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Assessing the Current Human Resources Talent Pool in ASEAN
Foreign investors looking at ASEAN need to understand the availability of talent and regulatory conditions as it exists in each member state. A regional bloc with over 600 million people, ASEAN is endowed with a diverse workforce, but these are spread across different levels of the developmental spectrum.
Factor-driven economies, such as Cambodia, are characterized by low education levels and incomes and are best positioned to provide basic manufacturing services and the production of basic components as part of an extension of more complex production lines from countries such as China.
Innovation-driven economies
Further, innovation-driven economies like Malaysia and Singapore can conduct high-value manufacturing, provide professional services, and assemble complex components. However, human resources are considerably more expensive in these countries.
Prior to the pandemic, Cambodia had the highest labor participation rate in Southeast Asia with over 80 percent of the working population aged between 16-and 64 being employed or seeking employment. However, Cambodia’s workforce is characterized by low education and low-to-medium-skill levels, in addition to low-technical literacy. Of the more than three million ‘wage employees’, more than 50 percent are concentrated in three sectors: textiles, garments, and footwear manufacturing; agriculture; and construction.
Some 89 percent of the workforce has completed primary education (or less), while only six and five percent have completed secondary and post-secondary school, respectively. The majority are still employed in Cambodia’s textile, garment, and tourism industries play an important role in the country’s economy, contributing to over 30 percent of the total GDP combined.
The government is looking at new sectors to help with economic development. The country is eager to develop its human resources in manufacturing, such as food and beverages, plastics, as well as paper processing.
Indonesia has ASEAN’s largest labor force
Indonesia has ASEAN’s largest labor force of over 136 million people with the majority being relatively young. Higher education institutions are dominated by smaller private providers of lower quality, while public universities are highly competitive. Further, the disparity in economic development between each province means unemployment rates between provinces can vary substantially.
Indonesia only has an estimated 55 million skilled workers. According to the Master Plan for the Acceleration and Expansion of Economic Development in Indonesia (MP3EI), the country will need 113 million skilled workers by 2030. Furthermore, many vocational training programs do not meet industry needs. This has contributed to the fact that the majority of the country’s workforce is employed in the informal sector.
Indonesia is expected to experience a demographic bonus in the coming decade with 70 percent of the population becoming working adults by 2030, making the country ripe for increasing economic growth. As such, policymakers are prioritizing vocational training to strengthen the skills of the Indonesian workforce as the country looks to solidify its standing as a G20 member.
Malaysia is fast becoming a sub-regional interconnectivity hub for Southeast Asia and according to the World Bank, the country is likely to transition to a high-income economy between 2024 and 2028, despite setbacks caused by the pandemic. Living standards have been transformed in less than a generation and poverty has been slashed to less than one percent of the population.
This article was first published by AseanBriefing which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in in China, Hong Kong, Vietnam, Singapore, India, and Russia. Readers may write to [email protected].
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