TalentCorp CEO talks about stemming the brain drain

By G. Sharmila

TalentCorp CEO Johan Mahmood Merican speaks to KINIBIZ about the talent drain and how successful it has been with its efforts to bring back talent and to improve talent levels in Malaysia.

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In 2011, the Malaysian government established an entity to attract and retain the talent needed for us to become an advanced nation. It named this entity Talent Corp Malaysia (TalentCorp) and gave it the mandate to stem the brain drain the country was and still is experiencing, as well as bring in the foreign talent and improve talent levels in the country.

To run the agency, the government hired Johan Mahmood Merican as the chief executive officer. Johan is a trained chartered accountant and was previously the principal private secretary to the minister in the Prime Minister’s Department of Malaysia and has over 20 years of experience in policy development, corporate finance, and accountancy in Malaysia and the UK.

KINIBIZ caught up with Johan recently for more insights into the brain drain issue and what the entity is doing to address it. Below are excerpts of the interview.

Human resource is not scaleable

KINIBIZ: How successful has TalentCorp been with its programmes to date?

Johan: When it comes to working on human beings, it is not immediately scaleable; it’s not something you can do with 10 people, which allows you to do the same with 100 people. It’s not like carrying out a RM10 million sukuk, and then a RM1 billion sukuk – that level of scalability is not there, that’s maybe one of the challenges we face.

We’ve become famous (or infamous) because of our Returning Expert Programme (REP). But I think the important thing to remember is that when we were first established, it really was about engaging with the private sector investors on how to meet their target (human capital) requirements.

So at the core of it, it’s about building partnerships with the major employers and investors, and linking back to the government agencies. We then look at what are the pools of talent needed. So while it is not practical for one company to engage the entire Malaysian diaspora, while that is one area where we can help, we also look at facilitating foreign talent. That’s very much based on government policy.

Our biggest part of the budget and headcount is actually on graduate employability – there’s always this issue about industry-ready graduates – and last but not least, we have an initiative about optimising Malaysian professionals and increasing diversity in the workplace.

KINIBIZ: So you’re not just about bringing back people from overseas back to Malaysia? How big a part is that segment? It’s because that’s what you’re known for…

Johan: I think that’s what makes the biggest news. But the biggest headcount is (utilised for) graduate employability and the other three programmes have similar numbers, actually, in terms of headcount. The foreign talent bit Residence-Pass Talent (RP-T) programme is growing actually. (Note: The RP-T is a programme that grants highly-skilled foreign talent a 10-year renewable pass to continue to reside and work in Malaysia.)

In terms of approach, when we talk about Malaysians abroad, a lot of our work has been about outreach for our REP and the criteria to facilitate their return. I think one of the things that we’ve been doing, which is partly the result of the World Bank study, is that we need to be doing more to connect with the Malaysians abroad.

So now we’re doing more to work with executive search firms and employers to really reach out to Malaysians abroad, understand their propensity to return, and see what we can do to connect them with job opportunities.

On foreign talent, when we first started in 2011 and we introduced the RP-T, it was part of the prime minister’s administration idea: that if we really want to become a developed nation, we have to be open to this idea of foreign talent.

So rather than seeing foreign talent as taking away Malaysian jobs, we realise that having the diversity of foreign talent helps the economy; it actually helps investments and creates jobs.

Under diversity, we’ve got two new areas: we’ve always been working in the space of women in the workforce, one of our initiatives is flexWorkLife.my, which promotes flexible work arrangements for women. We also have the Career Comeback Grant (an initiative to encourage employers to hire women returning to work after a career break).

We’ve also done some things around upskilling professionals, how we can give incentives to Malaysian employers to upskill their employees. Sometimes it is a risk in a tight labour market, sometimes there is an under-investment in talent because employers say: “I invest in a guy and maybe give him professional certification, it makes him more employable, then he will leave.”

So rather than develop staff, they’d rather recruit. But everyone does that; it is a rather vicious cycle. So part of our initiative is for us to encourage employers to upskill their employees. It’s something we do together with many other government agencies.

