KUALA LUMPUR, Sept 14 — As Malaysia strives to be a high-income nation with high technology and Industrial Revolution 4.0 adoption, investments must be supported with policies to support the workforce, especially high-skilled labour, said economists.
Independent economic analyst Prof Emeritus Dr Zakariah Abdul Rashid said Malaysia’s foreign direct investments (FDI) in the first half (1H) of 2021 was commendable and reflected that the economic cycle of investing in the country has returned.
In 2020, total investments approved declined 22.4 per cent at RM164.0 billion, from RM211.4 billion in 2019, weighted by the impact of weak global demands due to the COVID-19 pandemic and the movement control order (MCO), according to data by the Malaysian Investment Development Authority (MIDA).
In 2018 and 2017, it stood lower at RM201.7 billion and RM200.6 billion, respectively, MIDA added.
However, Zakariah said that while it may augur well for Malaysia to have a sustainable economic recovery, more is needed to be done for the country to achieve its goal of becoming a high-level income economic status.
Based on a recent statement by the Ministry of International Trade and Industry (Miti), 367 manufacturing projects worth RM66.9 billion were approved during H1 2021 and the projects are expected to create 32,220 job opportunities in various positions and roles, leading on the path for high-value and skilled employment.
Zakariah opined that although the statement mentioned that it would create 1,367 managerial positions, 4,031 technical professionals and 4,144 skills craftsmen, there was no indication for the remaining 22,678 positions out of the 32,220 job opportunities.
“This represents 70.38 per cent (22,678 positions) which could either mean low skilled or unskilled positions.
“With only a ratio of 30 per cent ratio going into the high skill positions, it will be a constant challenge to transform our economy, thus hindering the country from achieving the target of a high-income status country by 2030,” he said.
According to the Statistics Department, in 2019, Malaysia’s share of high skill employment (those who are employed in managerial, professional or technical roles) is at 27.5 per cent, while the share of semi-skill workers stood at 60.1 per cent and the share of low-skill employment at 12.4 per cent.
Zakariah said to become a high-income nation, the country must work towards reaching at least 50 per cent of a high skilled workforce.
However, the level of below 30 per cent high skill workforce in Malaysia has stayed on for about 15 years and this needs to buck up, he said.
“When we aspire to be a developed nation, we drafted development plans like the 12th Malaysia Plan (RMK12) and Shared Prosperity Vision 2030.
“We also want to join the Organisation for Economic Co-Operation and Development (OECD) club, whose high skilled labour ratio is much higher than ours, therefore, we should benchmark the OECD and make it as our targeted ratio in our plan for the future,” Zakariah added.
Meanwhile, Kenanga Investment Bank head of Economic Research Wan Suhaimie Saidie said the FDI surge in Malaysia for 1H 2021 provides a glimmer of hope but it is still early days as most of these approvals have yet to be fully committed.
During an economic slowdown, he said the rate of implementation could be affected as it could delay real capital commitments plus investors could change their minds based on business and political risk factors.
“Most of the investment applications might have been received before the pandemic and political situation might have been different then,” said Wan Suhaimie.
Quality of investments is another factor that has to be taken into account as well as what are the key sectors that would add long-term value to the economy.
“Most importantly it should generate high-quality jobs as opposed to low paying manufacturing jobs that are usually taken by low skilled foreign workers,” he said.
For H1 2021, Malaysia’s total approved investments recorded RM107.5 billion of FDI and domestic direct investments (DDI) in the manufacturing, services and primary sectors, chalking up a massive jump of 69.8 per cent compared to the same period last year.