Randall Jones
OECD Economic Surveys: Malaysia 2026
Abstract
The education system has helped Malaysia develop from a low-income country to the threshold of high-income status. However, declines in students’ results in international assessments, such as PISA, have raised concern. Current plans to make preschool mandatory for five-year-olds, while improving its quality, should improve opportunities and outcomes, along with policies to increase teacher accountability and the quality of their teaching in preschool through secondary schools. In addition, the age of enrolment in primary school has been lowered from seven to six. Giving teachers and principals greater autonomy to determine the most appropriate way to achieve educational objectives would also be beneficial. Improved performance should be accompanied by measures to narrow the performance gaps resulting from socioeconomic status and from urban-rural differences. Technical and vocational education and training (TVET) have the potential to boost productivity, especially by putting it on par with academic pathways and reducing fragmentation. Malaysia’s higher education institutions have made considerable progress in international rankings and attract a significant number of international students. However, the high level of skill-related underemployment among tertiary graduates has contributed to declining enrolment rates. Greater autonomy and accountability of university leadership could help reduce skills mismatches.
Education has played a key role in Malaysia’s economic development. At the time of the country’s independence in 1957, over half of the population had no formal education. Only 6% of Malaysian children had attended secondary education, and 1% had obtained a post-secondary level qualification. Workers’ mean years of schooling rose from 5.8 in 1970 to 10.4 in 2024 and remains above ASEAN peers (Figure 4.1). By 2011, Malaysia had achieved near universal net enrolment for primary school at 97%, while enrolment in upper secondary education jumped from 45% to 82% (Ministry of Education, 2013). Malaysia has emerged as a prominent education hub in Southeast Asia, attracting a growing number of international tertiary students.
Source: Asian Productivity Organisation (2025), Asia QALI database, Asian Productivity Databook 2025.
The rising quality of the labour force is estimated to have directly boosted labour productivity by 25% between 1970 and 2023 (Figure 4.2), while encouraging fixed capital formation. Malaysia is projected to become a high-income country (by the World Bank’s criteria) by 2028-30. However, less than half of all Malaysians will have an income above the high-income threshold. On average, household incomes need to double for everyone in the country to reach that threshold (World Bank, 2025). While Malaysia’s economic growth has been driven primarily by labour-intensive, low-cost manufacturing, this economic model will not sustain growth indefinitely (Malaysia Investment Development Authority, 2020). Malaysia needs sustained high productivity growth driven by innovation and technological progress. The official Malaysia Education Blueprints 2013-2025 and 2026-2035 and the Malaysia Higher Education Blueprint 2026-2035 call for a transformative overhaul of the education system, recognising an increasing performance gap relative to other countries and calling for the need to respond to global economic, technological and social trends to ensure that the education system remains relevant and competitive. Reference is made to a goal that “All children will have the opportunity to attain an excellent education that is uniquely Malaysian and comparable to the best international systems”. Reflecting these strong ambitions in education, the ThirteenthMalaysia Plan 2026–2030, the country’s major medium-term policy planning tool, has a strong focus on education. The proposed education reforms are summarised in Box 4.1.
Annual average percentage contribution of labour quality to productivity growth between 1970 and 2023
Note: Labour quality is calculated as the weighted growth rate of individual skill categories of workers.
Source: The Conference Board, Total Economy Database, April 2023.
Malaysia’s education system consists of the following elements:
2 years of preschool for children aged 4 to 6.
6 years of primary education from ages 7 to 12 for students in years 1–6 (grades 1-6).
3 years of lower secondary education from ages 13 to 15 (Form 1-3, equivalent to grades 7–9).
2 years of upper secondary education for students aged 16–17 (Form 4-5, equivalent to grades 10-11), with different paths available (academic, TVET and religious education). At the end of Form 5, students take a nationwide exam to receive the Malaysian Certificate of Education (SPM).
The SPM allows students to enter pre-university education, either in a matriculation college (1 year) or Form 6 (1.5 years leading to a STPM). In matriculation colleges, which are one path to public universities, 90% of the places are reserved for Bumiputera (Malays and indigenous groups).
Tertiary education, which includes four-year degree programmes at the undergraduate level.
In Malaysia’s multiethnic and multilingual society, the government has mobilised education to promote national unity and nation-building (Adams and Tan, 2022). Malaysians are classified at birth into ethnic groups; Malays (64% of Malaysian citizens), Chinese (23%), Indians (7%) and others (such as indigenous people and those of mixed races). Malay (Bahasa Melayu, the national language) is the primary language of instruction in publicly-funded schools and universities, in part to promote national unity.
Malaysia’s educational system is centred on “national schools”, which use Malay as the language of instruction. Around 70% of primary-school students attend national schools. The government also offers parents and students the flexibility to choose other educational pathways, including “national-type schools” (“vernacular schools”) that provide instruction in Chinese (Mandarin) or Tamil. National-type schools are meant to help preserve the cultural heritage of these groups. The government provides some funding for operating national-type schools, which can also receive private-sector support. Local ethnic communities own school buildings and assets.
The Thirteenth Malaysia Plan acknowledges remaining challenges in quality and outcomes across different levels of education and proposes education reforms as the pillar for numerous structural changes. The government expects reforms to boost labour productivity growth by 1 percentage point over 2026-30:
1. Strengthening governance: Governance of education from preschool (pre-primary education) to secondary school will be centralised and a National Educational Council will be established, in addition to the existing National Education Advisory Council. A pilot project will grant universities more autonomy and encourage their internationalisation.
2. Rationalising functions and roles of education institutions to optimise the use of resources and enhance the quality of education.
3. Enhancing education outcomes:
Early childhood education (ECE) (preschool) will be made compulsory at the age of 5, while the national curriculum (KSPK) for preschools will be made compulsory in all ECE institutions.
The starting age for primary education will be lowered from the age of 7 to 6.
Enrolment in secondary education has been made mandatory. Consequently, compulsory education (excluding preschool) will be lengthened to 11 years, in line with international norms, representing a 5-year increase.
English will be used as part of learning and communication by students during the first 3 years of primary school (Level One).
A mandatory paid internship scheme, primarily for SMEs and financed in part by a matching grant from a government agency, will be introduced for university students. A demand-driven learning model will be expanded by increasing collaboration between public universities and the private sector through certification of skills and work experience.
4. Improving assessment and evaluation of learning: The government will assess the effectiveness of student evaluations. A new tertiary graduate outcome assessment will be introduced to reduce graduate underemployment issues by addressing skills and competency mismatches.
5. Enhancing the competency and efficiency of educators: The recruitment of teachers will be broadened to secure the best teaching talent from diverse sources. Continuous professional development will be expanded to ensure high and up-to-date teacher competencies. Primary school teachers will be trained to teach all foundation subjects to students in grades 1-3. Improvements in the teacher promotion system will provide more competitive career pathways.
