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Seminar on Current Trends and Global Scenario in Higher

Education Series 1/2014

Dr. Mohd Gazali bin Abas

Economic Planning Unit

Human Capital Development Section

Prime Minister's Department

New Direction in Government Planning:

A Focus on Higher Education

23 Jun 2014 (Monday)

Content

Economic Trajectory: Achieving High Income Economy

Human Capital Development in Supporting High Income Economy

Higher Education as One of the Main Levers: Challenges and Way Forward

Conclusion

3

4

5

2

Introduction – EPU and Planning 1

2

EPU and Planning

3

National Development Planning Committee

Economic Council

Cabinet

Government ministries, agencies & State Governments

Private

Sector Inter Agency Planning Group

Parliament

Secretariat to the Economic Council

Formulate policies & strategies for socio-economic development ~ long & medium term plans

Formulate policies & strategies for sectors & regions

Undertake economic research & advise Government on economy

Evaluate & recommend development programmes & projects

Main Functions of EPU Development Planning Machinery

Content




Conclusion

3

4

5

4


2

Planning horizon towards 2020

5

Year

'56 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 ‘20

OPP2 OPP3 OPP1

Vision 2020, 1991-2020

National Mission

Note: OPP – Outline Perspective Plan DE – Development Expenditure

'15

DE (RM bil) 1.0 3.1 4.2 10 25 46 35 55 99 170 230 230

New Economic Model

Evolution of HCD in 5-year Malaysia Development Plans

6

• Improve access to education and training

• Promote economic growth to create jobs

• Improve employment opportunity among ethnics group in major economic sector

1st MP

1st MP

2nd MP

3rd MP 4th MP

5th MP 6th MP

7th MP 8th MP

9th MP 10th MP

Labour surplus Tight labour market Full employment

OPP 1 1971-1990 OPP 2 1991 - 2000 OPP 3 2000 - 2010 National

Mission - 2020

1965

52% - agri workers

6.1% - ue rate

1976

50% - agri workers

7.4% - ue rate

• Quality HCD

• High value added job creation

• Prepare quality human capital for knowledge based economy

• Reduce performance gap of urban – rural student

• Minimise skills mismatch

• HCD for high income with positive values and ethics

• Promote R&D & high quality innovation

• Increase women participation

High immigration

Low TFR – population growth

807k 2.3mil

2.2 3.0 1985

30% - agri workers

15% - manufacturing

5.6% - ue rate

1995

20% - agri workers

23% - manufacturing

3.1% - ue rate

2000

17% - agri workers

24% - manufacturing

3.0% - ue rate

2010

14% - agri workers

18% - manufacturing

3.0% - ue rate

Notes: 1965-1980 – 1st MP to 3rd MP 1985 – 2010 (LFS)

Education and training development expenditure

7

3rd MP

4th MP

2nd MP

5th MP

6th MP

7th MP

8th MP

9th MP

10th MP

Razak Report 1956

Education Ordinan 1957

Rahman Talib Report &

Education Act 1961

Cabinet Report 1979

New Primary School Curriculum (KBSR) 1983

Integrated Primary School Curriculum (KBSR) 1993

National Education Philosophy 1988

1st MP

Education Blueprint - 2025

Private Higher Education Institution Act 1996,

National Higher Education Fund Corporation Act

(PTPTN) 1997

1&2 MP

Share to total DE (Development Expenditure)

National Council on Higher Education Act 1996

Exclude 2015

HRDF PTPK

SLDN

8% 8%

16%

7%

10%

13%

26%

19% 20%

14%

7,7605,8124,840

2,152763391

43,295

20,185

25,615

43,729

PFI & 2015

Merger of MOE & MOHE

DE (RM mil)

Sustainable real GDP growth: averaging 6.3% p.a. ~ economy doubled in every 11.4 years

-10.0

-5.0

0.0

5.0

10.0

15.0

'71 '76 '81 '86 '91 '96 '01 '06 '11

6.3% p.a (1970-2013)

East Asian Financial

Crisis 97/98

Prod. E&E drop

% growth

US$2 to US$15 (per barrel) US$15 to US$40

(per barrel)

Advanced economies

Global Financial Crisis & Recession

08/09

Collapse of Bear Stearns and

Lehman Brothers

8

Registered low unemployment rate – full employment (below 4%) since 1995

9

Notes: Labour Force Survey EPU - GDP

3.73.2

2.5

7.4

-1.5

0.5

10.0

2

10

6

12

-2 1990

8

-8

2005

4

0

1995

3.0

-7.4

8.9

Unemployment rate

GDP growth

(%)

