In 2025, Malaysia’s brain drain remains a thorn in the side of national progress.

A staggering 1.86 million Malaysians or 5.6% of the population have relocated abroad over the past five decades, well above the global average of 3.6%.

This steady haemorrhage of talent continues to stifle innovation, throttle economic growth, and stretch critical sectors like semiconductors, which alone require an additional 60,000 engineers to meet demand.

At the heart of the matter lies a potent cocktail of unsatisfactory wages, limited career growth, and perceptions of better quality of life overseas. For employers, it’s a call to action: adapt or risk losing the next generation of talent to foreign shores.

The cost of talent flight

The economic implications are hard to ignore. Brain drain has cost the country an estimated 1.3 trillion Malaysian ringgit in lost human capital over 50 years. Skilled Malaysians are increasingly choosing neighbouring Singapore, where 39% of Malaysians in the workforce hold high-skilled jobs – draining the domestic supply of professionals in engineering, tech, and R&D.

Malaysia’s ambition to become a high-income economy is being undermined by a talent pipeline riddled with leaks. The demographic tide is also shifting.

Gen Z workers – those born between 1997 and 2012 – now form a major part of the workforce. They seek more than just a paycheque. They want meaningful work, career development, and flexibility. Without these, 28% of Gen Z workers are eyeing opportunities abroad.

Read: Minimum wage shrinks education pay gaps

Employer strategies: Holding on before the tide turns

Recognising the urgency, many Malaysian employers are stepping up to the plate with strategies aimed at plugging the talent drain.

1. Enhanced compensation: Linking pay to performance and skills

Money talks and Malaysian workers are listening. With 32% of the workforce planning to ask for raises in 2024–25, companies are introducing performance-linked pay to align output with compensation. In the tech sector, skill-based salary premiums of 15% to 20% are being offered for in-demand capabilities such as AI and data analytics.

These efforts signal a shift towards rewarding value creation, not just tenure. In a tight labour market, competitive pay isn’t a perk; it’s a prerequisite.

2. Upskilling and fast-tracked development

To stay ahead in the talent race, firms are betting on skills. Randstad Malaysia, for instance, has embraced recruitment process outsourcing or RPO to shorten hiring cycles for hard-to-fill roles, reducing vacancy periods by 30%.

Mentorship programmes and tuition reimbursements are also gaining traction, now embedded in 67% of large organisations. These initiatives cater directly to Gen Z’s hunger for growth and lifelong learning – a trait that employers ignore at their peril.

3. Flexibility as the new currency

The office as we knew it has evolved. In 2025, 45% of Malaysian employers offer hybrid or remote working options – an important drawcard for younger workers. “Buffet-style” benefits, where employees can choose perks ranging from home office stipends to fertility support, reflect a growing need for personalisation in the workplace.

Flexibility has gone from a nice-to-have to a dealbreaker. Firms slow to adapt risk being left in the dust.

4. Strengthening industry-academia collaboration

Proactive employers aren’t waiting for universities to catch up; they’re co-creating talent. Companies like Sunway Education Group are working closely with academic institutions to shape curricula that reflect market needs. The result is a 22% increase in internship placements since 2023, fuelling a pipeline of job-ready graduates.

This partnership between education and employment is one of the most effective ways to future-proof the workforce.

Policy in action: Public-private push to reverse the trend

The Malaysian government isn’t sitting on its hands either. Key interventions include:

• Johor-Singapore Special Economic Zone: With a 15% tax incentive for 10 years, this zone aims to generate 100,000 skilled jobs in tech and manufacturing. It’s a strategic move to anchor talent regionally and reduce outflow to Singapore.
• National Semiconductor Strategy: Backed by powerhouses such as Intel and Bosch, this public-private initiative focuses on training engineers for the growing chip industry, blending public funding with private expertise.

Yet, while policies lay the foundation, employer responsiveness will determine success.

Read: Skills-first hiring is gaining momentum in Malaysia

What drives Malaysians abroad: The push and pull equation

The reasons for migration aren’t just economic but holistic. Salary, of course, remains a key driver. Malaysian wages still lag behind those in countries such as Singapore, Australia, and Japan. With rising living costs and limited financial incentives at home, many find the grass greener across the border.

Beyond income, career progression (or lack thereof) is a major push factor. Rigid hierarchies, minimal autonomy, and scarce leadership opportunities leave many professionals feeling stuck. In contrast, overseas employers are seen as offering structured career pathways, innovation-led work environments, and more merit-based promotion systems.

Meanwhile, the lure of better work-life balance, superior education for children, safer environments, and inclusive work cultures all add to the magnetic pull of foreign destinations. Countries that promote multiculturalism and flexibility are particularly attractive.

The family factor

Migration isn’t always a solo decision. Family members already settled abroad often influence others to follow. The promise of better schooling, safety, and long-term stability adds emotional weight to economic reasoning.

For many professionals, Malaysia simply doesn’t tick enough boxes across financial, professional, and social dimensions.

What do employees want in 2025?

Malaysian professionals today are charting a different course. They aren’t just chasing higher salaries; rather, they want to grow, belong, and be recognised.

Recent data shows 60% of employees are likely to request a raise or promotion within the year. This reflects both a heightened awareness of market value and an expectation that effort and expertise be rewarded.

To retain them, employers must think beyond annual reviews and pay bumps. Transparent career pathways, skill-building opportunities, flexible work setups, and a vibrant, inclusive culture are now the essentials, not extras.

The real cost of inaction amid a brain drain

If these evolving expectations go unmet, particularly in high-demand sectors, workers will continue to look abroad where their skills are better valued. The loss is more than just headcount. It’s a drain on innovation, diversity of thought, and institutional knowledge.

Hence, the choice for employers is simple: change the game or lose the players.

Turning the tide for the better

To stem the outflow, Malaysian companies must evolve from rigid institutions into agile ecosystems of talent. This means shifting mindsets from command-and-control to empower-and-engage. It means rethinking reward systems, flattening hierarchies, and placing career growth at the core of company culture.

In short, businesses need to build environments that professionals won’t want to leave.

The road ahead is no doubt uphill, but with coordinated action from both government and the private sector, Malaysia has a real shot at transforming its brain drain into a brain gain.