6. Improving investment in education: Educational facilities, including preschools, will be improved. Enhanced government and public company education sponsorships will aim to reduce student outmigration, with priority given to Malaysians pursuing postgraduate studies at local higher education institutions.
7. Strengthening Lifelong Learning (LLL): LLL will be strengthened to prepare for Malaysia becoming an aged nation by 2043, in part by offering programmes through the Third Age University concept.
8. Strengthening the TVET ecosystem: The expansion of skill certification levels will put TVET on par with the academic pathway in the national higher education system, while enhancing TVET governance. A rating system for TVET institutions to ensure that programmes align with industry needs and support the optimal allocation of funding. Enhanced collaboration between public TVET institutions and industry will include the sharing of expertise and technologies.
Quantitative targets included in the Thirteenth Malaysia Plan are shown in Table 4.1. The Plan also includes specific targets for students with disabilities and the Orang Asli, an indigenous group that accounts for 0.7% of the population of Peninsular Malaysia.
Notes: 1. Trends in International Mathematics and Science Study. 2. Bahasa Melayu, English, history and math.
Source: Ministry of Economy (2025), Thirteenth Malaysia Plan.
National and national-type schools are open to students of any ethnicity. However, only 0.7% of ethnic Chinese students and 2.3% of Indian students attended national primary schools in 2020. Across primary and secondary school, around 96% of ethnic Chinese students attend Chinese-language schools (Chassie et al., 2023). However, the number of Chinese students in Chinese-language schools has been declining since 1995, reflecting demographic changes and competition from international private schools (Chai, 2025). English-language public schools were closed down gradually between 1970 and 1983, though English is also used as a medium of instruction in select public schools, particularly for teaching mathematics and science.
Total education spending in Malaysia in 2023 was 4.8% of GDP, of which private spending was 1.3%. Although government spending on education fell from an average of 5.0% of GDP in the 2010s to 3.5% in 2022 and 2023 (Figure 4.3, Panel A), it still accounts for nearly three-quarters of education spending, slightly less than the OECD average of 84% (OECD, 2025). Malaysia’s public education spending exceeded the ASEAN average of around 2½% of GDP but was considerably below the OECD average of 5.0% in 2023. Education remains the largest item in Malaysia’s government budget, accounting for 14% of total outlays (Panel B), although it has declined from between 18% and 21% during the decade 2009-19. The 2026 budget reflects a fiscally cautious approach (Chapter 1). Education spending is set to rise by 3.3%, compared to the OECD projection of nominal GDP growth of around 7% in 2026 and the 4% increase in the government budget.
Note: In 2023 or the latest year available. ASEAN is the average of the eight member countries for which data are available. EAP is the East Asia & Pacific (excluding high-income countries).
Source: World Bank, Government expenditure on education, total (% of GDP) - Malaysia, OECD members | Data, accessed 14 January 2026.
Public spending per student at the primary level in Malaysia was about one-fifth below the OECD average relative to GDP per capita (Figure 4.4, Panel A). However, in terms of spending at the secondary and tertiary level, Malaysia was close to the OECD average (Panels B and C). A number of Southeast Asian peers have spent an increasing share of public funds on a relatively small tertiary student population, allocating twice as much per tertiary student compared to primary students (Panel D). While Malaysia is above the ASEAN average in this regard, it still spends only 68 cents on primary students per dollar spent on tertiary students. Some OECD countries spend more per primary student than for tertiary students, including Korea and Japan, which are recognised for their outstanding performance in PISA. Spending a large proportion of public education funds at the tertiary level relative to primary education and preschool tends to reinforce socio-economic inequalities. Achieving Malaysia’s educational aspirations will likely require raising public outlays in line with increases in per capita income, while enhancing efficiency.
The remainder of this chapter features dedicated sections on early childhood education (which includes childcare and preschool for children from birth through age 6), primary and secondary schools, technical and vocational education and training (TVET) and higher education. The chapter concludes with policy recommendations (Table 4.7).
Expenditures as % of GDP per capita, 2021 or the latest year available
Source: World Bank (2021), World Development Indicators, https://databank.worldbank.org/source/world-development-indicators.
Malaysia's long-term growth prospects depend critically on bolstering its human capital by improving learning outcomes for children. Numerous studies have linked participation in early learning programs to positive short- and long-term outcomes in school readiness, educational attainment, health, crime prevention, employability and productivity (Egert et al., 2023; Heckman et al., 2013; Meloy et al., 2019). There is a near consensus that quality early childhood education (ECE) has a profound and long-lasting impact on children's futures and contributes to economic and social outcomes (OECD, 2023c). In fact, there is evidence that this part of the education system has the highest marginal returns on public investment; students who spent at least one year in pre-school achieved a higher PISA score of about 34 points (Egert et al., 2023). For this reason, this phase is often called "the window of opportunity". Participating in quality ECE is associated with higher primary school completion rates, lower grade repetition and dropout rates, and higher learning outcomes throughout primary and secondary school. Beyond these individual benefits, well-designed and quality ECE programmes can benefit children from low socio-economic backgrounds, level the playing field among children, and help reduce social inequalities over the longer run (Duncan et al., 2023). The consensus is reflected in the rise in the universal provision of ECE in countries worldwide (OECD, 2021), and the significant investment that accompanies extending ECE to all children while ensuring quality for these programmes.
4.2.1. An overview of early childhood education (ECE) in Malaysia
ECE in Malaysia refers to institutions that provide education and care for children from birth through age 7, when they enter primary school. Under the Thirteenth Malaysia Plan, the government is prioritising ECE to strengthen school readiness and narrow socio-economic gaps. Malaysia has two ECE systems for children:
Childcare centres (TASKA), which “provide care and early education services”, are defined as any place that accepts four or more children aged 4 and under for paid childcare.
Preschools are defined as any place that provides preschool education to at least ten children aged 4 to 6.
The number of childcare centres is low relative to the number of young children
Many parents now view early education as an investment that lays an important foundation for future development and lifelong learning for their children. Total enrolment in public and private childcare centres in Malaysia amounted to around 3.5% of the 2.3 million children under the age of 5. Malaysia had 4 016 childcare centres registered with the Social Welfare Department (part of the Ministry of Women, Family and Community Development) as of mid-2025. In addition, they must get permits from local authorities. However, the number of registered childcare centres (including public centres) has declined in major cities, such as Kuala Lumpur and Putrajaya (Figure 4.5), reflecting the challenges of rising costs, staffing shortages and red tape (Asia News Network, 2025). Private childcare centres cared for 66 075 children in 2025. In addition, around 600 public childcare centres operated by the Ministries of Education, National Unity, or Rural and Regional Development care for about 15 000 children. Public childcare centres primarily target children from disadvantaged backgrounds or rural areas. The government provides childcare subsidies to low-income families, defined as those in the bottom 40% of income earners.