Last but not least, in terms of graduate employability, there’s the Graduate Employability Management Scheme programme, which has trained more than 10,000 unemployed graduates since 2009. We do a sort of bridging programme, mainly soft skills but also some technical skills and then place them with companies for on-the-job training.

Probably the biggest chunk of our funding goes into those programmes, but then we also realised that it is not sustainable in the longer run. Because when someone’s already left university and you try to train them after they’ve left, you’ve got to hire private trainers, you’ve got to house them – it’s more expensive and there’s only so much you can do. So when you do it in the thousands, it’s not that sustainable.

So this year we’ve started this shift to less of interventions after they graduate to then see what interventions we can do before they graduate. This is in line with the higher education blueprint; it’s very keen on industry-academia collaborations, so that’s a key focus of ours in terms of the industry trainings that can be done before they graduate, enhancing internships and raising their awareness of careers.

Rewarding Malaysians who have chosen to remain here

KINIBIZ: There have been a lot of criticisms about not rewarding Malaysians who have chosen to remain here. Why are they not getting incentives?

Johan: We always get levied with this argument. The way we then explain it is – I think first we must start off from the premise that we are short of talent. If you speak to major investors, they’re basically saying: “Look, our key constraint from being able to grow and invest faster is the availability of talent.”

Say, Intel in Penang competes with not Motorola or Agilent, it competes with Intel Vietnam, Intel China, etc, and when headquarters decide which project gets sent to which Intel office, they look at talent availability as a key factor in deciding where they expand.

And so, really having available talent is key to us being able to sustain the level of growth and investment we need to become a developed nation. So we then look at what are the talent pools that we can access.

Clearly, Malaysians abroad are a very ideal talent pool. You then have Malaysians who have international experience and if they then return, you also get a sense of a better integration into the workforce. Even the World Bank report says that we should be leveraging on Malaysians abroad, because they already have the skill sets that we need.

So then it comes back to: is it unfair that we have this incentive? When we came out with incentives, we actually mirrored it from the experience and feedback of the companies.

You could say it is unfair – as in, when we send a teacher to Kelantan, why do we give him a relocation allowance as opposed to a Kelantanese who’s teaching at that school? It’s the same thing: there were not enough teachers and so we had to send someone else there, to facilitate the ability and it’s a temporary arrangement.

What’s quite good coming out from the World Bank report is that the glass is half full; they at least conclude that those benefitting from the programme are those that fit the talent gap.

But on the flip side, there are some areas that they have highlighted that we do need to improve and part of that is that we really need to do a lot more in connecting the talent back to opportunities because talent abroad may not have access to jobs. We are accordingly spending more time looking into how we can facilitate that.

Another area the World Bank also highlighted is that even though the people that have been brought in seem to meet the needs, it will be a lot better if we were more systematic in really identifying skill shortages.

They suggested that we come up with a common platform which is transparent, involves companies, and uses national-level data, to determine what really are the key shortages in the country and then use that to coordinate the interventions.

Malaysia is a champion on how much it spends on human capital as a percentage of gross domestic product, but I think we have to be honest – we’re not getting the bang for our buck. The effectiveness of our spending is not there. But then we actually have a lot budgeted.

What the World Bank is implying that if you coordinate your efforts – we have so many instruments such as the REP, the RPT, scholarships, upskilling – if you get everyone to coordinate, we’ll probably be more effective in addressing the shortages.

One of the recommendations in the 11th Malaysia Plan is that Malaysia is going to develop a critical skills shortage list, a coordinated approach to identifying shortages so that it better coordinates the different human capital interventions to address (the shortages).

We’re working together with The Institute for Labour Market Information and Analysis (Ilmia) under the Human Resources Ministry for that and the Economic Planning Unit is overseeing it. (Note: Ilmia was set up in 2012 to conduct research on the local labour market and develop labour market information.)

You have to move away from having to treat your different children fairly. You have to move to a point where what really is required and focus resources on that. All countries take this approach to focusing on what they need. At the end of the day, it’s about using our resources to address the shortages to best help our economy.

