By Syed Mohamed Arif, Ewanina Effandie & Muhammad Afiq Abdullah

As Malaysia prepares for its future economic landscape, ensuring the development of a future-ready talent pipeline is essential.

The country's focus on sectors like semiconductors, digital technology and manufacturing demonstrates the need for a workforce equipped with both technical and soft skills.

The challenge lies in aligning Malaysia’s workforce capabilities with industry requirements while also addressing talent retention, underemployment and job mismatches.

Semiconductors: a strategic priority

Malaysia's National Semiconductor Strategy (NSS) is at the forefront of efforts to develop a highly skilled workforce for the country’s burgeoning semiconductor industry.

The NSS aims to foster 60,000 highly skilled engineers and establish 10 local companies specialising in front-end semiconductor processes. This ambition places a significant emphasis on building technical expertise in Malaysia to reduce reliance on foreign talent.

However, current trends show that Malaysia produces around 5,000 engineers annually, yet many graduates face underutilisation and job mismatches.

Moreover, 60 per cent of Malaysian employers report challenges in retaining top talent, with many engineers seeking job opportunities overseas due to better financial benefits and improved quality of life.

Foreign direct investment (FDI), which constituted 99.2 per cent of investments in the electrical component sector in 2022, highlights the importance of nurturing local talent to meet the demands of international investors.

Retaining top talent amid global competition

One of the key issues facing Malaysia is talent retention

While the country ranks 21st globally and Kuala Lumpur 26th as top destinations for work, 60 per cent of global talent find Malaysia appealing due to job opportunities, financial benefits (53 per cent) and quality of life improvements (49 per cent)

Despite this, a significant portion of local talent remains open to working for foreign employers without a local presence. This trend risks creating a talent drain, with skilled professionals seeking opportunities abroad.

The Malaysian government recognises this challenge and is working to develop sectors such as data centres, with investments from global companies like Microsoft, Google and NVIDIA.

These investments are set to create economic opportunities in AI, cybersecurity and surrounding ecosystems, but retaining local talent remains crucial.

Developing local capacity in these sectors will require government initiatives to upskill the workforce and align personal data protection laws with international standards.

Bridging skills gaps in the digital economy

A key factor in ensuring Malaysia’s workforce readiness is bridging the skills gap, particularly in digital and hybrid roles.

The digital economy is expected to contribute 25.5 per cent of Malaysia’s GDP by 2025, creating 500,000 jobs in sectors like esports, data analytics and cybersecurity.

However, there is a noticeable mismatch between the skills possessed by the workforce and those required by industries. Malaysian universities, in collaboration with MDEC’s Premier Digital Tech Institutions (PDTI), are producing graduates to fill this demand, yet more work is needed to ensure graduates are equipped with both technical and interpersonal skills.

Efforts to close this gap include the New Industrial Master Plan 2030 (NIMP 2030), which targets the creation of 3.3 million jobs in the manufacturing sector by 2030, with a median wage of RM4,510.

The strategy not only focuses on advanced technical skills but also on the creation of a resilient and adaptable workforce that can thrive in a rapidly changing industrial environment.

While the majority of Malaysia’s digital talent resides in urban centres like Kuala Lumpur and Selangor, other states such as Johor, Penang and Perak also have a growing supply of skilled professionals. This regional distribution provides opportunities for companies to tap into a wider talent pool, fostering economic development across the country.

Local talent development should not be limited to high-tech sectors alone but intensified across various industries to drive broader economic growth.

Programmes focused on upskilling and reskilling employees in traditional sectors will be key to ensuring that Malaysia remains competitive on the global stage.

A holistic approach to talent development

Malaysia’s future economic success depends on its ability to cultivate a talent pipeline that is not only technically proficient but also agile enough to adapt to evolving industry needs.

From semiconductors to digital roles, the demand for highly skilled workers continues to grow, but addressing challenges like talent retention, job mismatches and underutilisation will be vital.

By aligning educational outputs with industry demands, fostering innovation in local companies and ensuring a strong talent retention strategy, Malaysia can build a workforce capable of driving the digital and green economy forward.

The NSS, NIMP 2030 and digital economy initiatives offer a framework for creating new opportunities for Malaysians, ultimately ensuring that the country remains a global leader in key industries.

In the 2024 Budget announcement, Prime Minister Datuk Seri Anwar Ibrahim highlighted that the government is allocating RM6.8 billion to develop local talent through Technical and Vocational Education and Training (TVET).

He emphasised the importance of collaboration with industry- and government-linked companies to enhance skills and provide industry-recognised certifications.

Learn how you can be part of the conversation and contribute to impactful change.

Discover more about the Youth Economic Forum 2024 at yef2024.com

-- BERNAMA

Syed Mohamed Arif, Ewanina Effandie and Muhammad Afiq Abdullah are directors of the Youth Economic Forum Secretariat 2024.

The Youth Economic Forum Secretariat is the executive body responsible for coordinating and facilitating strategic discussions on Malaysia's economic trajectory, led by young professionals committed to shaping the nation's future.