Malaysia has long set its driving economic goal as achieving high-income status and joining affluent Asian nations, such as Singapore and Japan, as a fully-developed country. A recent report by the World Bank, however, has called for urgent education reform, arguing that the country lacks an education system capable of supporting a high-income economy.


Indeed, with other countries emerging across South East Asia and undercutting Malaysia’s low-cost labor advantages, the general feeling is that Malaysia must continue to develop and modernize its economy.

Malaysia does have a compulsory education system, and every Malaysian child is required to attend school for at least six years, with many choosing to attend school through graduating high school. Still, the World Bank has argued that this education system is not preparing Malaysians to compete in a highly competitive global economy where high-end skills are becoming more important than low costs.

The OECD’s recently-conducted Programme for International Student Assessment shows just how far Malaysia is falling behind in the international knowledge race. Malaysia came in at 52 out of 65 countries assessed, beating out Indonesia but still lagging far behind many S.E. Asian nations. Vietnam came in at 17th, while Singapore ranked as number 2 (behind only Shanghai, China, which was measured separately).

Malaysia allocated $17 billion to education

The Malaysian government is allocating a large amount of funding to address the problem, and has launched an ambitious roadmap, the “Education Blueprint”, to try and improve the country’s failing education system. Nearly $17 billion dollars has been allocated to the education system next year, the highest for any single sector.

Still, frequent policy changes and a national economy with built-in affirmative action that favors Malays over Indians and Chinese individuals has held back previous attempts at reform. Previously, Malaysia had one of the better education and college systems in the region. The government decided, however, to shift from education in English to Education in Malay.

The quality of the education system quickly declined, and Malaysia’s once international-renowned universities now lag behind other regional universities. The government has recently tried to shift back towards emphasizing English, which has since emerged as the de facto global language, however the shift is proving to be tumultuous.

Malaysia suffering “brain drain” as best students vacate

At the same time, even those Malaysians that do emerge as the “best and brightest” often head overseas for employment opportunities. Malaysia has suffered from a massive brain drain, which many blame on the affirmative action policies that favor Malays over other races. Many bright Chinese and Indian students chose to take their talents elsewhere in search of better opportunities and employment systems based on merit, not race.

This brain drain has become a massive problem for Malaysia, which loses many of its best and brightest to Singapore, Australia, and elsewhere. As many as 20% of Malaysia’s well-educated citizens head abroad for employment. Worse still, many of these individuals are Malaysia’s most ambitious and driven individuals, as is evident by their drive to seek employment abroad.

Even if Malaysia succeeds in revamping its education system, Singapore and other countries could prove to be the biggest beneficiaries. Unless economic reform goes hand-in-hand with education reform, Malaysia’s brightest students may simply head abroad. Yet this past fall, Prime Minister Najib reiterated and even bolstered the government’s stance on supporting aggressive affirmative action.

Meanwhile, the government offers generous scholarships to Malay students to study in Malaysian universities. This has pushed out better-qualified Indian and Chinese students out of the university system, and often abroad. At the same time, the university system has declined in line with lower quality students who are not selected on merit but instead race.

Malaysia now finds itself at a crossroads. The nation must either implement serious reform or risk falling farther behind its neighbors and competitors. With Laos, Cambodia, and other nations quickly emerging, Malaysia can no longer rely on its low cost labor advantages. Instead, serious economic and education reform is becoming a necessity.