Human Capital Development (HCD)
Supporting Policies

Human Capital Development (HCD)

The Human Capital Development  (HCD) Strategic Reform Initiative (SRI) follows on from recommendations proposed under the New Economic Model. The SRI focuses on enhancing and addressing the human capital capabilities and needs of the 12 National Key Economic Areas (NKEAs) as well as strengthening the skills of Malaysia's labour force.

Human Capital Development Strategic Reform Initiative

The initiatives undertaken through this SRI are implemented via a two-pronged approach, comprising:
  • Workplace transformation, representing the elements required for a workplace to function effectively; and
  • Workforce transformation, which focuses on complementing the Government's measures to enhance human capital by leveraging women's talent, providing comprehensive labour market data and upskilling and upgrading of the workforce.

Workplace Transformation

The workplace transformation initiative is focused on addressing three main areas, comprising:
  • Modernising Malaysian labour laws in line with the needs of a high-income economy
  • Enhancing the labour safety net to ensure workers are protected during times of economic transition; and
  • Strengthening the human resource (HR) management of Malaysian small- and medium-sized enterprises (SMEs) which make up 99% of local businesses.

Modernising labour laws and enhancing the labour safety net

Among measures that have been addressed under these areas include increasing the population's standard of living by introducing a minimum wage for all workers; and raising the minimum retirement age to 60 years to retain a larger number of local knowledge workers and pave the way for higher productivity.

The Government is also currently reviewing the Industrial Relations Act 1967 in an effort to allow more efficient resolutions for unfair dismissals and trade disputes, ensure effective enforcement of Industrial Court awards; and balance business needs and employees' rights through conciliation.

The Employment Act 1955 is also under review to ensure the law is in line with emerging needs of local and foreign employers, as well as with the needs of an industrialising nation's workforce. Any amendments to the law are aimed at spurring productivity and efficiency, increasing income levels and protecting employees to support local, regional and global competitiveness.

In order to ensure public awareness and promote stakeholder engagement on any changes to labour legislation, the Government also takes measures such as conducting nationwide roadshows and issuing guidelines on the implementation of the laws.


  • The Minimum Wages Order 2012 was fully enforced by the Peninsular Malaysia, Sabah and Sarawak Departments of Labour in January 2014.
  • As at December 2014, 98.9% of employers in Peninsular Malaysia had implemented minimum wages, 98.7% in Sarawak and 97.2% in Sabah.
  • The National Wages Consultative Council (NWCC) is in the final stage of reviewing the Minimum Wages Order, in line with the NWCC Act 2011 which requires a review at least once every two years.
  • The Government announced the introduction of an Employment Insurance System in the Budget 2015 presentation.

Strengthening HR Management in SMEs

In line with Malaysia's high-income goal for 2020, the country's SMEs, which already contribute to 31% to GDP and employ 60% of the workforce, must account for at least 40% of the economy's output.

This initiative aims to achieve this goal by enhancing the SMEs' performance through a transformation of their HR processes and capabilities, equipping SMEs with the tools necessary for maintaining productivity and managing their workforce.


  • A tracer study was conducted in 2014 to increase the efficiency of the National Human Resource Centre, with recommendations proposed to enhance the centre's services, revamp the NHRC portal to improve visibility and attract more visitors and reinforce the promotion of NHRC services.

Workforce Transformation

The initiatives implemented under workforce transformation are centred on the following focus areas:
  • Upskilling and reskilling the workforce;
  • Leveraging women talent; and
  • Labour market analysis.

Workforce Transformation

Upskilling and reskilling the Malaysian workforce

This policy area undertakes a two-pronged approach to build a workforce that is sufficiently skilled to fulfil the needs of a high-income nation. These measures comprise upskilling NKEA-specific manpower and providing manpower training programmes.

Upskilling the manpower involved in the 12 NKEAs

This involves engaging industry players, educational institutions and the Government to develop sustainable, sector-led approaches to address the skill needs of each NKEA.

In 2012, this initiative focused on developing a skilled workforce for the Oil, Gas and Energy NKEA. Centred on enhancing the capabilities of the solar photovoltaics (PV) industry, efforts undertaken in 2012 included:
  • The Sustainable Energy Development Authority Malaysia (SEDA) commissioned German-based Renewables Academy (RENAC) to conduct a 10-day Train-the-Trainer (TTT) programme on the design and installation of grid-connected PV systems.
  • RENAC also recommended the expansion of existing training facilities at University Teknologi Mara and the Selangor Human Resource Development Centre following its evaluation of the two centres.
  • SEDA held three mini-hydropower plant industry engagement workshops in Perak, Pahang and Sabah.