The number of children in childcare is likely to be much larger than reported, as many parents use unregistered or informal, home-based childcare, which provides fewer educational resources and does not have to meet safety standards. In 2025, Malaysia had an estimated 1 080 unregistered childcare centres, with about half in Selangor (the state with the largest share of GDP) and Kuala Lumpur (Radhi and Iskandar, 2025). The growth in the number of unregistered centres reflects gaps in regulation and enforcement. Unregistered childcare services avoid the registration procedure as it involves dealing with various agencies, whose approval and processing protocols are complex and time-consuming (Rosli et al., 2024). The government continues to make efforts to register childcare centres that are not registered.
All registered childcare centres must use the government-created curriculum (PERMATA), which includes cognitive, physical, social and emotional aspects. Childcare workers are required to have completed secondary school, followed by a diploma in ECE (2.5 years) or TVET certificate (two months). Those who have worked with children for more than ten years are exempted from this requirement. Of the childcare workforce of more than 20 000 in 2019, 60% had only a secondary education degree (the SPM, which is ISCED 3).
Percentage increase in registered childcare centres in 2024 in Malaysia’s thirteen states and federal territories
Source: Department of Social Welfare.
Preschool enrolment has risen significantly during the past 15 years
Enrolment in preschool has risen significantly since 2010, reaching nearly 90% for children aged 4-6 in 2025 (Figure 4.6), although an earlier target of universal enrollment by 2020, which was included in the Malaysia Education Blueprint 2013-2025, had not been achieved. Still, Malaysia is well above the ASEAN average of 66% and the OECD average of 81%, according to the World Bank. All preschools in Malaysia, whether private or public, must follow the new 2026 Preschool Curriculum. It emphasises six key areas of development: i) language, communication and early literacy; ii) physical movement; iii) creativity and aesthetics; iv) early science and mathematics; v) character, socio-emotional and spiritual; and vi) sensory and environmental awareness. Preschool education is key to achieving the goal in the Thirteenth Malaysia Plan to improve children’s readiness for primary school, enhance student performance and help students acquire broader life skills (Kenayathulla et al., 2022). Studies show that students who attended preschool perform better at Grade 5 (age 11) than those who did not (World Bank, 2024a). The OECD’s Programme for International Student Assessment (PISA) shows a positive correlation between ECE and the school outcomes for 15-year-olds (Balladares and Kankaraš, 2020). Universal pre-primary education helps make education systems more effective and efficient (UNICEF, 2019).
Preschools are offered by multiple government ministries and private suppliers. Public preschools, which cater primarily to low-income and disadvantaged children (Kong, 2024), account for more than two-thirds of preschool students (Table 4.2). The Ministry of Education’s preschools (27.6% of total enrollment), typically located in existing buildings on school premises, prioritise children from low-income families. The other public preschools are located mainly in remote or rural areas. Given inadequate public capacity, the government relies on private preschools, defined as a preschool class for at least ten students, to serve the remaining one-third of preschool students. As with childcare, the government provides subsidies to low-income families for private preschools, which are subject to caps on their fees. In addition, private-sector employers who establish early care and education centres at their workplace receive a 10% corporate tax exemption for ten years. Languages other than Malay may be used as a medium of instruction in private preschools, provided that Malay is taught as a compulsory subject.
Source: Malaysia Ministry of Education.
4.2.2. Expanding and improving early childhood education
Raising the number of high-quality childcare centres
The limited availability of public and registered childcare facilities affects the educational development and opportunities of young children. Given that public and registered private childcare capacity is only 3.5% of the number of children under the age of 5, estimates suggest that Malaysia needs at least 50 000 to 60 000 registered childcare centres to facilitate female labour force participation and enhance ECE (Zhahir, 2025). Supply could be expanded by providing grants for private childcare centres in high-need areas. This could be supported by streamlining approvals and licensing procedures, which are primarily under the purview of the Department of Social Welfare. Moreover, the authorities should monitor non-registered childcare centres to encourage them to comply with health and quality standards and facilitate their registration. To reduce their operating costs, childcare centres and preschools could be allowed to operate under the same roof.
Notes: 1. These schools were established in the 1970s in rural areas by the Ministry of Rural and Regional Development. 2. Ministry of Unity and Integration. 3. JAIN is the State Islamic Education Department. The total includes private Islamic preschools registered with JAKIM (the Department of Islamic Development). 4.Malaysian Islamic Youth Movement.
Source: Malaysia Educational Statistics.
In addition to increasing childcare supply, the government’s proposed two-pronged strategy includes larger subsidies or vouchers to help families pay for childcare. However, in the 2025 budget, childcare subsidies amounted to MYR 9 million (USD 2.2 million) for families earning less than MYR 8 000 (USD 1 980) per month. Around a quarter of parents in Malaysia receive some type of childcare subsidy or voucher. Increasing the size of benefits and extending them to women with incomes above half the minimum wage would boost childcare enrolment (OECD, 2024d). The subsidies should be used exclusively at registered, quality-assured centres that upskill their workforce in line with the standards established by the Malaysian Qualifications Agency (MQA). To promote quality childcare, enforcing the education requirements for new hires and offering effective continued professional development would be beneficial. Increasing the affordability of high-quality childcare would also promote female employment. The lack of affordable, high-quality childcare is the major reason that women drop out of the labour force (National Population and Family Development Board, 2014), resulting in a large gender employment gap. Indeed, the employment rate for women in 2023 was 56%, 27 percentage points below the rate for men (see Chapter 1).
Meeting the goal of universal preschool enrolments
The Thirteenth Malaysia Plan’s target to make preschool education compulsory for 5-year-olds and increase the enrolment rate to 98% by 2030 can lay the foundations for improving educational outcomes. To achieve this goal, Malaysia will have to overcome several obstacles. First, it is necessary to identify the children who are not attending preschool in order to target increased capacity. Many children, particular those in rural areas and members of indigenous groups, are falling through the gaps. Second, Malaysia needs more preschools to accommodate increased enrolment. Government spending per preschool student is only 4.4% of Malaysia’s per capita income, only one-fifth of the OECD average. Moreover, it is only a quarter of what is spent on primary and secondary students, well below the OECD average of 88% (Figure 4.7).
A third obstacle is a lack of interest in preschool among some parents. In a 2021 survey, 90% of the respondents agreed that increasing awareness of the importance of preschool education is the key to raising enrolment (World Bank, 2023). The lack of interest may also reflect parents’ doubts about the quality of preschools. A minority of preschools are not registered, making it difficult to enforce compliance with standards and ensure quality. Indeed, nearly one-third of private preschools do not meet the minimum health, nutrition, and safety standards (Tee, 2024), raising the importance of registering unregistered preschools. Continuous evaluations of investments in preschool education, including child development indicators and educational outcomes, such as graduation rates, are essential to assessing progress toward higher-quality preschools.
