A report by the Department of Statistics Malaysia (DOSM) in 2019 showed that 390,000 out of 560,000 SPM candidates were interested in joining the
workforce immediately after the exam, while only 170,000 students were interested in continuing their studies. The three main factors why youths aged 17 to 18 did not want to continue their studies were:
- The belief that furthering their studies did not guarantee better-paying jobs;
- The availability of job opportunities in the gig economy, and;
- The interest to become influencers on social media.
Such is the sad state that this worrying trend is set to continue over the years. This could potentially impact Malaysia’s future supply of skilled labour, hindering its progress toward becoming a high-tech nation.
But on the other end of the spectrum, the Malaysian government has adopted aggressive measures aimed at internationalising its higher education system, a process it hopes will improve the sector’s dynamism and make it more responsive to the demands of a knowledge-driven world economy. In 2012, the higher education ministry established Education Malaysia Global Services (EMGS) to promote Malaysia as an international education hub and facilitate the movement of international students into the country.
Offering a degree that is well-recognised globally, Malaysian universities rank in the world’s top universities, with a total of 13 in the top 600, according to
QS World University Rankings. Based on QS World University Rankings by Subject 2022, 10 Malaysian programmes were placed among the top 50 universities for studying their academic subject.
As a result, Malaysia was the 13th-largest destination for international students in the world in 2020. According to the UNESCO Institute of Statistics (UIS), in 2020, Malaysia hosted 89,193 international degree-seeking students.
Smart Investor talked to several industry experts to learn more about the state of Malaysia’s education among the youth and their level of financial literacy.
The State Of Malaysia’s Education And Financial Literacy Among The Youths
“Education at the very base of it is required for everybody. Having an education will lay the foundation that the youths of today require to be better shapers of tomorrow for society to live in,” said Raja Edriana Baizura, head of career services at Taylor’s University.
“It is said that education and knowledge are two different things. Knowledge is what one knows, and education is how one learns it. Knowledge can be gained by the environment we are exposed to while growing up, while education is acquired knowledge from teaching and learning,” she added.
“Being in Asian culture, the value of structured education has not diminished. In fact, those who can afford it would be looking for alternatives for their children to receive a better education than what is being offered mainstream. The pressure of getting straight A’s is still there as it is perceived that this would be a stepping stone to tertiary education and progress in life,” echoed Terence Ooi, the co-founder of Wiki Impact.
“In the past, a heavy emphasis was on getting higher education to secure a high-paying job. However, current perceptions about having a traditional 9-to-6 job have shifted as youths are more inclined to look for alternative sources of income, such as trading or even growing and monetising their social media. While general sentiments are that higher education may aid one’s chances in securing a better job, the key is to find your niche,” stated Yeap Jun Rong, a market strategist at IG International.
“Today’s job landscape is so competitive, and while education does not guarantee a high-paying job or that you will land your dream career, it is a fundamental requirement. Nonetheless, it is undeniable that higher education leads to better job prospects in the long-term. Beyond furthering your studies, continuous learning is also very important, more so now as technological advancements shift the demands of what an organisation requires from talents,” shared Haida Tahir, the director of contingent workforce central at PERSOLKELLY Malaysia.
“I have never met a young person disinterested in learning. Curiosity is the most fundamental aspect of learning, and it is impossible to extinguish. I have, however, met many people who are disaffected with how we teach,” explained Dr Sanjay Sarma, CEO, president, and dean of Asia School of Business (ASB).
“At ASB, we are all about action – and I believe classrooms need to have a more engaging, thought-provoking nature for the next generation to be prepared,” he added.
The emergence of new methods of teaching and learning platforms, such as self-learning through learning management systems (LMS), has given students the ease of studying at their own pace. This minimises the effects of constraints they have when pursuing their education and their opportunity cost. They are becoming smarter and gaining skills faster than their predecessors, all at the same time.
For example, Udemy is an online learning platform founded in 2010. According to the company’s website, Udemy has over 155,000 courses taught
by over 70,000 instructors and has served over 50 million students worldwide as of 2021. In terms of growth, Udemy has seen significant expansion over the years. In 2016, Udemy reported that it had over 11 million students enrolled in its courses, and by 2019, the number had grown to over 50 million.
The number of courses on the platform has also grown significantly, from around 30,000 in 2016 to over 155,000 in 2021.
“Through our foundation arm, Forest Interactive Foundation (FIF), we are trying to bridge this gap by developing future innovators in tech. Our FIF programmes upskills young entrepreneurs and students alike by curating a robust tech-focused hands-on curriculum needed to solve the digital skills shortage and increase the overall employability rate within the country,” said Johary Mustapha, founder and CEO of Forest Interactive.
“Through our various programmes, we provide the younger generation with a varied skill set to help them stay relevant with the progressing economy. Our #SeKODlah programme, partnered with corporations like CIMB Bank and CIMB Foundation, would enable the future Malaysian workforce to explore and develop in-demand skills through e-learning and mentorship. If we are to meet the ever-increasing demand of the economy, it must be a collective gesture of both the private and public sectors,” shared Nisa Saharuddin, the community engagement lead at FIF.
