Friday, October 31, 2003
Malaysia faces new learning curve after Mahathir
Reuters Kuala Lumpur, October 31
Malaysian Prime Minister Mahathir Mohamad will hand a recovering economy to his successor Abdullah Badawi on Friday with one glaring element demanding attention -- the quality of its work force.
Despite gross domestic product on track to break 4.5 per cent growth this year and six per cent in 2004, warning signs are there on what lies ahead for the export-dependent economy.
Malaysia's manufacturing-based economic model, inspired by Japan and South Korea's in the 22 years of Mahathir's tenure, has brought sparkling infrastructure and propelled the country to 18th place among the world's trading nations.
But it is showing signs of wear as cheaper competitors such as China and neighbour Thailand surge ahead.
The country wants to shift towards sophisticated services, but does not yet have the work-force skills.
Paul Schymyck, an economist with IDEAglobal.com in Singapore, said Malaysia's firm growth should not distract from the risks faced in its electronics and electrical sector.
"Manufacturing is still a very important part of the economy and their export performance has not done well," he said.
"They have not done as well as some of the other economies in the region that have performed more poorly on growth. That reflects the intense competition."
He said government fiscal pump priming, surging oil and gas and crude palm oil prices had helped Malaysia weather the global downturn better than others. But it masked the underlying trend.
Malaysia has mapped out areas for growth, including information technology, Islamic banking services, tourism, back-office service functions and biotechnology, all of which need skilled labour.
The shift has produced notable scores already, with global banking giant HSBC Holdings Plc recently choosing Malaysia as one of the places to share in 4,000 jobs it is moving from its service centres in Britain.
MANUFACTURING STILL KEY
But with manufacturing accounting for 31 per cent of Malaysian GDP this year, more than four-fifths of exports and nearly 28 per cent of the jobs, the sector will remain critical.
Official figures from the 2000-2010 development plan predict that manufacturing employees will swell from 2.6 million to 3.8 million over the period, many highly skilled.
More sophisticated work will spur demand for 140,000 engineers and more than 330,000 engineering assistants.
Mahathir has said that Malaysia adds too little value when it takes imported components and turns them into exports. Much of the trade is due to foreign investors, he says.
"If the manufacturing industry continues to wait for inventions by other people, they will certainly be left behind and they will fail," he said on Thursday.
Malaysia's 2001-2005 development plan includes 40 billion ringgit ($10.5 billion) for education and training.
Mahathir said the country aimed to have 35 per cent of its labour force with tertiary qualifications by 2010, compared with the 17.1 per cent at present who have a degree or certificate from training after high school.
That would lag Ireland's current level of 43 per cent, and 41 and 36 per cent in the United States and Japan respectively.
With one of Asia's youngest populations -- more than half the 24.5 million people are younger than 25 -- Malaysia's challenge clearly lies in education.
Touchiness about race and religion make education a sensitive subject in multi-ethnic Malaysia, so the job is all the harder. Mahathir grasped the nettle last year by ordering schools to teach mathematics and science in English.
A more open, critical society might also help.
Chandra Muzaffar, an academic and former opposition politician, says schools at the secondary level must also improve, with challenging debates and inquiry for pupils to replace their diet of passive learning.
"I don't think critical thinking is being encouraged in the school system,"
says Chandra.
"If you don't allow people to discuss, debate and open up and so on, we will remain stunted intellectually."
© Hindustan Times Ltd. 2003. Reproduction in any form is prohibited without prior permission