To accelerate progress, the government’s plans to construct more public preschools should be accompanied by increasing the number of private preschools, in part by raising financial support to operators who create childcare facilities in high-need areas, while enforcing quality standards. As with childcare, burdensome and lengthy registration and licensing procedures make it difficult for private preschools to operate legally. Moreover, preschools need to obtain annual renewals from other bodies, such as health authorities and fire departments (World Bank, 2023). Streamlining registration and licensing and moving from annual renewals to random compliance checks could encourage more private preschools to enter the market.
Outlays per preschool student as a percentage of the average spending on primary and secondary students
Source: OECD, PISA 2022 Initial Reports (Volumes I and II).
Raising the quality of teachers
Teacher quality was consistently the weakest dimension during the second half of the 2010s in the National Preschool Quality Standard (PADU, 2019), which is designed to ensure that preschools provide a safe and enriching learning environment. The government acknowledges the need to continuously elevate teacher quality. Higher teacher qualifications are strongly associated with better outcomes for children (OECD, 2025). The implementation and enforcement of the requirement that all preschool teachers hold at least a diploma in ECE (ISCED 5) has been weak and no action is taken against preschools with unqualified teachers. While 90% of teachers in preschools run by the Ministry of Education hold the required two-year diploma, the share is only 18% in private preschools, even though many cater to high-income families (Kong, 2024). Consequently, about half of preschool teachers lack an ECE diploma. From 2026, preschool teachers under the Ministry of Education will be required to have a degree. To support this transition without disrupting the private preschool sector, the government is providing continuous professional development (CPD) and alternative upgrading pathways, ensuring existing teachers can meet these rigorous instructional standards. This presents an opportunity to improve teacher training as the value of a qualification level is only as good as the quality of the programme that leads to the qualification.
Enforcing the diploma requirement for new teachers is essential to improving quality (Chan et al., 2024), but it also adds to hiring challenges. Low salaries for preschool teachers and those working in childcare, particularly in the private sector, result in a shortage of workers and high staff turnover to meet the demands of this growing sector. If preschools raised teachers' status by offering higher wages, improved working hours and better career advancement prospects, ECE would be better able to attract and retain highly qualified individuals as teachers. Existing teachers should have incentives and better opportunities to upgrade their qualifications. The Ministry of Education has recently offered teachers without diplomas an opportunity to enroll in nationally accredited Initial Teacher Education Institutes.
Teachers in Ministry of Education-run preschools are required to participate in continuing professional development (CPD) for at least seven days a year to stay up to date on best practices. The government could apply this rule to other preschools, including those in the private sector. The OECD’s 2013 Teaching and Learning International Survey (TALIS) indicated that teacher participation in professional development activities is very strong. More than 90% of teachers reported that they engage in professional development programmes for approximately 10 days per year, exceeding the Ministry of Education’s requirement of 7 days annually (OECD, 2014). However, in a 2021 World Bank survey, 31% of teachers reported not receiving enough CPD in their schools (World Bank, 2023). The Malaysia Education Blueprint 2013-25 set a goal that 60% of teachers’ professional development would be self-initiated. CPD is compulsory to some extent in most OECD countries, typically as part of the job or as a requirement for promotion and wage increases. OECD research shows that CPD is more effective when it is ongoing, collaborative and embedded in schools’ day-to-day work rather than left to one-off workshops (OECD, 2022b).
The quality of English teachers is a particular concern, given that instruction in public preschools is split equally between English and Malay. In a Department of Social Welfare study, 78% of predominantly Malay-speaking parents who sent their children to local preschools preferred English as the language of instruction for their children. Preschool teachers who are proficient in English are important to build a foundation in the language.
Streamlining the administrative structure for early childhood education
Reforming the administrative structure for ECE could also promote better outcomes. The Ministry of Women, Family and Community Development (MWFCD) is responsible for registering private childcare facilities, while other ministries (Education, Rural and Regional Development, and National Unity) also run centres. Preschools are under the direction of the Ministry of Education. The Ministry of Rural and Regional Development operates both childcare and preschools. The split between the leadership of childcare and preschool and the multiple providers creates coordination challenges in areas such as data collection, curriculum, teacher training, quality assurance, licensing, monitoring and funding allocation. For example, the Social Welfare Department in the MWFCD lacks the legal authority to monitor or inspect public childcare centres operated by other Ministries (Kong, 2024). Registered facilities that operate childcare and preschools must have two separate buildings since they are under the direction of different ministries. The administrative complexity encourages such facilities to operate without licenses (World Bank, 2023).
The government aims to strengthen policy coherence, quality assurance, and resource efficiency in ECE through incremental coordination across ministries, while maintaining the distinct institutional responsibilities (World Bank, 2023). Consolidating leadership for childcare and preschool in a single ministry, as proposed in legislation passed by a parliamentary committee in late 2025, would cut red tape and help ensure that every child gets a fair start. It would also promote a smooth transition from childcare to preschool. International experience shows that integrated systems have increased public investment in ECE and improved access to and the quality of services (Bennett, 2011). By contrast, the current fragmentation of responsibility for childcare and preschool education can create inequality through uneven quality standards and lower quality due to the lack of coherent goals and policies (World Bank, 2023). The Thirteenth Malaysia Plan supports a “restructuring of roles and functions of agencies to centralise education governance of preschool to secondary school, as well as pre-university to higher education”.
4.2.3. Promoting equal opportunities through early childhood education
Despite the rising preschool attendance, approximately 24% of children entering primary school still lack school-readiness skills. Moreover, 36% of those in the lowest income quintile do not meet school readiness standards, compared to only 11% in the richest quintile (Figure 4.8). The initial differences in school-readiness when entering primary school are magnified once children begin school (World Bank, 2024a). Access to preschool is limited for children from low-income families and those living in rural areas (Tee, 2024), underscoring the importance of expanding preschools in underserved areas.
In addition to educational gains, public investment in ECE promotes equity. The limited availability of free public preschools leaves low-income parents with limited options, as private providers may be too expensive. Proposed measures to improve preschool quality could further reduce the affordability of private institutions, even though fees are regulated by the government. Private preschools may apply for a fee increase three years after their last increase, but it cannot exceed 30%. Consequently, high-quality ECE may be limited to higher-income families, thereby widening the educational gap between children from different income groups. One way to address this challenge and further boost preschool enrolment would be to expand access to subsidies, which are currently limited to families in the bottom 40% of the population.
Percentage of students lacking school readiness
Note: The Word Bank defines school readiness as five distinct but interconnected domains: physical well-being and motor development; social and emotional development; approach to learning; language development; and cognitive development and general knowledge.
Source: World Bank (2024).