Limitations of the RP-T programme

KINIBIZ: Your criteria for the RP-T programme is that the candidate must have a minimum of three years’ working experience in Malaysia. Doesn’t that limit you to a smaller pool of talent?

Johan: Specifically for the RP-T, when we first initiated it, our concept was that someone comes to Malaysia, works for a while and we think he’s pretty good talent, then we give him the ability to stay longer.

So in the criteria for the RP-T, there is even a criteria where the longer you have been in Malaysia, it’s easier for you to get a residence pass. So you need to have a minimum of three years’ working experience in Malaysia before you can apply.

But the World Bank makes a good point: they said that the number of years in Malaysia does not tell you whether the person is more talented or not, so why do you have that as one of your criteria?

In fact, they said the equivalent of a residence pass used by other countries, they use it for people applying from other countries. They said if your end goal is to procure talent that you are short on, you should even waive this three-year minimum and have this residence pass available for people with the right skill sets to apply directly from overseas.

Currently, we don’t have that facility, so they’ve recommended it. But obviously we’ve been aware of the recommendations a little earlier. One area for which we have already started, in a sense, implementing what they’ve suggested is when there is a major investor.

For example, National Instruments was establishing a new R&D facility in Penang. So they said they were going to bring in a core team to help set up and to be here for at least five years. We decided to waive the criteria because this was a major investor and the company was vouching for these people and so we waived the criteria for that particular group of people.

It’s still not quite like how the Australian government does it, whereby if a Malaysian has the skill set, they can apply on their own.

We still need an employer to recommend and employ the individual. It is the right idea, but we also need to be cleverer: when you are taking applications from individuals based overseas, you need to have the processes in place to ensure that you do not bring in a dangerous or dodgy person. We need to have risk mitigation before we implement this particular recommendation.

KINIBIZ: What is the annual budget like for TalentCorp?

Johan: We’ve got different parts of our budget. Our annual operating expenditure budget is RM20 million, so that’s what we get to cover our headcount, office expenses, and all that.

Separately, we have to apply every year to get an allocation for the programmes that we run. Many of our programmes actually don’t even have much costs, giving REP and RP-T programmes as examples.

The one that we need funding for is normally the graduate employability programme, as we send people for training. Off the top of my head that can come up to RM50 million. The biggest chunk of the allocation goes to the graduate employability programme as it involves graduate training.

The more important areas that we focus on – these are different pools of talent focusing on different programmes. Oil and gas uses more foreign talent. Healthcare may work with us to bring back Malaysians from abroad. The financial services sector works quite closely with us in terms of bringing back Malaysians and promoting diversity.

How successful the programmes have been

KINIBIZ: Have you met your KPIs for the REP and RP-T or are you below target?

Johan: For the REP, we remain below target; I think it is an area that we definitely have room to scale up. I think the RPT is very much in line with expectations. (Note: According to the 11th Malaysia Plan, since its inception, TalentCorp has successfully attracted 3,110 Malaysian professionals under the REP and approved 3,210 passes under the RP-T.)

KINIBIZ: What lessons have you learnt from the REP and what improvements are you planning to make?

Johan: For one, we’re responding to some of the recommendations that the World Bank has made in terms of being able to better connect the returning experts with employment. That requires us to be more focused in terms of sector and geography, so then we target a particular market and ensure we can match them to the right employment.

What was interesting was that when World Bank did a survey, 70% actually said career opportunities was the main reason for migrating out of the country. The bank described Malaysians abroad as being “highly educated, professionally opportunistic, and well networked” to react to career opportunities.

We’re not against people working overseas – it’s actually good for a country if you have Malaysians with international experience and with that they come back and contribute.

I think the reason brain drain is a problem is that we are still in a net outflow position. The numbers have gone up, a 40% increase from 2000 to 2010. The issue for us is that the outflow has accelerated and we then see what more we can do to actually achieve a balance.

While it is heartening to know that efforts are underway to stem the brain drain and plug skills gaps in Malaysia, perhaps we can also learn from how things are being done across the causeway to address similar issues.

Yesterday: Financial sector hit by talent shortage

Tomorrow: The Singaporean experience