Will Malaysia's brain drain block its economic ambitions?

Willson Lee
Image caption Willson Lee left his businesses in Malaysia to join the restaurant industry in China

Willson Lee is a proud Malaysian, but he left the country five years ago.

The Japanese grill in Hong Kong's crowded district of Causeway Bay is just one of a handful of restaurants he now runs in China.

Over plates of marbled beef, Mr Lee explained that he used to have businesses in Malaysia ranging from gold mining to stem cell banking.

But he left in 2008 because, he said, a policy favouring the Malay-majority over ethnic minorities was "blatantly abused" to enrich those in power.

The policy, he said, meant that his companies had fewer opportunities, something that hurt profits and left him and his partners demoralised.

Mr Lee is part of what the World Bank calls an "intense" brain drain problem that could hurt Malaysia's ambition to become a high-income economy by 2020.

Most of those who leave are ethnic Chinese, like Mr Lee, or Indian. They make up a third of Malaysia's population of 29 million people.

Many are propelled from the country by long-standing policies that give preferential treatment to ethnic Malays in areas from housing and education to government projects.

The objective is to re-distribute 30% of the country's wealth into the hands of Malays and indigenous groups, collectively known as the Bumiputras, because they lag behind the ethnic Chinese.

Although a certain percentage of listed companies has to be owned by Bumiputras, Mr Lee says this quota is applied to private businesses as well.

The government would often give licenses to a Malay company and he would have to partner with them in order to do business, he said.

"That is standard practice throughout Malaysia," he said.

'Chinese tsunami'

Image caption Many voters are put off by the government's policies that favour ethnic Malays

Prime Minister Najib Razak wants to attract this talent back, but it will be tricky. In polls on 5 May, the disaffected Malaysian Chinese community largely abandoned his Barisan Nasional coalition.

Mr Najib still secured a simple majority despite winning only 47% of the popular vote.

That's because constituency sizes give greater weight to rural Malay voters, who are the core supporters of the governing coalition.

There were also allegations of electoral fraud, which the governing coalition has denied.

Mr Najib's former political secretary and senior visiting fellow with Singapore's Nanyang Technological University, Oh Ei Sun, says the results are disappointing to the Malaysian talent overseas, who are believed to be mostly opposition supporters.

Some flew to Malaysia just to cast their ballots but when the opposition won 50% of the popular vote and still didn't form the government, many went back feeling hopeless, Mr Oh said.

He believes many more professionals may leave the country.

Meanwhile, opposition leader Anwar Ibrahim has been holding well-attended rallies across the country to protest against the results.

Mr Najib tried to sooth the divisions when he unveiled his new cabinet to carry through his ambitious economic reforms started four years ago.

He has billed the line-up as a mix of technocrats, experienced ministers and younger faces.

"Over the past months and years divisions have opened up in Malaysian society. Now it is time for all of us, in government and beyond, to put the bitterness behind us, and work towards national reconciliation," says Mr Najib.

Yet his plea has been drowned out by perceived anti-Chinese comments from the Barisan Nasional coalition and the frustration at the slow pace of reforms to the Bumiputra policy.

In the days following the election, Mr Najib blamed the coalition's weak performance on a "Chinese tsunami".

Image caption Mohamed Khalq says corruption is limiting opportunities for all Malaysians

But to attribute the election results to the racial divide is too simplistic. Analysts say more urban Malays also supported the opposition Pakatan Rakyat coalition, which advocates dismantling race-based quotas.

Mohamed Khalq is one of them. The 23-year-old is studying aerospace engineering under a government scholarship for Malays.

Yet he believes Malays are not sharing in the country's economic spoils because of cronyism. He supports the opposition's drive to clean up corruption.

"If your father is not a minister you cannot get a job with the government," he says. Mr Khalq wants to further his studies in Australia and hopes to find a job there and stay.

Successful returns?

"The number of Malaysians abroad is a significant number," says the head of the government agency Talent Corp, Johan Mahmood Merican.

He estimates that some 300,000 Malaysians, or 10% of the country's tertiary-educated work force, have left in the last decade.

Mr Johan has been tasked by Mr Najib with recruiting some of them back, attracting them with job opportunities and tax breaks.

He says Mr Najib has also reduced some ethnic restrictions as part of his unity campaign under the slogan of 1Malaysia.

He cites the prime minister's move to reduce the requirement for Malay investors to hold a 30% stake in listed companies to 12.5%, with further reduction if companies issue more shares later.

"In terms of the prime minister articulating 1Malaysia... it's a concept that has been backed by real progress," Mr Johan says.

So far, since 2011, more than 1,800 Malaysians have returned under the government programme.

Image caption The government hopes to encourage Malaysians like Dushyan Vaithiyanthan to return

It's a small dent in the brain drain problem, but the governing coalition says it's their most successful attempt yet.

Dushyan Vaithiyanthan, an ethnic Indian, is one of the returnees. He had worked with a global company in India, Norway and Thailand before he was contacted by a leading Malaysian telecom company.

"The call was exciting because being able to work for a Malaysian company and help them transform into a company for the future pulls on your heartstrings a bit more than if you were to work for a Norwegian company," Mr Dushyan said.

"It was exciting to be part of that whole buzz."

Mr Dushyan is glad to be home but he worries about the quality of English-language education in the country for his children, and rising ethnic and religious tensions.

There is still too much uncertainty in Malaysia, he says. He won't rule out leaving the country again just yet.

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