World Bank warns Malaysia’s top firms failing to scale or innovate, fuelling underemployment

KUALA LUMPUR, May 14 — Malaysia’s top frontier firms have either failed to scale up or not innovated enough, hampering competitiveness and the creation of high-paying jobs, leading to underemployment concerns, according to the World Bank.

The warning comes as the bank raised concerns about skills-related underemployment among graduates in Malaysia, which it noted has risen over the last decade.

“Firm-level evidence reinforces this diagnosis. Most productive firms in Malaysia are not yet scaling as strongly as intended. This is a challenge as they offer better-paying jobs,” the bank said in its latest Malaysian Economic Monitor released this morning.

Data indicating that national frontier firms are falling behind global productivity levels makes the challenge harder to overcome, it added.

While lagging firms have caught up domestically, the productivity gap between Malaysia’s best companies and global players has “widened”, according to the report.

“Technology generation and commercialisation have not improved, partly due to limited university-industry collaboration and technology transfer from foreign firms as well as brain drain of Malaysian investors,” it said.

“This performance constrains competitiveness and the creation of high-wage jobs.”