Insights

As Malaysia charts its course towards a high-income nation, the significance of a skilled and adaptable workforce cannot be overstated. Budget 2025, unveiled in October 2024, reflects this understanding with a notable emphasis on bolstering Technical and Vocational Education and Training (TVET) and Science, Technology, Engineering, and Mathematics (STEM) education. This strategic focus aims to equip Malaysians with the necessary competencies to thrive in a rapidly evolving global landscape and drive the nation's economic progress.  

TVET Empowerment: Bridging the Skills Gap

Budget 2025 earmarks a substantial RM7.8 billion for the development of the TVET ecosystem, a significant increase from the previous allocation. This commitment underscores the government's recognition of TVET as a crucial pathway for producing a skilled workforce that meets the demands of industries. The budget prioritizes several key objectives for TVET:  

• Enhanced Industry Collaboration: A core focus is on strengthening partnerships between TVET institutions and industries. This will ensure that training programs are aligned with real-world job requirements, providing graduates with relevant skills and increasing their employability. The Skills Development Fund Corporation (PTPK) will provide funding of up to RM500 million, with RM100 million specifically targeted at New Industrial Master Plan (NIMP) priority areas such as Maintenance, Repair, and Overhaul (MRO), Electric Vehicles (EV), aerospace, and Artificial Intelligence (AI).  

• Opportunities for Vulnerable Groups: The budget emphasizes providing training opportunities for vulnerable youth, including those from urban poor, marginalized, rural, and indigenous communities. This inclusive approach aims to empower all segments of society with marketable skills.

• Expansion of Training Capacity: An overall allocation of RM1.2 billion is dedicated to vocational colleges and technical secondary schools, benefiting an estimated 77,000 students. This investment will enhance the capacity and quality of TVET institutions nationwide.  

• Upskilling and Reskilling Initiatives: Recognizing the need for continuous learning, Human Resource Development Corporation (HRDCorp) will utilize RM3 billion to offer three million training opportunities, catering to the evolving skill demands of the job market.  

• Gig Economy Support: GiatMARA and community colleges will receive RM55 million to provide skills training to over 3,000 gig workers, acknowledging the growing significance of this sector.  

• Talent Development in Key Sectors: Khazanah Nasional Berhad will provide RM200 million through the Khazanah Youth Development Programme (K-Youth) to supply 11,000 local talents to critical sectors like semiconductors.  

• Structured Training Programs: The double deduction on expenses for companies implementing the Structured Training Program (MySIP) under TalentCorp will be extended until the assessment year 2030, encouraging industry involvement in developing talent.  

• TVET for Religious Schools: RM55 million is allocated to GiatMARA and community colleges to provide skills training within five years to 10,000 huffaz children from tahfiz and pondok institutions, broadening their future opportunities.  

STEM Reinforcement: Cultivating Future Innovators

While Budget 2025 doesn't specify a distinct umbrella allocation solely for STEM in the same way as TVET, the emphasis on technological advancement and high-value industries inherently necessitates a strong foundation in STEM education. Several initiatives within the broader education and higher education budgets directly support STEM development:

• PTPTN Focus on STEM: The National Higher Education Fund Corporation (PTPTN) will allocate RM500 million in educational loans specifically for students pursuing STEM-related subjects at the tertiary level, encouraging more students to enter these critical fields.  

• AI Education at Universities: Recognizing the transformative power of artificial intelligence, RM50 million will be directed towards teaching AI-related subjects at research universities, preparing graduates for the future of work.  

• Semiconductor Engineering Talent: Universiti Teknologi MARA (UiTM) will receive RM20 million to produce more engineers in the semiconductor sector, a crucial industry for Malaysia's economic growth.  

• Research and Development Boost: A total of RM600 million is allocated for research and development under the higher education and science, technology, and innovation ministries. This investment will foster innovation across various STEM fields.  

• Upgrading School Infrastructure: The significant allocation of RM2 billion for upgrading and maintaining schools nationwide, and an additional RM1 billion to address dilapidated school buildings, will indirectly benefit STEM education by providing better learning environments and potentially improved science labs and equipment.  

• Digital Connectivity in Schools: Efforts to expand internet access in rural schools, with an allocation of RM100 million, will provide crucial infrastructure for digital literacy and access to online STEM resources.  

Synergies for a High-Income Nation

The strong emphasis on both TVET and STEM in Budget 2025 reflects a holistic approach to human capital development. TVET provides crucial technical skills for immediate employment and supports key industries, while STEM education cultivates the critical thinking, problem-solving, and innovation skills necessary for long-term economic competitiveness in high-value sectors.  

By investing strategically in these areas, Malaysia aims to:

• Reduce reliance on low-skilled foreign workers: A skilled local workforce can fill jobs requiring technical expertise, reducing the need for foreign labour and potentially leading to better wage growth for Malaysians.

• Enhance productivity and innovation: A workforce proficient in STEM and technical skills is essential for driving innovation, adopting advanced technologies, and increasing overall productivity, key factors in achieving high-income status.  

• Attract higher-quality investments: Nations with a strong talent pool in STEM and technical fields are more attractive to foreign investors in high-tech and value-added industries.

• Improve living standards: Better-paying jobs in skilled sectors will contribute to higher household incomes and an improved quality of life for Malaysians, a defining characteristic of a high-income nation.

In conclusion, Budget 2025 demonstrates a clear commitment to empowering Malaysia's future workforce through significant investments in TVET and strategic support for STEM education. By addressing skills gaps, fostering innovation, and creating opportunities for all Malaysians, the nation is taking concrete steps towards realizing its aspiration of becoming a high-income country with a thriving and competitive economy. The effective implementation of these budgetary allocations and continued focus on quality and relevance will be crucial in ensuring that Malaysia's human capital becomes a powerful engine for sustained progress.