3.5

-1.1

US$15 to US$40 (per barrel) ‘85

East Asian Financial Crisis 97/98

Prod. E&E Drop ‘01

Global Financial Crisis & Recession 08/09

Economic Stimulus Package

• 1st – RM 7b (~RM 1b to address unemployment)

• 2nd – RM60b (~RM2b for unemployment programmes)

High unemployment period average rate ~ 6%

Low unemployment period average rate ~ 3%

Given the growth trajectory, we expect to create ~1.5Mn jobs over the 2011 to 2015 period (10MP horizon)

10 Source: EPU, DoS

10MP projects GDP growth of 6% to achieve USD12,663 GNI/ capita by 2015... ... Expected to will create ~1.5Mn jobs

0

100

200

300

400

500

600

700

800

Real GDP (RM Bn)

+6%

2015F 2014F 2013E 2012 2011 2010 2005

+4%

9th MP 10th MP

GNI/ capita (USD)

8,346 17,460

13,226

11,77310,893

1,452

881

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Employment ('000) +65%

2015 2011-2015 10th MP

job creation

2010 2006-2010 9th MP

job creation

2005

0.7% 0.33%* Employment elasticity

% change of employment required to produce additional 1% output

11

Transformed from agriculture into a manufacturing & services-based economy

Services

2%

Total

35%

25%

27%

11%

Mining

Agriculture

Construction

Manufacturing

100%

55%

8%

4%

7%

100%

25%

59%

7%

5%

6%

100%

23%

1970: 2013:

2020*:

• More food-based agriculture

• Producing high value-added goods

• Capital deepening in industries

• Dynamic manufacturing with more K-

intensive industries

• Modern services – finance, business, ICT,

and manufacturing-related services

US$19.0b US$249.7b

US$378.5b

Notes: * 2020 EPU target

...and tertiary industries contributed most to the new job creation (74%) in 10 MP and also to the creation of skilled jobs

12

128

604

128

194

371

1,452

13,200

12,800

0

12,000

12,400

13,600

Manufac-turing

Agriculture, Forestry,

Livestock & Fishing

5

11

Construction

7

Electricity, Gas & Water

Wholesale & Retail Trade,

Hotels & Restaurants

Finance, Insurance, Real Estate & Business

Services

15

Government Services

13,226

Employment ('000)

Transport, Storage &

Comms

11,773

Other Services

2010 base

11,773

Mining & Quarrying

Total

1

-0.1% 0.3% 1.3% 3.5% 5.0% 2.9% 0.2% 2.9% 2.4% 2.2% 0.3%

Primary industries (-0.3%)

Secondary industries (27%)

Tertiary industries (74%)

CAGR

2011-2015 jobs created

Source: EPU 10MP forecast

Slightly lower proportion of tertiary educated & skilled workforce as compared to OECD countries

13 Source: World Bank Education Statistics, Economic Intelligence Agency, International Labour Organisation, Korea Ministry of Labour, Singapore Ministry of Manpower, US Bureau of Labour Statistics

1 Management, professional and other skilled occupations

2 Tertiary education is the educational level following the completion of secondary education, i.e. after 11-12 years of basic schooling. Colleges, universities, institutes of technology and

polytechnics are the main institutions that provide tertiary education

Country

Labour force with tertiary education1

Percentage, 2007

25.6

31.9

32.7

34.1

34.8

35.0

35.9

24.5

OECD average = 27.0

36.0

42.5

42.9

36.3

43.8

29.3

51.0

25.3

OECD average = 37.6

Employment of skilled occupations2

Percentage, 2007

Malaysia (2012)

Singapore

Republic of Korea

Finland

United States

Australia

United Kingdom

Hong Kong

28.5%

Citizen

To achieve high-income status by 2020, Malaysia must shift trajectory to grow GDP by ~5 to 6% p.a. over the next 7 years

14

2000

2013

2020*

GNI

per capita ~ US$3,823

GNI


GNI


Pop

23.5m

Pop

30.0m

Pop

32.8m

1.6%

2.1%

2-3%

3.8 3.2

3.1

GNI per capita

Assumptions Inflation rate

Exchange rate

(Minimum level of high-income country status = US$15,000)

