Saturday, 23 April 2011

Jibbonomics: A tax free car & 15% is all it takes .....

Najib's 15%

'Professionals' are doctors, lawyers, accountants and other persons who undergo specialized training, usually belonging to an association which governs the quality of the vocation they practice. They are often regarded as highly educated and known as the 'white-collared' people. According to the Ministry of Human Resources (MHR) and Department of Statistics there were 67,310 job vacancies in the year 2010 with regards to the 'professional' category. If you think this number is not too big, think again. In 2004 there were only 5,187 registered vacancies. This makes it a 1300% increase from the years 2004 to 2010.

The trend is somewhat similar for technicians and associate professional vacancies registered with the MHR:

Kindly note assumptions number 1 to 3 at the bottom of this article whereby it is stated that private firms are not required to register unfilled positions with the MHR. It is correct to say this because private firms will normally recruit job positions on their own and not go through any government-linked agencies. Hence the actual number of unfilled positions in the Malaysian job market is higher than the MHR published statistics discussed here.

If we look at the snapshot of 2010 registered unfilled jobs, 'elementary occupations' hits the top spot. Such jobs are related to 'pekerjaan asas' such as maids, general workers, laborers and so on.
Zooming in on 'elementary occupations' the run chart below shows a steep climb from the years 2004 to 2010, a growth exceeding 13000% (10 times more that professionals) - caused by an acute shortage of workers in this category.

However the situation could have been worse. According to Tuan Haji Sabri, Deputy Director General of the Labor Department, in 2010, there were 785,000 Malaysians migrating out of the country and 1.8 million migrants into Malaysia. The 1.8 million migrants into Malaysia caught my eye because it appears that these migrants helped a little in easing the general worker shortage situation- the graph above could have been steeper. The breakdown of the 1.8 million in 2010 is as follows:

On the 785,000 Malaysians who migrated out of Malaysia, my take is that they are mostly professionals or semi-professionals who have gone out of this country. I do not have enough statistical evidence to show this (not my fault because I rely on published statistics only and I don't know why the Government has stopped releasing demographics like these since the year 2005) but being a professional myself who is in touch with the Asian region I am very confident that I am correct in saying that most the 785,000 migrants last year belonged to such a group and their reasons for migrating are push factors rather than pull factors. For me personally, it is a pain living in this country- the daily racism, the fear of political prosecution, the lack of religion freedom and so on.

Proponents of Ketuanan Melayu may ask me to leave this country on the next flight but they are ignorant of the fact that if hundreds of thousands of professionals like me leave Malaysia in this continuous trend within the next few years Vision2020 will never be achieved by 2020 and we will never ever be a developed country like we should be because of the lack of human capital.

I doubt Najib's 15% tax rate plus a couple of tax-free locally assembled cars through the Returning Experts Programme will do much to convince any professional who have made inroads in a foreign country to return home. For them the reasons of leaving the country is much more fundamental than lower tax rates and lower-priced cars (anyway, the pricing will never beat the prices and specs of cars sold in foreign countries). Najib needs to summon enough political will and balls to do the changes that needs to be done in Malaysia only then will people start coming back, tax breaks or not.

All sources of data are published figures from Bank Negara; Department of Labor, Department of Statistics and Ministry of Human Resources.

Assumptions on labor market statistics:
  1. As at end-period. Data is not comparable with past series. With effect from May 2005, the registration period during which jobseekers are deemed to be actively seeking jobs using the Electronic Labour Exchange was lengthened to six months (three months previously)
  2. The number of job vacancies could have been under-reported as it is not compulsory for firms to report vacancies to the Labour Department.
  3. Includes public administration and defence, compulsory social security, education, health and social work, other community, social and personal service activities, private household with employed person, ex-territorial organisation and bodies.