Malaysia must move beyond increasing technical and vocational education and training (TVET) enrolment and focus on developing industry-relevant skills, improving productivity and accelerating technological innovation to ensure Budget 2027’s substantial allocations deliver meaningful economic returns.
ASEAN Future Workforce Council (AFWC) Executive Chairman Dato’ J. Palaniappan said while the government’s RM8 billion allocation for TVET across ministries represents a significant commitment to workforce development, greater emphasis must be placed on transforming how skills are developed and applied across industries.
Budget 2027 also provides RM3 billion to HRD Corp to support three million skills-training opportunities and RM500 million through the Skills Development Fund Corporation (PTPK) to finance eligible trainees.
Palaniappan, who is also Vice President of the Federation of Malaysian Manufacturing (FMM), said these investments recognise the importance of equipping Malaysians with the skills needed to support the country’s economic ambitions.
However, he questioned whether sufficient resources were being directed towards developing new capabilities rather than maintaining existing training systems.
“The future of TVET cannot be measured simply by the amount of money allocated, the number of training places offered or the number of certificates issued,” he said in his commentary on Budget 2027.
He stressed that Malaysia’s skills development strategy must respond to rapid technological changes involving artificial intelligence (AI), robotics, automation, semiconductors, advanced manufacturing and the energy transition.
With technological advancements potentially rendering existing skills obsolete faster than conventional training programmes can adapt, he said Malaysia must develop a system capable of continuously anticipating and addressing emerging industry requirements.
Although Budget 2027 includes initiatives involving digital skills, AI and robotics, Palaniappan noted that limited details were provided on how much of the overall allocation would be channelled towards research and development, training innovation and emerging technologies.
He called for greater transparency in distinguishing operational expenditure from strategic development spending to ensure resources are effectively directed towards transforming the country’s TVET ecosystem.
Proposes Dedicated TVET Innovation And Productivity Fund
To strengthen the link between workforce development and industrial competitiveness, Palaniappan proposed establishing a dedicated TVET Innovation and Productivity Fund.
The fund would facilitate collaboration among TVET institutions, universities, manufacturers and technology companies to address real-world industrial challenges.
He said funding should support projects involving industrial automation, robotics, AI adoption, advanced manufacturing, energy efficiency and new production technologies.
For example, TVET institutions could collaborate with small and medium-sized manufacturers to develop affordable automation solutions while retraining technicians to operate and maintain new technologies.
Such initiatives would enable businesses to improve productivity while creating opportunities for workers to acquire higher-value technical competencies.
Palaniappan suggested that funding be awarded competitively and linked to measurable outcomes, including technology adoption, productivity improvements, industry-recognised qualifications and progression into higher-skilled employment.
Training Success Must Be Measured By Employment And Wage Growth
Palaniappan also urged the government to adopt stronger performance indicators when assessing the effectiveness of public investments in skills development.
He noted that HRD Corp’s target of three million training opportunities does not necessarily translate into three million unique trainees, completed programmes, new qualifications or additional jobs.
Instead, he proposed evaluating training programmes based on completion rates, employment in relevant occupations, wage progression, employer satisfaction and measurable productivity improvements.
Training providers that demonstrate strong industry partnerships, successful technology adoption and positive employment outcomes should also be given opportunities to expand their programmes.
However, he acknowledged that institutions serving disadvantaged communities or developing emerging technical disciplines may require different performance measures, as not every programme can generate immediate productivity gains.
Stronger Industry Collaboration Needed To Anticipate Future Skills
Palaniappan further called for a national skills intelligence mechanism involving employers, industry associations, investment agencies and training institutions to identify emerging occupations and critical skills shortages.
He said such a mechanism would enable Malaysia to anticipate future workforce requirements rather than merely responding to existing job vacancies.
The information gathered should guide curriculum development, instructor training, equipment investment and professional certification.
He also advocated modular and stackable qualifications that would allow workers to continuously upgrade their skills throughout their careers without having to repeat entire training programmes.
Equally important, he said, is ensuring TVET instructors remain familiar with current industrial technologies through structured industry attachments, professional development and partnerships with technology providers.
Palaniappan stressed that industries must play an active role in shaping training programmes, adopting new technologies and creating higher-value employment opportunities.
He added that stronger coordination among ministries, educational institutions and employers would be crucial to ensuring the allocations translate into measurable improvements in workforce capabilities and industrial competitiveness.
“Malaysia must move from funding skills training to delivering skills outcomes—and ultimately, to funding skills innovation that transforms our economy,” he said.
Ultimately, Palaniappan said the success of Budget 2027’s TVET investments should be judged not by the number of people trained, but by whether those investments enable Malaysian businesses to become more innovative, productive and technologically competitive in global markets.
