From Samirul Ariff Othman

There’s a paradox unfolding in Malaysia. Its economy is growing, but there aren’t more jobs. Or at least, not the kind that makes young graduates stay, build families, or innovate.

The country’s GDP has bounced back impressively from the pandemic, surging 8.9% in 2022 and projected to grow another 5.1% in 2024. But job creation? It’s stuck at neutral.

The number of jobs added annually has barely moved the needle since before Covid-19. And worse, most of those available are low- or semi-skilled.

This is the uncomfortable truth: Malaysia is revving its economic engine, but the tyres aren’t gripping the road.

Consider this: in 2022, only 11,200 skilled jobs were created out of 71,000 — less than 16%. Meanwhile, thousands of university graduates enter the workforce each year.

This disconnect is not just economic inefficiency. It’s also a warning flare. It fuels brain drain, wage stagnation, and growing frustration among Malaysia’s young and educated.

We are witnessing a form of “pass-through” development — goods come in, goods go out, but value is captured elsewhere. That is not a sustainable growth model. That’s a holding pattern.

This is where Xi Jinping’s recent state visit to Malaysia has taken on added weight. It came at a moment of global realignment: the US is raising tariff walls against Chinese goods, and China is recalibrating its supply chains to navigate a fractured world economy.

What needs to be done

Malaysia could become one of China’s new lanes — but it must choose wisely in how to engage.

The visit should not be reduced to a symbolic or ceremonial gesture. It is a stress test for Malaysia’s strategic readiness — its ability to make the transition from low-margin assembly work to high-value participation in regional and global value chains.

Malaysia must not become a mere backdoor for tariff circumvention or a staging ground for re-exports. That’s a race to the bottom.

Instead, Malaysia must position itself as a value-adder:

• A location where Chinese components are not only assembled but also refined and improved.
• A hub for research and development, product certification, and localisation — especially for the Islamic and Asean markets.
• A place where software is written to make hardware smarter, where advanced testing, green tech, precision engineering, and final customisation take place.

The modern supply chain is not linear. It’s modular and adaptive. Malaysia doesn’t need to absorb China’s entire US-bound export volume. It only needs to plug into the right nodes — those that create skilled jobs, capture intellectual property, and anchor the next wave of industrial transformation.

If done right, Xi’s visit could catalyse:

• Joint ventures in semiconductors, EVs, battery tech, and AI hardware.
• Chinese R&D centres in Cyberjaya or Penang, placing Malaysian engineers at the innovation table.
• A smarter reboot of Belt and Road projects — focused not on vanity infrastructure but on ports, logistic hubs, and digital corridors aligned with Asean’s integration goals.

But all this hinges on one inconvenient truth: Malaysia can no longer afford to grow the wrong way.

The way forward

The New Industrial Master Plan 2030, the 12th Malaysia Plan, and the Madani Economic Framework all provide the vision, emphasising high-value investments, sustainability, and digital transformation. What Malaysia lacks is execution.

This moment calls for more than capital. It calls for capacity building.

Malaysia must structure joint ventures to protect local interests. It must demand technology transfer, skills development, and serious job creation in return for access and incentives.

It must ensure that local small and medium enterprises (SMEs) are not sidelined but are integrated into global supply chains.

This is Malaysia’s geo-economic balancing act. Get it right, and the country becomes a neutral but strategic node in both China’s Dual Circulation strategy and the West’s China+1 diversification push.

Get it wrong, and Malaysia risks becoming a glorified transhipment hub — dependent, hollow, and replaceable.

Here’s the final truth: value creation is sovereignty. And the most strategic thing Malaysia can do right now is simple — make itself indispensable. Not just to China or the West, but to its own people, through good jobs, decent wages, and real upward mobility.

Growth without jobs isn’t progress. It’s erosion. And Malaysia deserves more.

Samirul Ariff Othman is an adjunct lecturer at Universiti Teknologi Petronas, an international relations analyst and a senior consultant with Global Asia Consulting.

The views expressed are those of the writer and do not necessarily reflect that of FMT.