wei is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.