The ultimate objective should be to make preschool affordable and compulsory (Chan et al., 2024). Globally, 46 countries, primarily upper-middle and high-income countries, have instituted free and compulsory preschool education (World Bank, 2023). Only 11% were located in the Asia-Pacific region. A UNESCO study found that the average enrolment rate in countries with free and compulsory preschool education doubled from 41.4% in 1999 to 82.8% in 2018. In contrast, it rose at a much slower pace – from 52.9% to 63.0% over the same period – in countries without free and compulsory preschool education (UNESCO, 2020). In addition, early childhood well-being, as measured by UNICEF’s Early Childhood Development Index, was significantly higher in countries with compulsory preschool education (84%) than those without (68%) (UNICEF, 2023).
The length of preschool education is another factor behind performance of students at later stages (OECD, 2017). Of 51 countries with compulsory preschool education, 29 require one year, and 22 require two years or more. In addition to making preschool mandatory for 5-year-olds, the government should consider extending it to 3- and 4-year-olds as well. In OECD countries, 79% of 3-year-olds and 90% of 4-year-olds are enrolled in preschool (OECD, 2020a).
One free year of preschool in Malaysia is estimated to have a fiscal cost around 0.2% of GDP and another 0.2% for children aged 3 and 4 (Rabi et al. 2020). Given the low spending on pre-primary education (Figure 4.7) and the particularly high returns on investment relative to other education levels (UNICEF, 2019), the case for investing more in this area is strong. Although spending on preschool education doubled from 1% of the Ministry of Education’s outlays (excluding tertiary education) in 2010 to around 2%, it remains below primary and secondary schools, which accounted for 50% and 47%, respectively, suggesting scope for rebalancing (World Bank, 2023). To ease the fiscal burden, preschool for children aged 3 and 4 could be initially financed by fees paid by high-income families.
Childcare and preschool could also play a key role in improving children’s health by providing nutritious meals. Although Malaysia is an upper-middle-income country, the share of children who are underweight increased from 11.6% in 2011 to 14.1% in 2019 (Table 4.3). In addition, the prevalence of stunting and wasting has risen. Malaysia should aim to achieve the Global Nutrition Target of reducing childhood wasting to less than 5%. Adequate nutrition supports cognitive development and promotes learning (World Bank, 2023), and progress towards universal preschool education could be a valuable way to promote better nutrition outcomes, which would then feed back into better educational achievement (Tiong, 2023).
Source: World Bank (2023).
4.3.1. Learning outcomes in primary and secondary education can be improved
Challenges in school readiness among some students are likely to affect their learning outcomes, making it difficult for Malaysia to achieve its objective of improving learning outcomes and matching international standards (Ministry of Education, 2013). The share of grade 5 students proficient in the Southeast Asia Primary Learning Metrics fell by 8 percentage points in Malaysia between 2019 and 2024, remaining below Viet Nam (Figure 4.9). In the 2019 test, the share of proficient readers in Malaysia in the lowest-income quintile were less than half of that in the top quintile.
Malaysian students’ performance in the Trends in International Mathematics and Science Study (TIMSS) has declined. In 1999, the average score of Malaysian students in grade 8 (Form 2) in mathematics and science ranked in the top half of the participating countries (Figure 4.10, Panel A). By 2023, it ranked well below the international average in both subjects, indicating a decline relative to other countries (Figure 4.10, Panel B). Moreover, 41% of Malaysian students lack basic knowledge and skills in mathematics and 27% in science (Trends in International Mathematics and Science Study, 2023).
Note: For students in 5th grade. Proficiency is defined as Band 6 or above.
Source: UNICEF & SEAMEO (2025), SEA-PLM 2024 Main Regional Report.pdf.
Note: For eighth-grade students.
Source: Trends in International Mathematics and Science Study (2023), Average Achievement (Grade 8) - TIMSS 2023.
Malaysian students also perform relatively poorly on OECD’s PISA, which assesses the ability of 15-year-old students to use their knowledge and skills in mathematics, reading and science to meet real-life challenges. Malaysia ranked in the bottom third of around 75 participating countries in the 2009 and 2012 PISA assessments. The Malaysia Education Blueprint 2013-2025 set a goal of placing Malaysia firmly in the top third of PISA performers by 2025, and it moved up to the middle third in 2018. However, it fell back to the bottom third of countries in the 2022 PISA amid a global decline in PISA scores (Figure 4.11).
The scores of upper-middle-income countries relative to all countries that participated in the 2022 PISA
Note: The OECD average PISA score is set at 500 points with a standard deviation of 100. Malaysia’s score of 404 is nearly one standard deviation below the OECD average. Of the 56 countries classified as upper-middle-income countries in 2022, 22 participated in the PISA. In Malaysia, 7 069 students in 199 schools completed the PISA test in 2022. Around 96% of the 15-year-old students taking the PISA test were enrolled in 10th grade.
Source: OECD (2023e), PISA 2022 Results (Volume I) | OECD.
The decline in Malaysia’s performance in PISA in 2022 is a matter of national concern. While most countries experienced decreases in PISA scores between 2018 and 2022 following disruptions caused by the COVID-19 pandemic, Malaysia ranked among the top six for the largest declines across all three subjects (Figure 4.12, Panel A). As a result, Malaysia’s scores fell relative to the OECD average, with the largest gap in reading (Figure 4.12, Panel B), while some Southeast Asian countries maintained or improved their scores.
Note: Although Malaysia participated in the 2015 PISA Assessment, the results were not internationally comparable.
Source: OECD (2023), Full Report: PISA 2022 Results (Volume I) | OECD.
The large declines may be explained in part by long school closures during COVID-19, aggravated by problems with remote learning. According to the 2022 PISA, more than 80% of students in Malaysia reported issues with internet access, well above the OECD average (OECD, 2023f). Malaysian students experienced the longest learning disruptions in Southeast Asia, resulting in a loss of about 5.4-11.4 months of learning (Asian Development Bank, 2021). The decline in Malaysia’s PISA scores is estimated to be equivalent to a loss of 1.6 years of learning in mathematics, 1.4 years in reading and 1.1 years in science (Azahar and Cheng, 2024).
The share of low-performing students (defined as those scoring below Level 2, the level of proficiency needed to participate effectively in society) in Malaysia in the 2022 PISA was about double the OECD average in all three subjects (Figure 4.13). In mathematics, 59% of Malaysian students were classified as low-performing compared to the OECD average of 31%. The share of high-performing students (scoring at level 5 or above) was close to 1% in each of the three subjects, well below the OECD average of 7% and 9%. The high share of low performers suggests a need for targeted interventions. The shares of high-performers in mathematics were much higher in other East Asian economies, such as Singapore (41%), Chinese Taipei (32%), Macao (China) (29%), Hong Kong (China) (27%), Japan (23%) and Korea (23%). The small share of high performers may have negative implications for Malaysia’s innovation capacity and the large share of low performers is a potential drag on the economy. A 10% rise in Malaysia’s PISA scores from about 400 to 440 would imply an increase in total factor productivity of 6.7%, although this would take decades to be fully realised (Egert et al., 2023).
