ON REPATRIATION AND RETENTION OF MALAYSIAN HUMAN CAPITAL:POLICY CONSIDERATIONS
Human capital is an important resource that must be valued and managed effectively as a means to lift the Malaysian economy to the next level of development in order for the country to achieve the vision and aspirations of a fully developed nation. Hence, it is imperative to prevent the loss of this crucial factor of production and focus on how to attract and hold onto skilled labour.
It cannot be denied that a large amount of this human capital has been lost through brain-drain. It is estimated that there are about 900, 000 Malaysians working overseas.
THE NEED TO ATTRACT AND RETAIN HUMAN CAPITAL
According to the Asian Development Bank (ADB), in Malaysia, the constraint is as much quantity as quality. The report also noted that Malaysian graduates tend to have weak skills in precisely those areas most needed by the type of knowledge-based economy to which Malaysia is directing its efforts to becoming.
The importance attached to human capital development by the Malaysian Government is shown in its 2009 budget which allocated a total of RM47.7 billion or about 23% of the total budget for education and training. In 2008 alone, the government sponsored 17,000 students in universities overseas. Government programmes are also complemented by the private sector.
There is a global competition for talent and human capital. Hence, efforts must be made to retain Malaysians with skills and expertise and those who are working overseas must be encouraged to return.
There is no systematic human capital retention programmes in terms of job placement and career development. Very often these students, including post-graduate students at the masters and doctoral degree levels, feel frustrated and disappointed with their job-postings. Such frustrations and disappointments are driving factors for brain drain. These policies and programmes must be based on rational criteria.
There must be clarity in the formulation of human resource policies. Implementation must be consistent with the spirit and intentions of policies. Many government-sponsored overseas students are allowed to work overseas upon graduation. The longer they stay overseas, the less likely for them to return. In some cases, the spouse, who is a professional is posted away from where the family is residing. Apathy among desk officers to the problems faced by the returning expert and his family may give a negative impression.
The converse phenomenon is Brain Gain. Although no data exist on brain gain, it may be deduced that Malaysia has not attracted any significant number of foreign experts.
Therefore, the Malaysian Government must take a serious look at its current policies and programmes for bringing back Malaysians as well as retaining those with the skills and knowledge that are needed by the country.
Current Repatriation Programmes:
Currently, there are two main programmes targeting the repatriation of human capital.
1) Program to Encourage Malaysian Citizens with Expertise Residing Overseas to Return to Malaysia:
Currently, the Ministry of Human Resources administers a repatriation programme under its “Program to Encourage Malaysian Citizens with Expertise Residing Overseas to Return to Malaysia” (refer to Appendix). This is a broad-based programme which covers a wide spectrum of expertise, targeting Malaysians all over the world. The programme offers three main incentives to encourage Malaysian citizens with certain expertise residing overseas to return home to Malaysia, that is, (i) tax exemption for personal effects, (ii) tax exemption for two cars, and (iii) permanent residence for non-Malaysian spouse and children. As of the beginning of 2007, there were only 985 applications, of which 485 were approved. Of the 485 approvals, 330 have returned. The statistics indicated that only, on average, each year about 50 Malaysians have returned to work in Malaysia. The effectiveness of the programme is hampered by some observed weaknesses:
- The programme does not address the fundamental reasons that cause these workers not to return. Tax exemption for personal effects and cars, may not be strong enough an attraction for repatriation;
- The package of incentives must focus not only on the worker but also on his family as well. It must be realised that Malaysians working overseas may have families. The decision to return involves the family as well. If the family’s needs are not met, the worker will not return. Family needs, among other things include residential location, employment opportunities for working spouses, and schooling for children;
- The current programme does not provide a special ‘green lane’ for the passage of repatriation. The successful applicants have to go through the normal bureaucratic procedures to apply for tax exemption and permanent residence for their non-Malaysian spouse and children. The process can take longer than six months;
- Under the current programme, the worker and his family bear all the risks.
Among the goals of MOSTI is to increase the critical mass of researchers, scientist and engineers (RSE) in the country to achieve a ratio of 50 RSE:10,000 labour force of priority areas by 2010. In this context MOSTI launched its Brain Gain Malaysia (BGM) programme in December 2006. Nevertheless, this programme suffered from similar weaknesses as mentioned above.
- Malaysian scientists working in developed countries expected salaries five times the pay here. Such expectations should be expected, taking into account the differential salary and remuneration systems as well as the foreign exchange factor. It is understandable for the returning Malaysian scientist or expert to want to at least maintain his standard of living and quality of life.
- There is a lack of sophisticated scientific facilities in Malaysia. Highly skilled scientists and researchers will be attracted to the availability of state-of-the-art equipment,, laboratories and facilities.
- Bureaucratic problems such as delays in obtaining immigration clearance.
RETAINING HUMAN CAPITAL IN THE COUNTRY
1) No Job Satisfaction:
Determining factors for human capital retention are related to opportunities for career advancement, intellectual fulfilment in the generation of knowledge and skills sophistication. The programmes for retention of skilled people must address both economic and non-economic factors.
2) More Economic Liberalisation:
An open economy with investor and business-friendly policies are more likely to attract the return of migrants.
3) Work with the Malaysian Diaspora:
Efforts should be made to tap the Malaysian academic and scientific Diaspora and entrepreneur networks to capture benefits and know-how from emigrants overseas through legislative and tax rules that encourage remittances and investment from Malaysians abroad.
4) Establish World-class Research Centres/Universities Free of Bureaucratic Controls:
The research and scientific professionals must be separated from the public service remuneration and scheme of service and be allowed to work based on a culture of knowledge creation and invention.
5) Administrative and Bureaucratic Commitment:
Very often, good ideas and plans are rendered ineffective because of poor implementation. The following administrative and bureaucratic measures are necessary:
a. Increase the salaries of post-doctorates and increase funding for the hiring of university professors to retain talent.
b. The procedures and process must be simplified in order to break down bureaucratic delays.
6) A Distinct Holistic and Attractive Package of Incentives:
Instead of just targeting the worker, the package of incentives must target the worker and his family. The incentives must be attractive enough. In this respect, it may be worthwhile to make benchmark comparisons with the kind of incentives provided by other countries. The package of incentives should also provide assistance:
c. For job-search
d. For business start-ups
e. For family re-location
Malaysia is a resource-rich country, nevertheless, countries that are poor in such resources such as South Korea, Japan, Taiwan and smaller economies like Singapore and Hong Kong have shown that a rational and effective utilisation of their human resources can achieve economic development and join the family of developed nations. In fact, people make the difference. Therefore, Malaysia cannot afford to continue to waste and lose the precious human capital that we have. Promotion should be based on merit. There should be no political inteference. Skills and talents are coloured blind.
 These figures were announced by the then Deputy Minister of Human resources, YB Datuk Abdul Rahman Bakar (NST, 8/2/2007)