This article first appeared in Digital Edge, The Edge Malaysia Weekly on February 24, 2025 - March 2, 2025

Strong domestic demand, foreign investment and growth in semiconductors, artificial intelligence (AI) and digital services have driven a 5.1% gross domestic product (GDP) increase in 1H2024. The digital economy is projected to contribute over 25.5% of GDP by 2025. Malaysia’s rapid economic transformation presents exciting opportunities but, as we celebrate these milestones, a deeper issue lingers beneath the surface — do we have the right talent to sustain this growth?

It is a question I find myself returning to time and again. We can build infrastructure, secure investments and launch national strategies but, if we don’t have enough skilled workers, engineers and digital specialists, we will be running on empty before we even hit the next phase of development.

This is not just a TalentCorp concern but a national priority. Industries driving Malaysia’s future — such as semiconductors, AI, cloud computing and automation — are experiencing severe talent shortages that could limit our ability to capitalise on emerging opportunities.

The good news? We know where the gaps are and we are doing something about it.

In my four decades of professional life, I’ve seen many industries transform, markets rise and fall, and economies shift. But what remains constant is this: A country is only as strong as its workforce.

Malaysia’s talent challenge boils down to three key issues:

1. Skills mismatches and underemployment

Each year, 287,000 graduates enter the workforce but only 48,700 high-skilled jobs are created. As a result, 37% of graduates are underemployed, among the highest rates in the region. The issue isn’t just about the quantity of high-skilled jobs, which the government is addressing with foreign direct investments or FDIs, but producing talents whose skills align with industry needs.

2. Intensifying global competition for talent

Countries like Singapore, South Korea and Vietnam aggressively attract high-skilled professionals, particularly in AI, data science and semiconductor design.

The Johor-Singapore Special Economic Zone (JS-SEZ) could boost Malaysia’s economy but, without local talent development, we risk more Malaysians seeking jobs abroad instead of helping to grow industries domestically.

3. Embracing talent mobility and strengthening retention

While Malaysians gaining global experience is beneficial, Malaysia must remain attractive for career growth. The Returning Expert Programme and MyHeart ease return pathways, while Xpats Gateway facilitates skilled expatriate entry.

However, beyond policy, we need compelling career opportunities, clear pathways and a thriving talent ecosystem, positioning Malaysia as a preferred place to work, innovate and grow.

We can’t afford to sit back and hope these problems solve themselves. We must take decisive action. At TalentCorp, we are doing just that — from schools to universities, from entry-level workers to mid-career professionals.

1. The impact study: Mapping the future of work

In November 2024, TalentCorp launched phase 1 of the Impact Study of AI, Digital and Green Economy on the Malaysian Workforce, covering 10 key economic sectors.

This study provides valuable insights for policymakers and industry leaders, equipping them with the knowledge to prepare Malaysia’s workforce for future challenges. It highlights the need for essential reskilling and upskilling initiatives to support individuals affected by job displacement, ensuring a smooth transition into new roles and fostering sustainable economic growth — leaving no one behind.

As we expand our study to another 11 sectors in 2025, our efforts are further supported by the annually published Malaysia Critical Occupations List (MyCOL), which identifies high-demand jobs at both sectoral and state levels. This ensures a precise alignment between workforce supply and industry needs, helping to bridge talent gaps effectively.

2. Starting young: YES! Rock the School and MyMahir for kids

One of the biggest shifts we need to make is reaching talent earlier.

We often talk about university graduates and working professionals but career awareness and exposure must start much younger. That is why we are bringing our efforts directly into schools through the YES! Rock the School initiative.

Through this programme, we are engaging students in a language they understand, showing them real-world career paths and introducing them to the skills they will need for the jobs of the future.

To further support early career planning, we have expanded our MyMahir platform to include a kids’ version, inspired by our Minister of Human Resources, Steven Sim. He envisioned a clear career guidance tool for his 11-year-old son, something that maps out possible career paths, future skills and job opportunities in a way that children can grasp.

