Home TA Online 2014 TA Online Let’s talk about brain gain instead of brain drain reversal

Let’s talk about brain gain instead of brain drain reversal

Reasons that prompt the Malaysian brain drain according to a World Bank’s Survey (Reproduced from World Bank, 2011)

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The fallacy in Malaysia’s brain drain policy is that our policymakers seem to take it as an independent phenomenon – like leaking holes that can be plugged by swift, random intervention, says Nicholas Chan.

The brain drain is like this pus-oozing, never healing dermal infection that Malaysia has. Every poke at it is bound to inflict pain and bitterness. A pain that costs around RM8.4bn per year to the country, according to recent research by Penang Institute.

On a personal level, the pain we as citizens have felt, is more psychological than material, as running brains imply that we are losing the better of our “kind” for the benefit of others. There is a sense of defeat and betrayal that is bi-directional: one, on the refusal of some of our best and brightest to remain and serve the country; the other, on the government’s ability and perceived willingness to retain them.

Sentimentality is the reason why brain drain is rarely addressed as net human capital loss; because we care more about how many of our own that we have lost than the counter-forces of how many extra “outside” brains that we have gained. We constantly pressure the government about doing more to reverse the brain drain but hardly query its efforts to woo and retain foreign talents.

Despite its maritime legacy and a subsequent British capitalist enterprise that thrives on a large intake of immigrants, the post-independence nation-state framing of the country impels us not to see ourselves as an “immigrant” nation, but as a nation with hypothetically secured borders.

This has resulted in a common uneasiness towards what is foreign to these borders. Every citizen is seen as a net gain to the nation, which makes it so hard to swallow the exodus as it implies loss, exile and separation.

However, nation-state allegiances are rarely factored in this pan-global movement of and even competition for brains. While undemocratic regimes do tend to push out their citizens – like the mass exodus of the wealthy faced by China – the reasons for most of the skilled and the professionals leaving their country are mostly more micro and personal. It all boils down to the desire for economic stability, social security and justice, plus environmental factors that promote livability like neighbourhood safety, good health care services and high quality education for their children.

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Ironically, the lack of these variables that attract or retain brains is also the consequence of brain drain. Losing brains means losing solutions, innovation and ingenuity to drive public and private sector efforts towards heights in output, management and provision – although sadly, talents do not guarantee equality in provision, as in the case of talent-concentric United States. Ultimately, a cycle of talent loss is created; losing talents means losing good governance and economic dynamism, and the losing of these qualities propagate the losing of more brains.

Nevertheless, talents are as indiscriminate as the job markets that hunt for them. A Malaysian will not automatically do better for Malaysia, as our slew of bad policymakers would attest to. Therefore, as mathematical as it sounds, a net gain of talent, regardless of where it is from, will be a net gain to the country. Therefore, I look with scepticism the idea of framing the brain drain solution as a reversal policy, one that is window-dressed by a “nation-state coherence” narrative. The message is that the country needs you; it also insinuates that you need the country too.

Presumably that is why Talentcorp designed its packages according to country of origin; you have the Returning Experts Programme (REP) for Malaysians aboard, and a separate Expatriates package. The emphasis on brain drain reversal can be seen from the fact that REP participants have multiple tax perks like a 15 per cent flat rate for income tax, tax exemption on cars and personal effects, benefits that would seem unfair to not just the expatriates but also similarly high income-earning local talents that opt to stay back.

The fallacy in Malaysia’s brain drain policy is that our policymakers seem to take it as an independent phenomenon, like leaking holes that can be plugged by swift, random intervention. It is as if by waving its hand on foreign-bound Malaysian talents, they will feel appreciated and come home.

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The World Bank’s investigation on Malaysia’s brain drain problem, as can be seen in the figure below, provides a good clue as to why we are losing our best and brightest and also why we fail to attract new ones. In short, there are major policy shortfalls in addressing productivity and social inclusiveness.

 Reasons that prompt the Malaysian brain drain according to a World Bank’s Survey (Reproduced from World Bank, 2011)
Reasons that prompt the Malaysian brain drain, according to a World Bank’s Survey (Reproduced from World Bank, 2011)

It is wrong to think that these concerns of the Malaysian exodus don’t matter much for the foreign talents. According to the HSBC Expat Explorer Survey 2013, Malaysia ranked poorly (27th out of 37 countries) in the measures of disposable incomes for the expatriates. This matches the two major reasons for the brain drain, which are career prospects (a better career prospect would mean higher-paying jobs) and compensation. And this goes back to our problem of a middle-income trap, which is hampered greatly by our perennial issues of corruption and crony capitalism (Malaysia ranks third in the The Economist’s crony capitalism index), as well as low-performing education.

The case of low-performing education also relates back to the social injustice question (meritocracy is severely compromised by the ethnic-focus affirmative action and also the stifling of academic freedom by the authoritarian one-party state), whose roots can be traced back to the New Economic Policy (NEP).

The NEP also introduced significant pro-Bumiputera protectionist economic policies, like racial quotas for publicly listed companies and those vying for government contracts. The result is that it restricts the interest of foreign companies to invest and set-up high value-added ventures in Malaysia, thus stagnating our income and placing our productivity levels at a bottleneck.

The situation now is that low cost, labour-intensive manufacturers would prefer Southeast Asian destinations like Indonesia and Vietnam, while high-value added, high-income job-generating enterprises will opt for Singapore. The FDI report 2014 from the Financial Times puts Malaysia in 10th place among 11 Asia Pacific countries for foreign direct investments (FDI) by capital investments1 in 2013, only one place above politically tumultuous Thailand. Malaysia’s FDI inflow of US$5.2bn is significantly lower even when compared to Indonesia (US$9.6bn), Vietnam (US$15.3bn) and Myanmar (US$13.2bn).

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(The FDI Report 2014 measures FDI only by new investment projects (greenfield investments) and significant expansions of existing projects. It does not include mergers and acquisitions (M&A) or other equity-based or non-equity investments, which might explain why its FDI value is different from the values provided by United Nations Conference on Trade and Development, which puts Malaysia’s FDI in 2013 at US$12bn. Greenfield investments were known to enhance growth while M&A were shown to have little, or no effect (Harms and Meon, 2012).

Only long-term, landscape-changing policy interventions can reverse the “brain deficit” problem in Malaysia. It can be done on two major fronts: first, introduce economic dynamism by market liberalisation and the active courting of high value-added investments (not high-value real estate properties, for God’s sake) and talents in support of these ventures regardless of their origins. Second, promote social justice by the provision of good, accessible health care and infrastructure as well as greatly expanding and increase the intellectual capacity of our education institutions.

This paranoia about a foreign man helming our corporates and universities is an outdated, postcolonial mentality that will work to our disadvantage. Hire foreign managers, teachers and lecturers if they are proven to be more capable. In the long run, these foreign talents shall breed local ones, as in the case of great reservoir of teachers, academicians and even police officers we inherited post-independence from the British.

Above all, don’t discriminate against talents. Treasure them, no matter foreign or local (that means those staying back in the country should also be unshackled from the constraints against meritocracy). If brains see no geographical and territorial limits in the exercise of their abilities and talents, why should we impose it on them by labelling talents according to these criteria?

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