Source: OECD, PISA 2022 database.
Several indicators suggest that parents’ satisfaction with national schools has weakened. First, the share of non-Chinese students in Chinese primary schools has grown from 3% in 1989 to 20% by 2020. Second, private school enrolment has tripled since 2005, reaching 10% of secondary school students by 2020 (Azahar and Cheng, 2024). Private schools make greater use of English in teaching and have lower student-to-teacher ratios (Ruban, 2017). A widening gap in learning outcomes between public and private schools has also contributed to Malaysia’s falling PISA scores, as the decline in public school scores between 2018 and 2022 exceeded that in private schools (Figure 4.14, Panel A). In 2022, private schools’ scores were higher than public schools by 68 points in mathematics, 42 points in science and 29 points in reading (Figure 4.14, Panel B). The larger share of children from high-income families, who have greater access to supplementary learning resources, in private schools contributes to the growing gap with public schools. In addition, after-school tutoring has become widespread in Malaysia and plays a significant role in supporting academic achievement. However, it also presents issues related to equity and student well-being.
Source : Azahar and Cheng (2024).
While many indicators and international benchmarks point to significant challenges in Malaysia’s education system, there are also many policy initiatives that go in the right direction and that Malaysia can build on. The success of education reforms to promote better outcomes and provide more equal opportunities will depend in part on policies discussed below to reduce the school drop-out rate, improve the quality of teaching and school leadership, move towards a less centralised education system, and expand the use of digital tools in ways that improve educational outcomes. Changes in education policy can have significant results over a relatively short period of time, as illustrated by Poland (Box 4.2).
When communism ended in Poland in 1989, its education system was focused on vocational education to prepare students for lifetime employment in state-owned companies. Poland had one of the lowest participation rates in full secondary education and in higher education in the OECD in the 1990s.
In 1997, the government introduced an education reform with three major objectives: i) increasing secondary and higher education qualifications in the population; ii) ensuring equal educational opportunities; and iii) improving the quality of education. To accomplish these goals:
A new core curriculum for secondary school was introduced.
While curricular standards were set at the national level, curriculum development was decentralised to the local level. The objective was to change the teaching philosophy and culture of schools. Teachers were encouraged to focus on three dimensions of education: acquiring knowledge, developing skills and shaping attitudes.
An accountability system was created to monitor results. External exams were implemented at the end of primary and lower and upper secondary schools to ensure that schools were improving. The matura exam for university admission became available to all secondary school students.
Poland participated in PISA for the first time in 2000. Polish students’ average score was 479, well below the OECD average of 500 points. Moreover, more than 21% of students only reached level 1 or below. The PISA results revealed a sharp disparity between students in the general education system and those in basic vocational schools, among whom nearly 70% had literacy scores at the lowest level.
Poland’s turnaround began between 2000 and 2003. In the 2003 PISA, Poland’s average score increased to 497. Moreover, the variance between schools in student performance in reading, mathematics and science recorded the most significant decline among OECD countries. The improvement continued in the 2006 PISA: the average scores of Polish students reached 534, an 11.5% increase in six years. The rise in 2006 was driven in part by a 115-point improvement by students who previously would have been assigned to basic vocational schools but instead received an extra year of general secondary school curriculum in the new system. Indeed, Poland ranked 9th in the world in the 2006 PISA.
In sum, changing the curriculum to improve teaching methods, decentralising curriculum development to the local level, allowing all students to take the university admission exam and instituting an accountability system to monitor results helped Poland achieved remarkable results. While not all of these specific reforms may apply to the Malaysian context, this illustrates the potential of reform to improve outcomes.
Source: OECD (2011), Lessons from PISA for the United States | OECD.
4.3.2. Moving towards longer mandatory schooling and a lower school entry age
While Malaysia provides 11 years of free primary and secondary education, only 6 years were mandatory until 2025, compared to 9 years in Indonesia and Thailand. Applying the international definitions, in 2018, only 82% of youth completed lower secondary education, well below the OECD average of 96% and 98% in Viet Nam (OECD, 2023f). In 2023, 9% of lower-secondary-age youth were not enrolled and more than one-fifth at the upper-secondary level, significantly higher than in other ASEAN-6 countries (Figure 4.15). Many of the dropouts are in the lowest socioeconomic strata and the most rural communities. For example, about a quarter of children from West Malaysia’s indigenous communities do not transition from primary to lower secondary school. Since 2025, all 11 years of schooling have been made mandatory. This is likely to decrease dropout rates and retain vulnerable students longer in the education system. The returns to lengthening compulsory schooling can be sizable, especially for marginal students (OECD, 2019b). At the same time, it creates challenges as Malaysia does not have sufficient school places to meet this goal in the short term.
Source: UNESCO (2025), World education statistics, 2025 - UNESCO Digital Library.
The recent decision to lower the primary school entry age from 7 to 6 in 2027 will also bring Malaysia closer to international norms and better harness the rapid cognitive development of young children. This transition will create some logistical challenges in 2027, as primary schools will have to provide two first-grade classes. To ensure that 6-year-olds are ready for primary school, the government is making at least one year of preschool education compulsory (Box 4.1) and strengthening the transition from preschool to primary school. The revised 2026 preschool curriculum is more closely aligned with the primary school curriculum, creating a clear progression path for student development. In 2027, parents will have the option of delaying their children’s entry to primary school until age 7 if they feel their children are not adequately prepared.
4.3.3. Improving the quality of teaching and school leadership
Teachers play the most important role for promoting student learning within schools. OECD research stresses the importance of professional frameworks that provide a strong foundation for effective teaching by identifying what teachers should know and be able to do. Malaysia’s teacher standard, Standard Guru Malaysia (SGM) 2.0), delineates the ethical standards required of educators and required competencies for each stage of a teacher’s career. Malaysia also utilises a Training Curriculum Framework to ensure that teachers acquire relevant skills required for the profession. This framework serves as a comprehensive guideline for teachers and training providers to meet quality benchmarks. Box 4.3 provides several other examples of professional frameworks for teachers in Saudi Arabia, Singapore and the United States.
