HUMAN
RESOURCE DEVELOPMENT IN BIMP-EAGA:
THE ROLE OF UNIVERSITI MALAYSIA SABAH (UMS)
Prof. Dato
Dr. Abu Hassan Othman,
Vice Chancellor,
UMS Wong Hock Tsen,
Lecturer, School of Business and Economics, UMS
INTRODUCTION
Malaysia has experienced significant economic
growth in the past years with inflation kept at a very low level and
capita income increased at nominal terms. The high economic growth
during the period was accompanied by a tremendous structural transformation
of Malaysian economy which resulted from a shift on primary economy
to a more modern industrial one. The manufacturing industry itself
has shown significant changes, from mainly low-technology to high-technology
industries. The rapid expansion of the economy has tightened the labor
market, resulting in higher wages and a higher inflation rate. Malaysia’s
current account of balance of payment has traditionally been characterized
by surpluses in the merchandise account but persistently by deficits
in the services account. Recently, however, the deficits in the services
account has increased, overcoming the surpluses in the merchandise
account and bringing the overall balance of payment at a deficit level.
Hence, exports from Malaysia should be increased and at the same time,
imports need to be reduced to improve the deficit in the balance of
payment.
Given these changes in the Malaysian economy and
considering that the world economy is becoming more competitive, more
global, and dominated by information and communication technologies,
steps must be taken towards greater automation, capital-intensive,
and knowledge-based industries to sustain a high and rapid economic
growth to increase the competitiveness of Malaysian products and services
in the world market. These could be achieved through strengthening
science and technology (S&T), increasing research and development
(R&D) and innovation activities and most importantly, developing
and providing a huge and highly skilled manpower, particularly in
the areas of engineering, and S & T, among others. This has brought
new challenges to institutions of higher education and other public
sectors training institutions in particular, to produce more of such
kind of manpower and to continuously upgrade the technical competence
and skills of the nation’s existing work force. A pool of highly
qualified and dexterous engineering, technical, scientific, and managerial
manpower, is crucial to ensuring the successful transition from labor-intensive
and low-wage activities to higher-technology and capital-based industries.
There is a general consensus that the human resource
is one of the crucial factors for economic development. Romer (1986,
1990), among others, has shown the importance of the human capital’s
contribution in shifting the production frontier forward; an indication
that economic growth has occurred. The experiences of countries with
newly industrialized economies (NIEs) such as Taiwan, South Korea,
Hong Kong, and Singapore have shown that their high and rapid economic
progress in the past few decades could be partly explained by their
past policies which emphasized the importance of human resource development
(HRD). Hence, HRD should be one of the key policies in developing
countries’ economic development agenda. This is also recommended
by international organizations such as the World Bank and the Asian
Development Bank.
THE MALAYSIAN ECONOMY TRANSFORMATION
Malaysia has experienced significant economic
growth since 1970, about two and a half decades ago. The gross domestic
product (GDP) grew at an average rate of 6.7 percent per annum from
1971 to 1990 and 8.7 percent during the implementation of the Sixth
Malaysia Plan (1991-1995). Since 1988, the Malaysian economy’s
growth became more impressive, with a sustained 8.9 per cent yearly
growth (Malaysia 1996). From 1975 to 1994, the inflation rate was
kept at less than 4 percent, in accordance with the rapid and high
economic growth rate. In 1995, inflation went down to only 3.4 percent
and was projected about 4 percent in 1996. In 1995, the per capita
income in nominal terms increased significantly, from US$ 308 in 1972
to US$ 4,027 (Table 1). This implies that in general, the standard
of living in Malaysia improved through time. The momentum of rapid
economic growth and low inflation are necessary conditions to achieve
Malaysia’s Vision 2020, which is about 24 years from now.
