Brain drain has been a huge issue for Malaysia over the last several years. Now a new index released by the World Economic Forum shows that Malaysia is at risk of slipping even further behind, despite recent efforts to attract and retain talent.

Malaysia Singapore

Singapore’s labor force is now ranked as the third best labor force in the world, according to a combination of education, employment, health, and enabling factors. Malaysia’s workforce comes in at a respectable 22, but still lags behind its long-time rival, Singapore. With Malaysia trying desperately to increase the quality and productivity of its workforce, this news suggests that the country has a long way to go.

Singapore’s economy is far more advanced than Malaysia

Singapore’s economy is far more advanced than Malaysia’s and in fact is one of the most developed economies in the world. From high-end manufacturing, to cutting edge pharmaceutical research, the Singapore economy is at the forefront of many industries. This has helped the island nation generate numerous high-paying jobs and opportunities. With a native population of only 4 million people, however, Singapore has long relied on attracting foreign talent to fuel its economy.

One of the key sources of this foreign talent has been Malaysia. Singapore can offer higher wages and arguably a higher quality of life to Malaysians willing to cross the short causeway to live and work in the city-state. A combination of Malaysian affirmative action policies also encourages Malaysians of Chinese and Indian descent to leave Malaysia in search of better opportunities. And Singapore often ends up receiving the best of Malaysia’s talent looking to move abroad.

This news is especially troubling at a time when Malaysia is trying to avoid a middle-income trap. The Malaysian economy has grown at a strong clip over the last several decades, growing, on average, in access of 5 percent. This growth, however, has relied on infrastructure development, commodities, and other low-value added sectors. Further, in order to keep prices for commodities and other products low, Malaysia has long relied on the import of cheap labor from Indonesia and elsewhere.

Malaysia is trying to develop more advanced industries

Now Malaysia is trying to develop more advanced industries, such as IT, but with its best talent heading overseas to higher-paying locales that offer better job opportunities, the country is running into a kind of glass ceiling. How can Malaysia support advanced industries without the talent necessary for those industries to grow?

Singapore, on the other hand, has found a considerable amount of success in developing advanced and high-paying industries. The influx of foreign talent, however, is starting to cause resentment from many Singaporean citizens, some of whom feel like they are foreigners in their own country. Now, the government has begun to slowly make it more difficult to hire foreign workers and is considering further policies to restrict the influx of foreign labor.

If the Singapore government takes this route, however, it may be to the country’s own detriment. Many Western MNCs have chosen to locate their regional offices in the country due to the ability to easily import staff and talent. Further, the influx of foreign talent has helped numerous industries grow at rapid rates, creating jobs for Singaporeans and foreigners alike.