In Malaysia, teachers’ academic credentials appear strong. Nearly all prospective teachers accepted into Initial Teacher Education Institutes (IPG) (ISCED Level 4) ranked among the top 30% of students in the SPM national exam (World Bank, 2024a). All teacher candidates prior to appointment must satisfy rigorous selection criteria, including the Teacher Candidate Eligibility Test. Around 50% to 60% of primary school teachers have at least a bachelor’s degree (ISCED Level 5), and the share is 94% for secondary schools. The remaining teachers typically hold diplomas or specialized teaching certificates from an IPG. However, ensuring that teachers obtain the required qualifications is not sufficient to ensure high-quality teaching. During the preparation of the Malaysia Education Blueprint 2013-2025, broad consultations by the Ministry of Education found “a surprisingly high degree of consensus on some topics such as the importance of raising the quality of teachers”. In the OECD’s 2022 PISA study,, 22% of students attended schools whose principals reported that the school’s capacity to provide instruction was hindered by inadequate or poorly qualified teaching staff. The corresponding share in 2018 was 13% (OECD, 2023f). In sum, an increasing number of students are facing less qualified teachers, which may have long-lasting impacts on learning outcomes (Azarah and Cheng, 2024). At the same time, class sizes have increased, reaching 29.8 students, which is higher than the OECD average of 25.5 (OECD, 2023f).
Clear professional standards for teachers provide a foundation for effective teaching and are most impactful when they are developed in dialogue with teachers and allowed to evolve in response to experience and changing needs (Révai, 2018). The Malaysia Education Blueprint 2013-25 reported that the school inspectorate (JNJK of the Ministry of Education) rated only 13% of schools as having “good or excellent” teaching and learning practices, compared to 63% of the schools themselves. The wide discrepancy suggests the need to build a common understanding of what good teaching looks like, and to prepare teachers to meet that standard (Ministry of Education, 2013).
Saudi Arabia
Teaching has traditionally been seen as a secure, though not highly prestigious, profession in Saudi Arabia. The introduction of teacher standards and professional pathways in 2020 may have helped shift the perception of teaching from a “government official” role towards a more knowledge-based profession. The standards focus on ethics and responsibility, knowledge, and effective teaching and are continuously updated and aligned with international norms. In addition, the standards establish a three-stage performance-based career path for teachers‒Practitioner, Advanced and Expert. Teachers are appraised by their principals (OECD, 2020b). Following the implementation of the standards, all in-service teachers were required to take a certification examination. Those who failed had six years to become qualified, while those teachers who passed were certified as Practitioner Teachers and those with high scores were preliminarily designated as Advanced or Expert Teachers for four years during which they had to prove the competence required for the higher status, or they were moved down to the level below. All teachers must renew their status every five years.
Singapore
Singapore has a career structure that offers teachers opportunities to advance. New teachers typically spend about five years as “classroom teachers”. Once their supervisors agree that they are ready for additional responsibilities, they can move onto one of three tracks: teaching, leadership (leading to being a school principal) and specialist. Teachers are judged on three outcomes: student learning, professional development and organisational aspects. As in Malaysia, there is a single and autonomous provider of initial teacher education (the National Institute of Education) (Révai, 2018).
The U.S. state of Colorado
The Colorado Teacher Quality Standards, introduced in 2013 at the primary and secondary school levels, outline the knowledge and skills required of an excellent teacher: i) demonstrate mastery of the subjects they teach and pedagogical expertise; ii) establish an inclusive and respectful learning environment for a diverse student population; iii) plan and deliver effective instruction; and iv) demonstrate professionalism through ethical conduct and leadership of students (Colorado Department of Education, 2013). The standards form the core of the teacher evaluation process and serve as a tool for teachers’ professional development. Colorado’s upper secondary school graduation rate rose from 73.9% in 2011 to 82.3% in 2022, narrowing the gap with the nationwide rate by 1 percentage point. In addition, third-grade proficiency rates in Mathematics and English were higher in 2023 than in 2015 despite a decline during the COVID-19 pandemic. Overall, Colorado’s education system was ranked at 18th among the 50 states, based on test scores, teacher quality and pay, school safety, student outcomes, dropout rates, per-pupil spending, and class sizes (America’s Dashboard, 2026).
The Malaysia Education Blueprint 2013-2025 called for the government to “Transform teaching into the profession of choice” and proposed reforms to enhance the quality, effectiveness and professionalism of teachers (Box 4.4). The Master Plan for Teacher Professionalism Development is reinforcing the Blueprint. The Ministry of Education has structured teacher careers into the Teaching and Learning pathway, and the Leadership and Management pathway. Both pathways offer a merit-based career progression and are not solely focused on time-based progression. Incentives can play a key role in attracting highly qualified and motivated individuals into the teaching profession, and in ensuring the continuous motivation and high performance of teachers, who have lifelong employment as civil servants. Career progression should be merit-based rather than time-based (Chan et al., 2024). Salaries, prospects for career progression, performance-related pay and disciplinary measures in case of weak performance should all play an important role in the incentives that both teachers and principals face (Woo, 2019). One example of how good incentives can improve the performance of education systems is the experience of the Brazilian state of Ceará in the early 2000s (Box 4.5).
Recruitment and selection: Establishing merit-based recruitment processes to attract high-quality candidates into the teaching profession.
Professional development: Implementing continuous professional development programmes to upgrade teachers’ knowledge and skills, equipping them to deliver high-quality education.
Career progression: Providing clear pathways for career progression based on performance, qualifications, and experience, thus incentivising teachers to excel.
Performance management: Implementing robust performance evaluation systems to assess and support teachers in improving their effectiveness in the classroom.
Teacher standards: Establishing clear standards and expectations for teachers’ conduct, competency, and professionalism.
Leadership development: Offering leadership development opportunities to nurture and empower school leaders who can drive positive change and foster a culture of excellence.
Recognition and rewards: Recognising and rewarding outstanding teachers and school leaders for their contributions to education excellence.
Collaboration and networking: Encouraging collaboration and networking among teachers, schools, and educational institutions to share best practices and professional growth.
Support systems: Providing comprehensive support systems to address the diverse needs of teachers, including mentoring, counseling and well-being initiatives.
Stakeholder engagement: Engaging stakeholders, including teachers, parents, communities, and policymakers, in the design and implementation of teacher development initiatives to ensure relevance and effectiveness.
Source: Ministry of Economy (2013), Malaysia Education Blueprint 2013-2025.
Teacher appraisals are a precondition for promoting good performance. The PISA results show that high-performing countries have strong teacher appraisal mechanisms that focus on teachers’ continuous improvement (OECD, 2018a). The frequency of teacher self-appraisals in Malaysia has been reduced to once a year to reduce the administrative burden on teachers. Since 2016, Malaysia has been using the Integrated Evaluation for Education Service Officers. However, only 0.02% of teachers scored below 60% in the performance evaluation between 2010 and 2020. These high ratings are hard to reconcile with student performance on international assessments. Moreover, only about 0.6% of teachers leave the profession before retirement age, suggesting that teacher appraisal may not be effective in identifying weak performers and triggering appropriate action, such as removing teachers who consistently perform poorly from classrooms (World Bank, 2024a).