The high economic growth during the period was
accompanied by a tremendous structural transformation of Malaysian
economy, resulting in a shift from mainly production and export of
primary commodities to a more modern industrial economy. In 1970,
the primary sector (agriculture, forestry, and fishing) accounted
for 32.1 per cent of the GDP. However, after the industrial policy
aimed at export diversification was implemented in the 1960s and 1970s,
the Malaysian economy’s structure underwent significant changes
in 1987. Those changes entailed for the manufacturing sector to play
a more dominant role in leading the economic growth, surpassing the
primary sector for the first time. The contribution of the manufacturing
sector to the GDP became more significant after 1987. In 1995, the
manufacturing sector accounted for 33.1 percent of GDP compared with
only 12.2 percent in 1970. On the other hand, the contributions of
the primary sector to the GDP was reduced to 13.9 percent for the
same period (Table 2). Besides this, the manufacturing sector also
played a significant role in terms of employment generation and exports.
The manufacturing sector itself showed significant changes from being
mainly resource-based processing and labor intensive industries in
the earlier state of industrial development in Malaysia during the
late 1960s and 1970s, to that of higher-technology, capital intensive,
and knowledge-based industries in 1980s and early 1990s. In the future,
emphasis will be given on promoting automated manufacturing, materials
production, electronics, biotechnology, and information technologies,
to further enhance the industrial base and to sustain the role of
the manufacturing sector as an engine of growth for the country’s
economy.
The rapid expansion of the economy has led to
a situation of virtual full employment, with the unemployment rate
declining from 7.5 percent in 1970 to 2.8 percent in 1995 (Table 1).
In turn, labor market’s tightening resulted in an increased pressure
on wage levels. If left unchecked, this could push the economy’s
general price level upward. This will not only increase the cost of
living in Malaysia but could also reduce the competitiveness of Malaysian
products and services in the world market in terms of prices. This
implies that Malaysia’s economic growth can no longer depend
heavily on input growth, particularly cheap labor. Focus should shift
to growth based on Total Productivity Factor (TFP), that is growth
based on productivity and quality. From 1977 to 1990, the TFP accounted
only for about 1.2 percent of GDP growth. The TFP contribution to
the GDP growth is projected to increase by 3.3 percent in 1996-2000
period (Table 4).
Malaysia’s current balance of payment account
(or BOP) has traditionally been characterized by surpluses in the
merchandize account but persistently by deficits in services account.
However, in the early 1990s, the deficits in the services account
has increased, overcoming the surpluses in merchandize account and
bringing shortfall to BOP. A big portion of deficit in the services
account was mainly due to a large net outflow of investment income
and freight and insurance. The deficits in investment income and freight
and insurance dramatically rose from RM 335 million and RM 325 million,
respectively, in 1970 to RM 11,266 million and RM 8,532 million in
1995 (Table 3). The large net outflow from freight and insurance was
chiefly due to lack of domestic capacity to meet the increasing demand
for these services. Besides, import of goods (capital, intermediate,
and consumer) also increased owing to expansion of the economy. Hence,
there is a need to enhance exports from Malaysia but at the same time,
imports should be reduced to improve the BOP deficit by producing
higher value-added and competitive products and services for local
and global markets.
Thus, to sustain a high and rapid economic growth
in the future, Malaysia’s economy should put emphasis on TFP
growth in general, which was adversely affected by lack of input,
particularly cheap labor. Likewise, there is a need to shift the dependency
on labor and low-wage intensive industries toward greater automation,
capital-intensive and knowledge-based industries to produce more value-
added and competitive products and services for domestic and world
market. This brings new challenges for higher education institutions
and other public sector training institutions, in particular, to produce
technically competent and skilled manpower as needed by the new industries.
A pool of highly qualified and dexterous engineering, technical, scientific,
and managerial manpower is crucial to ensuring the successful transition
from labor-intensive and low-wage activities to higher-technology
and capital- and knowledge-based industries.
GLOBALIZATION CHALLENGES
The world economy is becoming more competitive,
more global, and increasingly dominated by information and communication
technologies. This has made human capital more important, as technical
knowledge and the capacity to respond quickly to change is an even
more crucial input to the production process (Carroy 1995).
