Malaysia's ambitious goal of achieving high-income status by 2028 will be contingent on the workforce migrating from its current low-skill status to skilled and high-skilled.
The World Bank defines a high-income nation as one with a gross national income (GNI) of US$14,005. Malaysia's GNI, while competitive at US$11,997 in 2023, is not among top-tier countries.
A study conducted by Talent Corporation Malaysia Bhd (TalentCorp) highlighted that an alarming 620,000 jobs across 10 key sectors are expected to be impacted by artificial intelligence (AI), digital technology, and the green economy within the next three to five years.
To address the critical gaps in high-growth, high-value (HGHV) sectors caused by a lack of skilled talent, several initiatives have been introduced to ensure these sectors remain competitive and future-ready.
In the 2025 Budget, a record-breaking RM7.5 billion has been earmarked for Technical and Vocational Education and Training (TVET), supporting the National Industrial Master Plan (NIMP) 2030 and the New Semiconductor Strategy (NSS), which aim to drive economic growth, industrial development, and social progress.
SHIFTING GEARS
Khazanah Research Institute senior research associate Dr Mohd Amirul Rafiq Abu Rahim said the focus on AI education, startup development, and attracting foreign investment is a comprehensive approach that not only prepares workers to confront the rapidly changing labour market, but also creates the necessary ecosystem for long-term growth, specifically in the digital economy.
"Targeting the urban poor, rural communities, and indigenous youth will equip our most vulnerable populations to thrive in an ever-evolving economy.
"Additionally, greater investments in the business ecosystem are driving innovation and resilience in key industries.
"Together, these initiatives mark a decisive step towards raising the floor for both individuals and businesses, ensuring sustainable and equitable progress for Malaysia," he told Business Times.
However, Amirul noted that to create a more inclusive and effective skills development strategy, the budget should address key gaps such as regional disparities in access to training, the need for robust measures in identifying industry-specific upskilling, strengthening public-private partnerships, and improving soft skills development.
He said future-ready workforce can be shaped by targeting rural areas with mobile training centres, improving internet and digital connectivity, customising programmes to meet sector-specific needs, and incentivising private sector involvement through co-developed apprenticeship models.
"Additionally, fostering a forward-thinking of lifelong learning, integrating soft skills, and improving the tracking and transparency of training funds, allocated to key segment of training programmes which support the current and future industrial needs, will help ensure that workforce development is equitable, responsive to labour market demands, and inclusive of vulnerable groups like youth, women, older workers, and persons with disabilities," he said.
Amirul said Malaysia can learn from other countries that already have their own strategies in skills development to align the workforce training with industry needs.
For example, Germany emphasises integrated practical and theoretical training for long-term employability, while Singapore invests in lifelong learning with a focus on high-growth sectors, and Australia targets immediate workforce recovery and skills for employability in response to economic challenges.
"These models collectively demonstrate the importance of tailored strategies, multi-stakeholder engagement, and adaptability in maximising the impact of skills development investments," he added.
Institute for Democracy and Economic Affairs (IDEAS) Malaysia economist and assistant research manager Doris Liew said that while many initiatives for TVET are geared toward HGHV sectors, low-skilled workers remain underserved.
This is due to a lack of access to information about training opportunities or pathways to gain knowledge and acquire specialised skills, limiting their chances to join the high-value economy.
"To address this disparity, targeted programmes should be developed such as creating accessible training opportunities tailored to their educational background and job experience.
"This could provide clear pathways to bridge knowledge gaps and advance toward higher productivity roles, while establishing partnerships with employers to ensure that training aligns with real-world job requirements," she added.
Liew said raising the minimum wage is helpful in improving income levels but it does little to address the core issue of productivity as the workforce must also be prepared for future shifts in industrial demand.
"Lifelong learning must be a central tenet to Malaysia's workforce development strategy, with programmes that empower individuals to continuously reskill and upskill to remain competitive in a fast-changing global economy," she said.
Universiti Malaysia (UM) Social Wellbeing Research Centre research fellow Dr Zulkiply Omar said the private sector needs to be more proactive working with TVET to support the initiatives, particularly in creating a win-win situation.
He also suggested that the private sector should be granted an incentive to train and upgrade their technologies.
"In our case, most students have to find an internship opportunity, but this should change. The private sector must be more proactive in recruiting talented students for internships and eventually absorbing them as full-time employees," he added.
PRIVATE SECTOR'S GAMEPLAN
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the industry has undertaken some key initiatives, which include collaborating with skills development institutions like the Penang Skills Development Centre (PSDC), German-Malaysian Institute, Japan-Malaysia Technical Institute and polytechnics.
He said the partnership provides targeted training in semiconductor fields, such as advanced manufacturing and process technology; design and engineering skills; automation and Industry 4.0 integration; quality control and testing; data analytics and digital skills, among others.
He stated that the semiconductor players also actively engage in initiatives such as the National Dual Training System (NDTS), including apprenticeship and internship programmes to ensure workers gain both theoretical and on-the job skills.
Given the shift towards automation and digitalisation, along with the recognition of the need for inclusive growth to prevent displacement of low-skilled workers, Soh said companies are focusing on creating job opportunities for these workers through reskilling and cross-training initiatives to help them transition into higher-value roles.
"Additionally, on-the-job training provides them with continuous learning opportunities that help build their competencies in new fields and areas the company has started to adopt.
"Partnerships with universities and TVET institutions on micro-credentials and certification programmes are another option employers can pursue to enable their low-skilled workers progress and grow within the organization," he added.
Soh stated that industries are increasing their efforts to collaborate with TVET and other higher institutions to be part of training process, aiming to enhance students' employability and provide industries with skilled workers who possess relevant skills and industry exposure, allowing them to be quickly absorbed into the workforce through initiatives such as the Academy in Industry, as well as internship and apprenticeship programmes.