(Minimum level of high-income country status = US$12,616)

with slower population growth - increasing productivity will be key to achieve this vision of a high-income economy by 2020

population

Malaysia is on track towards a High Income Country

15

0

2

4

6

8

10

12

14

16

18

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

USD

$ (

Tho

usa

nd

)

Malaysia

Minimum HIC

-68.9%

GNI per capita income (USD$)

Note: Minimun HIC year 2020, estimates: USD$15,300 Sources: World Bank, IHS Global Insight & EPU

2018 USD$15,398

2000 USD$3,420

2010 USD$8,346

2020 USD$17,378

1990 USD$2,370

2013 USD$10,687

1990 USD$7,621

2000 USD$9,266

2010 USD$12,276

-63.1%

-32.0%

2013 USD$13,172

-18.9%

2020 USD$15,280

National Transformation Policy Towards High-Income Economy

16

o Reducing Crime

o Fighting Corruption

o Improving Student Outcomes

o Raising Living Standards of Low-Income Households

o Improving Rural Basic Infrastructure

o Improving Urban Public Transport

o Addressing Cost of Living

National Key Results Areas (NKRAs)

o Benchmarking to International Standards and Undertaking Liberalisation

o Rationalising the role of Government in business

o Strengthening Human Capital Development

o Enhancing Public Service Delivery

o Narrowing Inequality Gap

o Reforming Public Finance

o Unleashing economic growth - 12 National Key Economic Areas (NKEAs)

Strategic Reform Initiatives (SRIs)

• Creating a conducive environment for unleashing economic growth

• Moving towards inclusive socio-economic development

• Developing and retaining a first-world talent base

• Building an environment that enhances quality of life

• Designing Government philosophy and approach to transform Malaysia

1Malaysia People First, Performance Now

Preserve and Enhance Unity in Diversity

Transformation of Government to be more effective in

public service delivery

10th Malaysia Plan & 11th Malaysia Plan

Rural transformation to

attract private investment,

employment & economic activities

and encourage young people to return and serve

Government Transformation Programme

Rural Transformation

Programme

Economic transformation towards a high

income country by 2020

Economic Transformation Programme

Political Transformation Programme

National Transformation Policy

Political transformation programme to

complement the economic and public delivery initiatives

16

10th MP Strategic Thrusts

Content




Conclusion

2

4

5

17


3

HCD planning framework covers both supply and demand

18

Labour

Supply Labour

Demand

DELIVERY SYSTEM

• Education

• Training

Labour Market Operation

Population

growth + Immigration

Labour Force

Issues

Economic Growth

by Sector

Factor Intensity

+ Capital Labour

Tertiary: • University

• Colleges

• Polytechnics

• TEVT

Education: • Early childhood

• Preschool

• Basic education

• Unemployment

• Wage structure

• Productivity

• Skills requirement

• Mismatch/

Underemployment Stock

Flow

Production Technology

Elasticity of employment & output by

economic sector - Manpower

Requirement Approach (MRA)

IEO Forecast Model

Labour Force Projection

Labour Market Approach

HRD CGE Economy

Wide Model

1

2

3

5

4

Population projection (age-cohort component method)

IEO – Intake, enrolment and output of education institutions

Skills

training: • ILKA

• ILKS

Economic & other factors •World and Regional Economic Performance • Industrial Incentives and Disincentives •Labour and Immigration Legislation •Fiscal & Monetary Policy •Exchange Rate & Prices •Technology

Tool/model/methodology - projection

Integrated Talent Development Framework: Addressing entire education & professional cycle, seamless co-ordination & implementation

19

Early

childhood

Pre-

school

Basic

education

Tertiary education • University / college

• Polytechnic

• Community college

• Technical Education &

Vocational Training Institution

Professional

working life

Retiree/

Second

career

Ensuring Every Child Can Succeed

Holding Schools Accountable for Changes in

Student Outcomes

Investing in Great Leaders for Every School

Attracting and Developing Top Talent in

Teaching

Transforming the Effectiveness of Delivery

Mainstreaming and

Broadening Access to

Quality Technical Education

and Vocational Training

Enhancing the Competency

of Tertiary Graduates to

Prepare Them

for Entering the Labour

Market

Making the Labour Market More Flexible

Upgrading the Skills and Capabilities of the Existing

Workforce

Attracting and Retaining Talent Initiatives

(12)

