As Malaysia prepares for the tabling of Budget 2027, the Asia School of Business (ASB) is calling for a stronger focus on workforce transformation to help Malaysian workers adapt as artificial intelligence (AI), automation and emerging technologies reshape jobs across the economy.
ASB said Malaysia’s competitiveness will depend not only on attracting investment and adopting new technologies, but also on ensuring that its workforce is equipped to adapt to changing roles and opportunities.
“Technology will change the way we work, but the question is whether our workforce is ready to change with it,” said Melati Nungsari, Deputy CEO and Deputy Dean of Research and Academics, Associate Professor of Economics, and Faculty Director of the ASEAN Research Center (ARC) at the Asia School of Business. “Malaysia has invested heavily in infrastructure and digitalisation. We now need to make a similar investment in our people, helping workers acquire new skills, move into new roles and work alongside new technologies,” she said.
Against this backdrop, ASB has identified four areas it believes should receive greater attention in Budget 2027, ranging from employer incentives and workforce development funding to job redesign and stronger industry-education partnerships.
Linking upskilling incentives to meaningful outcomes
ASB is urging the government to encourage employers to invest in structured workforce development through stronger, outcome-based incentives.
Rather than linking tax incentives primarily to the number of training hours completed, ASB recommends tying support to measurable outcomes such as improved productivity, career progression and wage growth.
The approach would place greater emphasis on whether training and reskilling programmes actually help employees move into higher-value roles and contribute more effectively to their organisations.
With AI and automation changing the skills required across industries, ASB said workforce development should focus not simply on increasing participation in training, but on helping workers acquire capabilities that translate into career and productivity gains.
Making workforce development funding more flexible
ASB is also calling for greater flexibility in the use of the HRD Corp levy to support a wider range of workforce development needs.
The school recommends that existing funding mechanisms provide greater support for mid-career professionals, executive education and emerging areas such as AI, digital transformation and leadership.
This would allow organisations and employees to respond more quickly to changing skills requirements, particularly as businesses integrate new technologies into their operations.
The recommendation reflects the broader shift in workforce development, where employees may need to continuously update their capabilities rather than rely solely on skills acquired earlier in their careers.
Redesigning jobs instead of simply replacing them
As companies adopt AI and automation, ASB is advocating for government support that encourages businesses to redesign jobs and manage workforce transitions, rather than focusing solely on technology-driven replacement.
ASB recommends incentives that encourage companies to develop workforce transition plans covering redeployment, retraining and the creation of new, higher-value roles.
The aim is to help employees move alongside technological change and allow businesses to make better use of human capabilities as routine tasks become increasingly automated.
This approach would also support the creation of roles that complement new technologies, allowing workers to develop skills that remain relevant as the nature of work evolves.
Bringing industry and education closer together
ASB’s fourth recommendation is to strengthen partnerships between industry and education providers.
The school said government, businesses and universities should work more closely to identify emerging skills requirements and develop shorter, practical programmes that can respond more quickly to changing industry needs.
Closer collaboration could help education providers better understand the capabilities employers require while giving businesses greater access to talent equipped for emerging roles.
ASB said demand for leadership, digital fluency and applied AI capabilities has grown through its executive education programmes as organisations navigate workforce transformation.
“Our recommendations are informed by ASB’s work with corporate and government partners through its executive education programmes, where demand for leadership, digital fluency and applied AI capabilities has grown as organisations navigate workforce transformation,” said Melati.
Investing in people for long-term growth
Ultimately, ASB said the objective should not simply be to train more people, but to ensure Malaysians can continue creating value as the nature of work changes.
By combining workforce upskilling with job redesign, flexible funding and stronger collaboration between industry and education providers, Malaysia can better prepare its workforce for technological change.
For ASB, strengthening human capital alongside digitalisation and investment will be important to positioning Malaysia for sustainable, high-value economic growth under Budget 2027.
