KUALA LUMPUR (Aug 18): The government will unlock up to RM2 billion in Human Resources Development (HRD) levy funds from Sept 1 to help companies hire Malaysian graduates, strengthen local employment, and tackle brain drain. 

Human Resources Minister Steven Sim Chee Keong said the initiative marks the first time employers will be allowed to use their HRD levy contributions to pay graduate salaries, instead of limiting the fund to training.

“For the first time, employers can channel their levy funds directly to salaries,” Sim said at the Federation of Malaysian Manufacturing’s (FMM) 57th annual dinner on Monday. 

“This is not just about helping businesses manage costs — it is about creating pathways for Malaysian graduates to enter the workforce and thrive.” 

The scheme will initially cover graduates from local universities and Technical and Vocational Education and Training (TVET) institutions, which equip students with industry-relevant technical and practical skills.

Malaysia produces tens of thousands of graduates annually, yet many struggle to find jobs aligned with their qualifications. Government data show nearly one in five fresh graduates face unemployment or underemployment within the first year.

Sim warned that ignoring human capital while chasing technology-driven growth could worsen brain drain. “Our talents are the ‘wheelbarrow’ in the factory story — often overlooked, but essential. If we ignore human capital, we risk losing the very foundation of our growth,” he said.

Beyond hiring, Sim urged employers to adopt more progressive workplace practices to keep local talent from leaving for opportunities abroad. He highlighted surveys showing 40% of Malaysian workers value job flexibility as much as salary, while another 40% prioritise work-life balance.

“These are not luxuries anymore. They are expectations,” he said. “Companies that place value on human capital will be better positioned to retain graduates.”

The event also marked the rebranding of the Federation of Malaysian Manufacturers to the Federation of Malaysian Manufacturing, reflecting a broader mandate to represent the entire manufacturing value chain, including services and other sectors that support industrial growth.

The RM2 billion release is aligned with the government’s Madani economic strategy, which seeks to create 1.2 million high-skilled jobs by 2030 as Malaysia transitions to an AI-driven economy.

“The government wants to walk with you, as your partner, so that we can grow together,” Sim said. “This measure is a message that we are serious about supporting employers and giving our graduates the opportunities they deserve.”

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