Globalization of the world economy and liberalization
in recent years has resulted in the situation where competition in
various aspects became unavoidable. Furthermore, with the revolution
of biotechnology and information technology, the mode of production
and technology will change frequently while competitiveness will increase.
The product’s life cycles will be shortened and skill demands
will shift rapidly and less predictably. The ability to adapt and
respond to changing internal and external environments will constitute
a nation cutting edge. Besides this, the free flow of labor across
boundaries has brought new issues and dimensions on human resource
planning and development. The traditional manpower planning, that
is macro-oriented and targeting approaches will no longer be adequate.
In addition, the existing approaches will require to be used in line
with the micro-level cluster-based approach to HRD. This will afford
a more focused and hence more responsive strategy at the levels where
labor markets, industries, and supporting networks operate and where
decisions are made.
Based on is easy access to information and technology,
the mode of production will change as well as the nature of work itself.
There will be an increasing need for flexible and multi-skilled manpower.
Some experts have projected that the professionals of the next century
would require depth not only in their own specific disciplines but
familiarity with at least one or more other disciplines. Their intellectual
capacity must be supplemented with skills to operate information technology
(IT) equipment. Also, there is a need to train and retrain our human
resources. Inflexible human resource planning may produce workers
with skills already made obsolete by technical or market changes.
In particular, the higher education institutions
and training institutions in developing countries will no longer act
as individual organizations, as was traditionally practiced. In a
global and liberalized world, greater co-operation among organizations
is needed as well as the demand for excellence in teaching, research,
and publishing.
Malaysia’s metamorphosing industries would
face the new challenges of an emerging competitor, particularly in
1997 when the United States withdraw the Generalized System of Preferences
(GSP) from the country. This requires adding monetary worth along
the value chain (Porter 1985, 1990) and a new international industry
structure. To ensure the success of this transformation, Malaysia
will need to increase and create a pool of highly skilled and human
resource, especially in the high-skilled product development and marketing,
to strengthen its S&T and R&D capabilities. The percentage
of unskilled labor in assembly jobs has to be reduced through capital
incentives and automation. The nature of work itself will change in
many important ways in the years to come. To brace for a future where
change will be the only constant factor, it is prudent to review the
critical emerging issues and challenges confronting future technical
human resource planning and development in Malaysia and adapt and
adjust accordingly.
HIGHER EDUCATION INSTITUTIONS
AND HUMAN RESOURCE DEVELOPMENT IN MALAYSIA
A pool of highly qualified and dexterous technical
manpower is crucial to ensuring the successful transition from labor-intensive,
low-wage activities to those of higher-technology and capital-based
industries. HRD is no longer considered or planned within an implicitly
closed system. Both supply and demand for labor are increasingly shaped
not only by internal socio-economic factors but also by a large number
of external factors as well. These include labor market changes resulting
from the integration of international production networks: the emerging
global and regional trade arrangements as a result of the General
Agreement on Tariffs and Trade/World Trade Organization (GATT/TWO)
and ASEAN Free Trade Area (AFTA); rapid technological change including
the information, aerospace, and biotechnology revolution; increased
competition for Foreign Direct Investment (FDI) and output markets;
and increased access to information and technology.
The transformation of an economy to high and advanced
industries requires alternatives in HRD as well. The success of such
transformation requires more human resource with expertise in the
science, engineering, and technical fields. In the Sixth Malaysia
Plan (1990-1995), it was projected that 47.9 percent of university
graduates (degree, diploma, and technical) will come from the field
of arts while 52.1 percent will emerge from science/technical fields.
Generally, the percentage of human resource with science/technical
background output may not be able to fulfill the need of a progressive
and rapid economic industrialization in Malaysia. In fact, Malaysia
recently faced a crucial shortage of engineering and technical human
resource needed by its industries. Hence, in the Seventh Malaysia
Plan (1996-2000), emphasis was given on increasing the science/technical
manpower output ratio. Within this period, the science/technical graduates
of universities is expected to increase up to 55.8 percent of the
total, while 44.2 percent will be coming from the fields of arts.