Cluster

Attract, Develop and Retain

Top Talent in the Public

Service

Strengthening Academia-

Industry Cooperation and

Research Capacity

91

70

83 82

92

76

81

82

85

85

85

Status update Q4/2013 - Initiatives Monitoring System (%)

Revamping education system to

significantly raise student outcomes Raising skills to increase

employability

Reforming labour market to

transform Malaysia into a

high-income nation

0+ 4+ 6+ 17+ 20+ Age

1 2 3

82

Major Human Capital Policy Documents in the 10th MP period

20

Education Blueprint 2013-2025

Talent Roadmap 2020

Graduate Employability Blueprint

2012-2017

Higher Education Strategic Plan – 2020

(revisited)

Pelan Induk Latihan & Pembangunan Kemahiran

Pekerjaan Malaysia 2008-2015 (revisited)

Content




Conclusion

2

3

5

21


4

Higher education in up-skilling of workforce to ensure quality flow and stock to support economic growth and industry demand

22

Meet industry demand

Stock approach (existing workforce)

Skilled

(25%)

Semi-

Skilled

(63%)

Low

Skilled

(12%)

33% • Legislators, senior officials and managers

• Professionals • Technicians and associate

professionals

• Clerical workers • Service workers and shop and

market sales workers • Skilled agricultural and fishery

workers • Craft and related trade workers • Plant and machine operators and

assemblers

• Elementary occupations

Qu

alif

icat

ion

Up

grad

ing

Skills Upgrading

2012 2015

Flow approach (new entry to workforce)

Output from Education Institutions

Bridging Programme

Occupational breakdown

28.5% Citizen

HE

Competition among education institutions for shrinking pool of supply

23

2000 2005 2010 2015 2020 2025 2030

4,200

4,000

3,800

3,600

3,400

3,200

0

(‘0

00

pe

rso

n)

-95.7 2.8%

-0.4%

3,722

3,953 4,049

3,061

Notes: 2000-2009 – inter census estimate 2001-2009, 2010-2030 – population projection based on population census 2010 Vital Statistics – 2012 preliminary

Historical growth 2000-2010

Projection growth 2000-2040

1

2

1

2

2000 2005 2010 2015 2020 2025 2030

3,800

3,600

3,400

3,000

3,200

2,800 (‘

00

0 p

erso

n)

+81.8 2.4%

-0.2%

3,436

3,649 3,567

2,821

Tertiary education cohort’ of 17-23 years is expected to reduce overtime

1

2

Total population 17-23 years old Citizen population 17-23 years old

TFR drop from 3.0 in2000 to replacement level fertility at 2.1 in 2012

Challenges: U21 analysis

24

1. Resources - 71% (T12)

• the evaluation by U21 - a network of the world leading universities • research based on a research by the Institute of Social and Applied

Economics Studies of the Melbourne University, Australia • ranking of 50 countries 2013 • study based on the 4 elements - resources, environment, connectivity

and output

U21 Ranking of National Higher Education Systems 2013

3. Connectivity – 40% (B14)

4. Output – 19% (B5)

Rank - 27th Overall score - 52%

2. Environment – 87% (M25)

Current situation

25

Unemployed

Polytechnics

Primary and Lower Secondary Education (9 years)

Upper secondary – Academic stream Upper secondary

Technical & vocational stream

CC

Universities / College universities

Matriculation Sixth forms Polytechnics TEVT

Entry into job market Do not want

to work

Study

Foreign

0% 10% 20% 30% 40% 90% 80% 100% 70% 60% 50%

Desired Outcome

26

Unemployed

Polytechnics

Primary and Lower Secondary Education (11 – 12 years)

Upper secondary – Academic stream

Upper secondary Technical & vocational stream

Community colleges

Universities / College universities

Matriculation Sixth forms Polytechnics TEVT

0% 10% 20% 30% 40% 90% 80% 100% 70% 60% 50%

Entry into job market Do not want

to work

Study

University of the future: A thousand year old industry on the cusp of profound change

27 Source: http://www.ey.com/Publication/vwLUAssets/University_of_the_future/$FILE/University_of_the_future_2012.pdf

“… our study, key findings and recommended responses. It covers: • Drivers of change • Evolution of the university model • Implications for public universities, policy makers and the

private sector • How to play in the future — Ernst & Young’s framework for

assessing and designing a model for the future • Ernst & Young team and methodology

