Unemployment is rapidly increasing in Malaysia, especially among college graduates aged 20-24, who number 161,000 out of the 400,000 unemployed within the country, or 40.25 percent.
In addition, close to half the graduates of public universities are working in mismatched occupations unrelated to their formal training. A Finance Ministry report states that over 90 percent of those unemployed are aged between 15-29 years old against total aggregate unemployment at 4 percent.
Much of this unemployment is in the rural areas, where there is an increasing incidence in drug-taking and crime. Farming, forestry, and fishing are hard jobs that most young people aren’t willing to take, so they are left to foreign guest workers.
However as an Asia Foundation youth survey found, youth are very discerning about what type of job they will accept. The manual jobs are only appealing to the 2 million-plus foreign workers. A JobStreet survey found that 70 percent of employers surveyed believe the standard of graduates from local universities are just average, while 24 percent believe they are “bad” with only 6 percent believing their quality is good. The main complaints were about attitude towards work and lack of communication skills.
Thus, new paradigms are needed to absorb the youth into economically and socially productive roles within the country. First, the concept of traditional employment needs to be challenged, and second the informal economy must be reframed to provide both a “safety net” and platform for nurturing innovative idea based enterprises.
This presents two challenges. One is relooking at education and training from the bottom up so that young people can reach their creative potential and develop new micro-enterprises based on ideas that they have. Two, relooking at the informal sector of the economy in new ways; a means to insulate society from deepening hard economic times and as a field or platform where creativity can be allowed to nurture into viable micro-enterprises, where ideas are the drivers.
This means abandoning the baggage of subscribing to factor-driven economics, technology-driven economics, and the big enterprise syndrome. There has to be a belief that innovation will come from the youth, rather than from FDI, GLCs, or even university research.
This also means a complete change in the way we think about economic development and a need to change the way knowledge and empowerment is disseminated through education.
Informal economy as Idea Economy
As a country develops, the informal economy is seen as a trademark of development, with no place within a fully developed economy. Governments adopt this attitude because it is difficult to collect revenue from the informal economy because most transactions are in cash.
However, the informal economy needs to be rediscovered as an integral part of a nation with an important role to play. Currently the informal economy consists of hundreds of thousands of micro-enterprises which tend to copy each other, most oriented towards food or supplying simple services utilizing business models which are copied through observation. The only creativity within the informal economy today is copycat innovation. We see burger and nasi lemak stalls, dobies, kedai runcit, and other micro enterprises within the same mould.
This is where the concept of innovation has to be demystified to become the catalyst in creating an exciting new economy. The concept of “technology & innovation” needs reframing to simply mean something new; a new idea, a new way of doing things, a new location, and a new business model for that activity.
The key to Malaysia’s economic and social enhancement is through infusing new ideas into the informal sector. This is where variety of product, diversity, and new innovation is most likely to come from should it be backed.
The government has already defined the informal sector boundary by exempting enterprises with sales under RM500,000 per annum from GST. This is a great incentive for a new breed of young micro-entrepreneurs to take advantage of.
An entrepreneurial pedagogy
Then we come to the means to kick-start the idea economy through entrepreneurial education. However we find a problem here. University entrepreneurship courses are too academically oriented around exams. The goal within this type of education is just to regurgitate what was taught in class and in the textbook during the exam, a view supported by a Talent Corporation and Chartered Institute of Management Accountants (CIMA) report on bridging the employability gap.
The report went on to say that Malaysian university instruction lacks approaches to develop critical thinking and problem-solving skills. Knowledge is just absorbed by students without question, for the purpose of passing exams. Employers felt that students should spend much more time getting real world experience.
The current inflexible approach to formal education is at the cost of experiential learning and taking hands on practical approaches to enterprise creation and development. Business schools are usually the faculties responsible for business and entrepreneurial education within higher education, but suffer from the disability that technical knowledge needed in enterprise creation are not interwoven within curriculum.
For example, the bachelor degree of Engineering Entrepreneurship taught at Universiti Malaysia Perlis has very little engineering incorporated into the curriculum. Students have no engineering competence upon graduation.
Tertiary students only get 50 percent of the knowledge they need to start a business. The basic business knowledge maybe there, but technical and street-smart knowledge is lacking. Many business faculties are still grappling with what the concept of entrepreneurship really is. Many courses taught today in Malaysia are more about small business management rather than innovation based enterprise that is based upon ideas.
Entrepreneurship training consultants are also at fault here. Many are ex-academics, civil servants, or people whose only experience in business is the consulting firms they operate. Many who have experience follow the old paradigm of doing business as a contractor, relying on personal contacts and throwbacks. This is not the type of innovative business that should be taught to the younger generation we want to be independent of the old ways of doing business with government.
Where the paradigm needs to shift.
The status of vocational education needs to be elevated. This is where tomorrow’s successful youth entrepreneurs are more likely to come from. Courses need to be short and to the point. They need to be interesting, informative, and semi-tailored to the requirements of the students. Teaching needs to be in the field rather than in the classroom, and by “practademics” who have entrepreneurial experience rather than academics from the traditional background.
The silver bullet here is “one to one” mentorship. Utilize the large pool of retired businesspeople in Malaysia to help with mentoring the young generation. This army is ready, willing and able to assist the country in its need to create an idea economy.
Within this paradigm we need to learn that “small capital is beautiful” rather than consider the traditional concepts of SME financing. Not many micro-entrepreneurs actually receive grants or loans, so it’s necessary to show people how to start an enterprise for under RM1,000.
This is a true challenge for the creative. Most bureaucrats and academics would laugh off this concept. But this is what has to be, if new innovative micro-enterprises are to be created. This requires a complete paradigm change in entrepreneurial creativity that few are equipped to understand, let along instruct and mentor others.
Mentorship under this philosophy would create thousands of new entrepreneurs within Malaysia within a short period of six months.
The writer doesn’t know of any government entrepreneurship development programs that could deliver such results within this timeframe. Hundreds of millions of ringgit have been poured into entrepreneurship initiatives with lackluster results.
Towards an Idea Economy
The informal economy is the key. Micro-entrepreneurs are the future of the Malaysian economy as the palm oil, oil and gas industries, construction, and large scale manufacturing stall with a slowing world economy.
Domestic economic growth comes from increasing the velocity of money. Developing new sources of value that consumers want helps to develop an economic buoyancy that will partly insulate the country from external economic slowdown. Thailand was successful with its OTOP program last decade and is relooking at reviving the program to increase domestic economic activity, once again.
As graduates today are choosy about the work they do, they are perfect candidates for pioneering the idea economy. This requires mentors to empower potential micro-entrepreneurs in both urban and rural environments. Once some succeed, natural champions will rise as role models for others to follow. These are the types of enterprises that will save Malaysia and rebuild the country bottom up.