  • In 2014, the Economic Planning Unit was tasked by the Cabinet to lead a Public Skills Institution Audit Exercise across seven Ministries.
  • PEMANDU facilitated the establishment of a partnership between the Department of Skills Development, the German-Malaysian Institute and the Malaysian German Chamber of Commerce and Industry in 2014. The scheme involves training with 17 companies.
  • The National Talent Enhancement Programme has trained a total of 1,103 trainees as at December 2014, against a target of 682.
  • Recognition of Prior Learning, an assessment which allows upskilled employees to demand a higher salary according to his/her expertise, saw the participation of 17,470 employees as at December 2014.

Providing upskilling training programmes for the Malaysian workforce

These upskilling training programmes are provided through the MSC Malaysia MyProCert Programme (MyProCert), the National Talent Enhancement Programme (NTEP), Industry Academia Collaboration (IAC) and the Technical Education and Vocational Training (TEVT) Curriculum and Trainers' Programme.
  • MyProCert aims to enhance the skills of the Malaysian workforce in line with international certification standards. Initially offering SAP certification, the programme now includes other certification partners to cover more skill sets, providing international professional certification at affordable rates. More information is available at the following link.
  • NTEP comprises a 12-month attachment programme with the 12 NKEAs and non-NKEAs under the five Regional Economic Corridors. The programme was held from June 2011 to December 2012.
  • IAC, managed by the Multimedia Development Corporation (MDeC) and supported by PEMANDU, enables global technology players to establish strategic alliances with public and private institutions of higher learning by investing in curriculum development and TTT programmes.


  • SEDA Malaysia developed and organised four workshops related to renewable energy systems:
    • A four-day competency training course on field acceptance test of small hydropower plants. Under the programme, both technical and practical sessions focussed on relevant international standards applicable to small hydro installations.
    • Two Train-the-trainers (TtT) sessions related to grid connected solar photovoltaic (GCPV) systems installation and maintenance training were held in June to develop a pool of trainers for the course. A total of 20 trainers were trained for this TtT programme.
    • 68 wiremen and chargemen were trained under SEDA Malaysia Grid-Connected Photovoltaic Systems Course during the August-November period.
    • Developed a GCPV System Design course to replace the current International Sustainable Power Quality training module following the expiry of SEDA Malaysia’s ISPQ license and decision by ISPQ accreditor Global Sustainable Energy Solutions to cease operations in February.
  • MyProCert received nearly 5,000 applications for the 33 skill sets offered during the year. The full list of certification and training programmes is available on
  • During the year, IAC collaborated with Intel, Agilent, National Instruments and Altera to conduct TtT programmes in the area of embedded systems. As of December 31, 2013, 10,662 knowledge workers have benefitted from IAC programmes, surpassing the target of 8,000 knowledge workers for the programmes.

Leveraging women's talent

This measure supports targets outlined under the 10th Malaysia Plan, such as increasing the female labour participation rate to 55% (2011: 47.9%), which is expected to raise Malaysia's GDP by 2% annually.

This effort is also focused on a 30% representation of women on the boards of public-listed companies (PLCs) by 2016.

The Government has embarked on a series of supportive measures to support these goals, such as:
  • Strengthening the platform for upskilling women talent;
  • Increasing entrepreneurship activities for low-income earners; and
  • Advocating a holistic structural social support system for childcare and eldercare solutions to encourage women to remain in the workforce.


  • The participation of Malaysian women in the workforce has risen to 53.4% in Q1 2014 from 49.2% in 2012.
  • 515 childcare centres were registered with JKM in 2014.
  • As part of the Government's effort to subsidise the training of childcare minders, 3,296 childcare minders completed their training in the Kursus Asuhan PERMATA programme in 2014.
  • On 16 April 2014, the Cabinet decided to review the possibility of locating workplace childcare centres on levels above the second floor in commercial buildings, following feedback from companies that they are constrained by existing building usage.
  • The number of women on boards has risen to just over 10% as at the end of 2014 from 8% in 2012.
  • 932 women were trained under the Women's Directors Programme conducted by NIEW, MINDA and LeadWomen in 2014. Of these, 17 have been appointed to boards.
  • PEMANDU is studying the feasibility of setting up the 30% Club, a global network of business advocates championing board diversity.

Labour market analysis

Labour market analysis comprises a critical component in helping the Government identify and address Malaysia's manpower needs in its transformation towards high-income status, as well as to plan effective labour policies.

As such, the Government in January 2012 established the Institute of Labour Market Information and Analysis (ILMIA), whose role among others is to forecast workforce demand in industry sub-sectors and build a centralised and interactive labour market database.


  • In 2014, ILMIA commenced Phase Two of the ILMIA Portal, which has seen it complete the procurement and installation of a Labour Market Integrated Data Warehouse.
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