By: Murray Hunter


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.