We hope the paper provides food for thought as universities chart their journey towards a new future.” Justin Bokor Ernst & Young

“Our primary hypothesis is that the dominant university model in Australia — a broad-based teaching and research institution,

supported by a large asset base and a large, predominantly in-house back office — will prove unviable in all but a few cases

over the next 10-15 years”

University of the future: the 5 derivers of change

28

Democratization of Knowledge Access Ubiquitous content Broadening of access to higher education Increased participation in emerging markets

Digital Technology • Mass open online courses & learning • Digital teaching & learning on

campus • Blended learning

Global mobility • Emerging markets become global scale

competitors • Academic talent increasing sourced by

emerging markets • Emergence of elite & truly globalised

university brand

Integration with Industry • Scale & depth of industry-based learning • Research partnership and commercialisation • Industry as competitors in the certification &

delivery of content

Contestability of Market & funding • Fiercely competitive

domestic & International student market

• Challenges to government funding

• Competing for new sources of fund

Source: University of the future: A thousand year old industry on the cusp of profound change

Current typical university model

29

Typical university model + ICT

30

Blue ocean university model

31

Future university model

32

Higher Education

11th Malaysia Plan: What are we doing

33 to survive and excel

FG 1, 6, 7, 10 INTENSIFYING & RATIONALIZING

CAPACITY

Strengthening HIEs (RU, MTUN,

New Uni)

Soft programmes training

Affirmative intervention for targeted group

(gender)

ICT support (MOOC)

FG 9 & 16 CORPORATE & GOVERNANCE

REFORM

Empowering governance for

HIEs

Financial & sustainability

Independence

Productivity & cost

Remuneration & reward

FG 11, 12 & 17 MARKET DRIVEN & RESULT BASED PERFORMANCE

Marketing and competitiveness

Product & services

Investment & asset

management

Graduate employability &

KPIs

FG 9 & 16

BRANDING & GLOBALIZATION

Malaysia as regional

education hub

Attracting world renown HIEs to

M’sia

Niche specialization

To become world top rank HIEs

FG 3, 5, 8, & 15 EXCELLENCE

INNOVATION & VALUE CREATION

Curriculum & pedagogy

Pre-sch; primary; secondary;

tertiary outcome monitor

R, D & C

Soft skills & industry

relevance

FG 2 & 13

PRIVATE – PUBLIC HIES &

ACADEMIA – INDUSTRY

Private HIEs investment

Industry input & intervention

Resource sharing & knowledge

transfer

Collaboration programmes

T3/C5: Harnessing Talent Demand Supply

Public Private Knowledge Base

High Income

Creative & Innovative

Sustainable & Inclusive

Accessible, Equitable, Affordable & Quality

….11th Malaysia Plan: What are we doing

34

FG 1, 6, 7, 10 INTENSIFYING & RATIONALIZING

CAPACITY

Strengthening HIEs (RU, MTUN, New Uni)

Soft programmes training

Affirmative intervention for targeted group

(gender)

ICT support (MOOC)

FG 9 & 16

CORPORATE & GOVERNANCE REFORM

Empowering governance for HIEs

Financial & sustainability

Independence

Productivity & cost

Remuneration & reward

FG 11, 12 & 17

MARKET DRIVEN & RESULT BASED

PERFORMANCE

Marketing and competitiveness

Product & services

Investment & asset management

Graduate employability & KPIs

Content




Conclusion

2

3

4

35


5

Goals: Where do we want to go?

36

…as the best university in Malaysia? …as world top 100 university? …as top choice industry preferred technology partner? …as Malaysian student’s top choice university? …to secure 30% private endowment by 2020? …to generate 10% profit growth per annum? …to expand its’ business income growth from …international market by 10% per annum? …to enhance R,D&C by 10% per annum?

Conclusion

37

“You can't change the past. You can only change the present which programs the future. That's where your

power is.” Tara Brach

““Today's pain is tomorrow's power. The more you suffer today, the stronger you are tomorrow."

“Stop waiting for the 'right time.' Success is a numbers game: the number of times you take a shot.“

“That time is now….Take enough shots and over time you'll grow more skilled, more experienced, and more connected. And that will mean a greater percentage of your efforts will succeed. Take enough

shots, learn from what didn't work, and in time you'll have all the skills, experience, and connections you need.”

ECONOMIC PLANNING UNIT PRIME MINISTER’S DEPARTMENT

MALAYSIA http://www.epu.gov.my

38