Brain drain—the migration of talent across borders—has an impact on Malaysia’s aspiration to become a high-income nation. Human capital is the bedrock of the high-income economy. Sustained and skill-intensive growth will require talent going forward. For Malaysia to be successful in its journey to high income, it will need to develop, attract and retain talent. Brain drain does not appear to square with this objective: Malaysia needs talent, but talent seems to be leaving.
Brain drain is a subject of intense debate and controversy, but surprisingly few studies have characterized the phenomenon in the Malaysian context—be it in terms of magnitude, impact or policy response. What complicates matters further are the statistical discrepancies that limit the quality, availability, timeliness and comparability of international migration data.
In our most recent Malaysia Economic Monitor  (available April 28, 2:00 pm Malaysia time), the Malaysian diaspora—the group of skilled and unskilled Malaysian-born women, men and children living overseas—is estimated conservatively at 1 million worldwide as of 2010. A third among these represent brain drain—those with tertiary education among the diaspora. This is not to suggest that others are not ‘brainy’, but educational attainment is the only available proxy that is consistently available across recipient countries.
To put the numbers in perspective two factors are important: the size of the skills base and the profile of immigration. Because of the narrow skills base, brain drain is intense in Malaysia and is further aggravated by positive selection effects, as the best and brightest leave first. Further, brain drain is not alleviated by compensating inflows, since migration into Malaysia is mainly low-skilled with some 60 percent with primary education or less and the number of high-skilled expats has fallen by a quarter since 2004.
How can policymakers address the brain drain? The challenge for Malaysia, as for many other countries, is to embrace the global mobility of talent. As Malaysia needs talent, it will need to turn the brain drain to its advantage.
Malaysia needs to tackle the underlying determinants of brain drain. Brain drain is a symptom—an outcome of underlying, more fundamental factors. Identifying the factors that drive people to migrate is the first step towards formulating policy responses to brain drain.
Among the factors that matter in Malaysia are differences in earnings potential, career prospects, quality of education and quality of life, relative to overseas locations. However, discontent with Malaysia’s inclusiveness policies is a critical factor too—particularly among the non-Bumiputeras  who make up the bulk of the diaspora.
The productivity and inclusiveness agendas are well understood and policy frameworks have been well-articulated in Malaysia’s transformation programs. Forceful implementation of these programs should assist in strengthening both the demand and supply side of the market for talent, so that productivity and wages levels can rise in tandem. This will also reduce the incentive to emigrate and help attract talent from abroad. Progress on updating Malaysia’s inclusiveness strategies will be equally important as this is perceived by the diaspora as a key push factor that fuels the incentive to leave and serves as a deterrent to return.
Once the enablers are in place, targeted measures are helpful to further facilitate the flow of talent and engage with the diaspora in other ways than through the physical flow of people. However, these targeted measures cannot substitute for more comprehensive measures outlined earlier. Malaysia’s Talent Corporation  is developing new initiatives and recent measures, such as the Residence Pass and Returning Experts Programme, are encouraging. The challenge going forward will be to also find effective ways to connect with the diaspora—as interest is more easily raised than sustained. One immediate example of engaging might be to seek the diaspora’s input on how Malaysia can make a leap forward in embracing the globalization of talent and turning brain drain to its favor.
Photo courtesy of Syafiq Sirajuddin (Pheeque )