WEF: KL policies behind brain drain

THE World Economic Forum (WEF) has revealed something most Malaysians already know - that affirmative action policies in favour of the bumiputera and a reliance on cheap foreign labour have driven the country's brightest talents to seek opportunities elsewhere, mostly in Singapore.

The Geneva-based body's Human Capital Index, a measure of a country's ability to develop a skilled workforce, ranked Malaysia 22nd in a field of 122 countries.

In an index that evaluated quality of healthcare, infrastructure and education, Switzerland took the top spot, followed by Finland, Singapore, the Netherlands and Sweden. South-east Asian countries on the list include Thailand in 44th place, Indonesia (53rd) and the Philippines (66th).

The report said that Malaysia's affirmative action policies and its dependence on cheap migrant labour have kept it from developing a skilled workforce that can compete with that in smaller, richer Singapore.

It is noteworthy that Prime Minister Najib Razak had homed in on the country's brain drain in his New Economic Model introduced in 2010, and had promised to tackle it through, among other things, a gradual rollback of these policies.

Mr Najib even set up a Talent Corporation, tasked with wooing back skilled Malaysians from overseas.

Even so, affirmative action policies are still in place, although Mr Najib has withdrawn some in the services sector. The policies, already in place for 42 years, tend to make non-Malays feel discriminated against and like second-class citizens in their own country.

Economists have also criticised the policies for stifling Malaysia's potential growth.

Affirmative action was introduced in 1971 when it became clear that the Malays, the majority in the population, held only 2 per cent of the country's wealth. The New Economic Policy was thus aimed at eradicating poverty and at closing the wealth gap between the Malays and the other races.

While huge strides have been made in both areas - mostly through providing widespread access to education - critics point out that the attempt to create bumiputera entrepreneurs has generally benefited only a small coterie of people close to the politically dominant United Malays National Organisation (Umno).

In fairness, however, the policies have not stopped the Chinese, who form 26 per cent of the population, from doing well in business. The richest people in Malaysia are generally the non-Malays.

The report noted that unskilled foreign workers from Indonesia and Bangladesh had left business owners with little incentive to increase wages or to boost productivity.

Frustrated by the lack of opportunities at home, as much as a fifth of the country's most highly educated may have left the country in an exodus that has saddled the country with a lack of skilled professionals in banking, engineering and information technology.

It appears little could change going forward. A hotly contested general election divided the country along racial lines, and an influential, right-wing element has evolved within Umno.

To appease those elements, Mr Najib has had to resort to more affirmative action-type policies; he recently announced a RM20 billion (S$7.84 billion) Bumiputera Economic Empowerment Programme.

At WEF's launch of the report yesterday, its founder Klaus Schwab said that developing skills and talent is the key for a country's future - ironically, the same point made by Mr Najib's New Economic Model.