It is hoped that Malaysia will be able to cope with the needs to achieve
its Vision 2020. Mismatch of HRD will jeopardize the development process
required.
Within the Seventh Malaysia Plan (7MP), the thrust
of HRD efforts will be the preparation of a strong human resource
base for long-term economic growth and global competitiveness. Given
the shift toward a productivity-driven economy, the emphasis will
be on increasing the efficiency of labor use and greater capital and
technology intensity in production. A productivity-driven economy
will require a higher level of professional and skilled manpower as
well as administrative and managerial expertise. The government will
continue to play a major role in HRD. Education and skills training
institutions will be expanded, upgraded, and restructured, where necessary,
to increase skill formation in the country and make training more
responsive to industry needs.
Greater private sector participation and cooperation
with the public sector will be encouraged in tertiary education and
skills training. The amendments to the private Higher Educational
Institution Act of 1996 will enable the private sector to play a greater
role in the provision of tertiary education. Education and skills
training are accorded high priority in nation-building to provide
a sufficient pool of well-educated, highly-skilled, and a strongly-motivated
labor force. Also given emphasis was the accessibility and participation
of the low-income group in education and training.
Training institutions will conduct more advanced
skill courses in line with the changing economic structure of the
country as it moves toward high technology and higher value-added
activities. To meet the manpower requirement of the rapidly growing
economy, tertiary education in the Sixth Malaysian Plan was directed
at increasing enrolment at the degree, diploma, and certificate levels,
particularly in science, medicine, engineering, and technical-related
courses.
The expansion of industrial and economic activities
toward a direction of high technology and knowledge-based future requires
a strong education system. This should be based on multi-skills, versatility
and adaptability to enable our manpower to adapt and respond quickly
to the rapidly changing technological and work environments. Besides
this, the education system must be able to stimulate and provide a
conducive environment to adapt and innovate new processes and products.
THE ECONOMY OF SABAH
The economic growth of Sabah in recent years was
less impressive compared with the country as a whole. The average
annual economic growth rate for Sabah in 1981-1990 and 1991-1995 were
5.2 and 6.2 percent, respectively. These performances were far behind
the overall national achievement, which was more than 8 percent per
annum. For 1996-2000, the average annual growth rate of Sabah is projected
to be considerably low -- 5.4 percent only (Malaysia 1996). Sabah’s
economic growth is not only slow but unstable as well, mainly because
its economy depends heavily on the primary sector while the prices
of commodities in the world market fluctuates dramatically most of
the time. The sluggish growth of Sabah’s economy brought about
a relatively languid demand for labor and as a consequence it continues
to experience a high level of unemployment. The number of jobs created
by the primary sector was still insufficient to cater to the large
pool of labor supply.
The unemployment rate of Sabah is much higher
than the national figure. In 1990, its unemployment rate was 9.1 percent,
compared to the national rate of 5.1 percent. In 1995, Sabah still
yielded a high unemployment rate of 5.6 percent whereas the national
rate was only about 2.8 percent. In year 2000, unemployment rate in
Sabah is projected at 5.7 percent compared with the national rate
which has been projected to remain at 2.8 percent (Malaysia 1996).
The worse part of this scenario is that unemployment in Sabah was
concentrated among the group of young people.
Sabah’s economy is still dominated by the
primary sector which includes forestry, agriculture, livestock, and
fishery. Structural changes in the manufacturing and services sectors
for the past few decades were neither significant nor consistent.
No serious and significant policies or plans for an industrial economy
were carried out. Recently, however, the structure of the state economies
underwent transformation, with the primary sector contributing less
to the total state value-added to the secondary and tertiary sectors
which are composed of utilities, wholesale and retail trades, hotels
and restaurants, transport, storage and communication, finance, real
estate and business services, and government services, among others.