Education is and always will be important. However, the dynamics of learning have changed. Evidently, the younger generation places less value on traditional education as, from their viewpoint, there are multiple ways of achieving economic growth.
Are The Youths Of Today More Financially Savvy?
Bankruptcy cases are a telling point of where we stand regarding financial literacy. The number of bankruptcy cases seems to be declining, but let’s not forget that our government amended the Insolvency Act 1967 in 2017, raising the bankruptcy threshold from RM30,000 to RM50,000. This was followed by another amendment, raising it from RM50,000 to RM100,000.
Personal loans are the highest cause of bankruptcy among Malaysians, contributing almost 42%, followed by hire purchase loans at almost 15%.
Another worrying sign is the high number of cases in the 25 to 34-year-old age group, which makes up more than 21%, with the highest being in the 35 to 44-year-old age group, with more than 37%.
“As information is readily available on the internet, consuming the right information to be financially savvy is important. Not many know how to save or start investing early but those who have early exposure to financial literacy will or may start saving and investing earlier in life,” said Edriana.
“From my observation, they are generally still quite largely ignorant. Many are still unaware of basic investment options and opportunities. However, if compared to generations of the past, they do have greater access to resources on financial tips and investments – thus if you compare apple to apple, they are in a greater state,” added Ooi.
“They are more aware and practical of their financial capacity, so it’s a yes – if we take the literal meaning of financially savvy. However, long-term planning is also important, and that depends on a case-by-case basis,” opined Johary.
Where Do The Youths Invest?
The Institute for Capital Market Research Malaysia (ICMR) recently conducted a nationwide study to better understand their issues, challenges, and behaviours regarding personal finance and investing. The survey was distributed to 1,500 respondents and found that millennials and Gen Z Malaysians can be categorised into three groups, each with unique characteristics.
A higher proportion of respondents from the east coast do not invest (Group A), while Group C has a higher proportion from the Central region. More notably, there are differences in household income levels between all three groups. While 69% of Group A earns less than RM5,000 in monthly household income, 56% of Group B earns between RM3,000 to RM7,000.
Meanwhile, respondents who fall under Group C were found to have significantly higher incomes, with 31% having household incomes above RM10,000.
Financial Literacy And Risk Tolerance
ICMR’s research suggests a link between financial knowledge, financial confidence, and risk tolerance with the likelihood of investing and the products invested in. For instance, someone who does not know much about financial matters and has little financial confidence would also be unwilling to take risks – hence not investing and falling into Group A.
This could also explain behavioural differences between Group B, which invests only in ASNB funds or unit trust products, and Group C, which invests in other capital market products. The first unit trust company in Malaysia was set up in 1959. This might be why retail investors are most comfortable with unit trust products, considering their long history in Malaysia.
Additionally, many investors who only invest in ASNB funds or unit trust products (Group B) tend to be less risk tolerant and financially confident. In contrast, those who invest in other capital market products like shares or cryptocurrency, which are perceived to be riskier, tend to have higher risk tolerance levels and feel more financially confident.
“Based on our data at IG International, with the recent volatility, youths are more inclined to trade major US indices and forex. The Dow Jones Industrial Average and Nasdaq 100 are popular choices. Since the Covid-19 trading boom, youths continue to have their feet in the game in terms of trading,” shared Yeap.
“In addition to the stock market, young people are also investing in alternative assets such as cryptocurrency, NFT’s, and real estate. Cryptocurrency has become increasingly popular among younger generations, with platforms like Coinbase and Binance providing an easy way to buy and sell various cryptocurrencies. Real estate investing has also gained popularity among young people, with crowdfunding platforms like Fundrise and RealtyMogul allowing investors to pool their money together and invest in commercial real estate,” explained Jason Low, co-founder, and CEO of Virtualtech Frontier (VTF).
“Personally, I have seen students who invest in the stock market or even trading to make their money ‘grow’ even as early as their first year of university. We invite speakers from the industry to introduce topics such as financial literacy to students in their final year during Professional Development Week, where they learn the importance of being financially savvy,” added Edriana.
“Most young people I know are investing in insurance and crypto. This is perhaps the access they have to either opening the accounts or someone within the industry educating them,” said Ooi.
“Some common options for youth to invest in are NFTS, cryptocurrency, stocks, fixed deposits, and real estate. Stocks are popular with those looking for higher returns and are willing to take more risk while fixed deposits are a more conservative option that offer guaranteed returns. Real estate is also popular for those who are looking for long-term investment with the potential for appreciation,” mentioned Johary.
The State Of Malaysia’s Education And Financial Literacy Among The Youths Summary
In short, youths of today are more financially savvy than previous generations. But it is important for them to educate themselves about personal finance and investing and seek advice and guidance from trusted sources.
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