The next stage in Malaysia’s catching-up process requires that economic growth be knowledge-led and not just capital-led. The post-1970 New Economic Policy (NEP) produced a large middle class through economic centralisation. But the decentralisation of decision-making is badly needed to enable knowledge-led growth to wrench Malaysia out of the middle-income trap and to spread the fruits of economic growth more equally. Reform of the education system, and not just economic policy and the financial system, is urgently needed.
The education system fails in imparting competence in basic skills such as reading, mathematics and science to the average student and promoting academic excellence in talented students. Malaysia’s education system is unnaturally low in quality according to OECD cross-country surveys on the scores of primary and secondary school students in basic skills. In the 2012 OECD sample of 65 countries, Malaysia’s rank for mathematics, reading and science were 52, 59 and 53, respectively. Malaysia’s scores were comparable to those of Thailand (50, 48 and 49), Chile (51,48 and 47) and Mexico (53, 51 and 55).
Government expenditure on education per capita in 2011 (measured in PPP-adjusted 2011 international dollars) was PPP$1,307 for Malaysia, PPP$701 for Thailand, PPP$860 for Chile and PPP$832 for Mexico. This huge gap between what Malaysia spends and what Thailand, Chile and Mexico spend indicates some severe problems in Malaysia’s education system.
There is a problem of accountability and competence of teachers in the Malaysian education system due to the absence of performance-based pay and the guarantee of lifelong employment. Then there is the problem of the school curriculum – imposed by the central government on all government-aided schools – being set at a low academic level, resulting in an upward trend in the number of students receiving perfect scores in the annual national examinations.