The contribution of the two main sectors to the total state value-added
increased from 43.5 percent in 1990 to 55.4 percent in 1995 (Malaysia
1996). More efforts need to be exerted to make such transformation
significant.
Traditionally, economic progress and development
in Sabah has been achieved mainly through exports of primary commodities,
which are short-lived and low value-added. Furthermore, it generated
only a few employment opportunities with low income. In terms of trade,
although exports value exceeded that of imports, the gap has been
narrowed down. In general, Sabah’s performance has deteriorated
relative to its own past achievements and compared to the country
as a whole (Ministry of Industrial Development 1996).
For the past few years, nearly half of the growth
in manufacturing outputs came from the wood and wood products industry.
The contribution of other manufacturing industries was not significant
at all. This was because the manufacturing industry in Sabah was very
narrowly-based and dominated by the timber industry products. Moreover,
most industries have dual structures where the size and capital-intensiveness
of operations vary consistently between each industry.
Within Malaysia, Sabah registered the highest
population growth rate of 5.2 percent per annum. This high population
growth rate was mainly due to the huge inflow of external immigrants.
According to the 1991 census, out of a total 300,000 external immigrants
who entered Malaysia during the period 1986-1991, about 40.8 percent
entered Sabah. For 1991-1995, Sabah’s population continued to
register the highest growth at 6.2 percent per annum owing to high
fertility rate and high external immigration (Malaysia 1996). The
high growth of population will result in a large labor force which
will require the economy to produce more employment opportunities
in the future to reduce high unemployment and to improve the standard
of living of the people in Sabah.
In general, the standard of living of the people
of Sabah is poor, ranking lowest in the whole country. In 1989, the
average monthly household income in Sabah was RM 1,148 compared to
RM 1,167 for the whole of Malaysia. In 1995, the mean monthly household
income of Sabah was projected to increase up to RM 1,444 but at the
same time, Malaysia’s mean monthly household income was projected
to reach RM 2,007 (Malaysia 1996). This means that in general, the
standard of living in Sabah was still far behind the whole nation
and greater efforts should be carried out to improve this situation.
Therefore, industrialization in Sabah is important.
Sabah should produce products which are not only resource-based but
also high-technology and knowledge-intensive based so as to cope with
the high population growth. Hence, a skilled labor force needs to
be produced by higher education institutions so that the people of
Sabah can produce innovative products through R&D activities.
This will sustain the competitiveness of future products from Sabah
and could also increase the economic growth and reduce unemployment
rates thereby improving the standard of living in Sabah. In addition,
more innovative entrepreneurs who would set-up new business and economic
activities should be produced.
UNIVERSITI MALAYSIA SABAH (UMS)
The Universiti Malaysia Sabah (UMS) was established
on 24 November, 1994, under section 18, article 3(1) of the UMS Incorporation
Act and is categorized under universities offering broad disciplines.
Its founding was an effort towards producing qualified and trained
experts in the areas of science, technology, and management in order
to achieve Malaysia’s goal of becoming a fully industrialized
nation by the year 2020. The philosophy of UMS is based on the principle
of the belief in God and in the development of students who are progressive,
disciplined, integrated, and balanced in their intellectual, emotional,
physical and spiritual outlook and who will contribute toward the
well-being of society and the nation.
UMS strives to achieve academic excellence in
various fields to gain international recognition through learning
and teaching, research and publication, social services, and a balanced
specialization of knowledge and development of personality of students
resulting in high productivity and quality work in the context of
the environment and the aspirations of society and the nation.
In order to achieve the university mission, UMS
suggested in its development planning to set up 11 schools, 6 academic
centers and institutes, and 3 academic support centers within the
period 1995-2005. In Phase I (1995-2000), six schools, six centers
and institutes, and three centers will be established. This will be
followed with the establishment of five more schools under phase II
(2001-2005) to fulfill the various needs and aspirations of the nation,
state, and BIMP-EAGA region (see tabulation below and Appendix A).
Phase 1: 1995-2000
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