And we’re not doing this alone — we’re working with the Ministry of Education to integrate our findings into school engagement programmes. If we can get students to think about their careers earlier, we can change the game.

3. Bridging the gap between education and employment

Beyond schools, we need to ensure that when students graduate from university or vocational training, they are truly job-ready. Industry and academia play a crucial role in closing the skills gap and preparing Malaysia’s workforce for the future — something our impact study highlights extensively.

A key solution is strengthening internships and structured workplace learning. Many graduates lack hands-on experience, making it harder to transition into the workforce. TalentCorp addresses this through Ilham Kesuma, a national internship ecosystem that expands structured internship opportunities, supports businesses in developing high-quality placements and provides students with paid, career-relevant internships.

Initiatives under Ilham Kesuma, such as the National Structured Internship Programme and MyNext, bridge classroom learning with industry needs, ensuring graduates gain practical exposure before entering full-time employment. The newly introduced 1:3 Internship Policy will further encourage local talent development, supported by the presence of expatriates in the country.

On the academic side, stronger industry-academia collaboration is needed, especially curriculum validation by industry players to ensure graduates develop job-relevant skills. The impact study also suggests extending internship durations from three to six months for deeper industry engagement and introducing project-based learning to enhance problem-solving skills.

At the same time, industry must take the lead in shaping training for future talent. The MyMahir Future Skills Talent Council, an industry-led, sector-based initiative, brings together industry leaders to determine the specific skills and training their sectors require. This ensures that upskilling and reskilling efforts align with real-world industry demands, strengthening Malaysia’s workforce competitiveness.

4. Upskilling and reskilling for the digital economy

Malaysia’s Industry 4.0 vision includes transforming 3,000 factories into smart factories by 2030 but, without a skilled workforce in automation, AI and robotics, these efforts will fall short. As technology advances, reskilling and upskilling are no longer optional but essential.

The impact study highlights 10 key recommendations for workforce development across government, industry and academia. Businesses must take the lead in future-proofing their workforce as those who fail to upskill risk losing talent to more adaptive competitors.

On the MyMahir platform, users can see the jobs that will be impacted. More importantly, they will be able to see what kind of skills they need to pivot to another role. This will be very useful for anyone looking to future-proof their career, explore new job opportunities or stay competitive in an evolving job market.

Sim announced that the Ministry of Human Resources (Kesuma) has set aside a RM3 billion fund across its departments and agencies to support workforce upskilling and reskilling through levies, credits, scholarships and matching grants.

For Malaysia to remain competitive, upskilling must become a lifelong process, not a one-time event.

5. Retaining and attracting high-value talent

Retaining talent goes beyond salaries — it is about creating an environment where professionals see long-term career growth and stability.

MYXpats, Xpats Gateway and MyHeart streamline the entry process for skilled expatriates and returning Malaysians, ensuring seamless workforce integration. Flexible work arrangements further support talent retention, helping employees balance professional and personal commitments while boosting productivity.

Women’s workforce participation is also a priority, with incentives for employers hiring women returning from career breaks. By removing barriers to re-entry and fostering inclusivity, Malaysia can tap into a wider talent pool.

The bottom line? We must strengthen policies that attract, retain and support talent at every career stage, ensuring Malaysia’s workforce remains resilient, competitive and future-ready.

Malaysia has everything it takes to be a global talent hub. But we must move fast and act decisively.

If we fail to address talent shortages, we risk capping our economic potential. If we don’t create the right career pathways, we will continue losing our best and brightest.

But if we align education with industry needs, invest in skills development and create an ecosystem where talent can thrive, Malaysia will be unstoppable.

A familiar saying goes, “We can’t keep doing the same things and expect different results”. If we want real progress, we must be willing to rethink old ways, embrace fresh perspectives and take decisive action. The future will not wait and neither should we.

Thomas Mathew is the group CEO of Talent Corporation Malaysia Bhd (TalentCorp), an agency under the Ministry of Human Resources 

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