The experience of Brazil shows that progress is possible with better incentives in education systems. Unlike in Malaysia, Brazilian states are responsible for their education systems, and both the levels and trajectories of the performance of these subnational systems show significant heterogeneity. One positive example is the improvement in the relatively poor northeastern state of Ceará. Starting from a very low base, the state of Ceará has become one of the top performers in education quality. This progress was based on an effective mix of increasing resources and introducing incentive mechanisms (OECD, 2011; Boekle-Giuffrida, 2012). Practices included an early extension of compulsory schooling, production and distribution of structured course materials to all schools, and elements of performance-related pay for teachers and principals, coupled with teacher training and management support for schools. In all cases, incentive-based measures were coupled with periodic appraisals.
Source: OECD Economic Survey of Brazil, 2018.
Incentives for teachers to improve the quality of their teaching are typically weak without effective appraisal systems (World Bank, 2024a). An objective appraisal system should be a precondition for career progression and monetary rewards for high-performing teachers (OECD, 2019a). Malaysia’s Integrated Evaluation for Education Service Officers should effectively link appraisal outcomes to incentives such as annual salary progression, career advancement and professional recognition. Such rewards could also attract more talented individuals to teaching and improve remuneration for those who perform well (OECD, 2024b). The annual average teacher salary in Malaysia in 2026 was MYR 61 680 (USD 15 300), 18% below the national average (World Salaries, 2026).
The Malaysia Education Blueprint 2013-2025 called for a “robust performance evaluation system” based on an annual appraisal of teachers by their principals. The appraisal is to evaluate teachers’ ability to deliver effective instruction in and out of the classroom based on four elements (Figure 4.16): i) a clear definition of underperformance; ii) evaluation of teacher performance; iii) coaching and mentoring to improve teacher performance; and iv) redeployment to other tasks in case of continued underperformance. Rigorous use of this assessment mechanism is essential to improve the quality of teaching.
Assessments of teachers’ performance should be carefully related to students’ learning outcomes and benchmarked to international standards in order to find areas for improvement. Such an evaluation should aim to identify a teacher’s contribution to student learning rather than rely solely on test results. The Malaysia Education Blueprint 2026-2035 moves beyond teacher appraisal based on traditional academic results to consider a teacher’s effectiveness in nurturing a holistic, balanced individual, which includes a student’s character, resilience, digital fluence and physical health. In addition, teachers are evaluated on their teachers are evaluated on their ability to manage mixed-ability classrooms, utilise AI tools in teaching, and execute targeted learning interventions based on new metrics (Ministry of Education, 2026). In addition, an effective teacher appraisal should have three key elements: i) sufficient investment of time from principals, other evaluators and teachers; ii) evaluators with the required expertise; and iii) teacher acceptance of the system as fair and trustworthy, encouraging them to use the results of the assessment (Schleicher, 2020).
Two other components of the Blueprint (Box 4.4) could support teachers’ efforts to improve performance. First, improving continuous professional development programmes to upgrade teachers’ knowledge and skills is important. Given that most teachers who will be in classrooms during the next thirty years have already been recruited, the government should prioritise in-service teacher training to improve performance. Over 90% of teachers report that they spend about ten days annually in professional development, exceeding the Ministry of Education's annual requirement of seven days. The scope of training activities is varied, encompassing self-directed learning, external workshops, and school-based coaching activities. The IPG has conducted 2789 training sessions with a total participation of 636,500 by the end of 2025. Second, providing clear pathways for career progression based on performance, qualifications, and experience would incentivise teachers to excel. Teacher appraisal outcomes are linked to incentives such as annual salary increases, promotions, professional recognition and career development, encouraging sustained improvements in teaching quality.
Source: Ministry of Education.
One element of weak teacher performance is absenteeism. In a 2019 SEA-PLM survey, nearly 40% of grade 5 students reported that their teachers were “often” or “sometimes” absent, compared to 9% in Viet Nam (UNICEF & SEAMEO, 2020). In one well-known case, three students successfully sued their English teacher, as well as the school principal, the education minister and the government, for violating their right to education. The English teacher had failed to attend class for seven months (South China Morning Post, 2023), suggesting a lack of teacher motivation, ineffective disciplinary measures and corruption in school management. Some teachers are reportedly absent because of other income-generating activities. In addition to absenteeism, 64% of fifth graders said that their teachers were “often” or “sometimes” late, much higher than the 14% in Viet Nam (UNICEF & SEAMEO, 2020). Effective application of the new assessment framework (Figure 4.16) and performance-related pay to boost teacher motivation would help address these problems.
Scope for further progress is greatest with respect to the quality of English teaching. When the government tested English teachers in 2013, 52% were found to be proficient in English according to an internationally recognised standard. The Malaysia Education Blueprint 2013-2025 set a target of ensuring that every English teacher achieved the proficient user level in English. Training focused on the 14 479 teachers who had some English ability but did not achieve that level. By 2020, the share of teachers who reached proficiency levels remained nearly unchanged at 53%, indicating significant scope for further improvement through continuing professional development (World Bank, 2024a). Raising English proficiency is a government priority; in launching the Malaysia Education Blueprint 2026-2035, the Prime Minister highlighted the need for strong English proficiency to compete globally, especially in fields such as digital transformation, energy transition and artificial intelligence (Zalani, 2026). The government’s aspiration is that students should be able to work in both Malay and English after graduation.
A specific concern voiced about teaching practices in Malaysia is the strong emphasis on rote learning. The Malaysia Education Blueprint 2013-2025 raised concerns that teaching is focused on memorising facts rather than developing critical thinking skills. Around 70% of lessons test the ability to recall facts, while only 15% require synthesising information. A 2024 study recorded 333 hours of instruction by 140 teachers in 24 public secondary schools. It found that “the homogeneous teaching practices do not engage and advance students’ learning and thinking beyond more rote forms of educational processes”. Teachers struggle to use pedagogical practices that are “conducive to cultivating thinking” (Tee and Boon Kheng, 2024). The government has introduced some “higher-order thinking skills” questions into exams to address this. Malaysia no longer groups students by achievement levels, particularly in primary schools, helping avoid labelling children too early in their education and undermining their motivation and sense of self-worth. However, it requires that teachers provide differentiated learning approaches that adjust lesson content to a range of students’ abilities.
The overall quality of teaching is also negatively affected by the relatively long time that teachers in Malaysia spend on administrative responsibilities. The OECD’s Teaching and Learning International Survey found that teachers in Malaysia spend 15 hours a week on non-teaching duties, compared to an OECD average of 6.5 hours in the latest available data (OECD, 2014), and this remains a concern. The heavy teacher workload, combined with limited career advancement opportunities, negatively affects teacher retention and morale. Reducing administrative burdens would allow teachers to focus more on teaching and spend more time with students, thereby improving learning outcomes. It would also leave more time for professional development while improving teachers’ well-being. The Ministry of Education has made efforts to alleviate teachers’ burdens by standardising and streamlining data-collection processes and urging schools to reduce teachers’ workloads on administrative committees (World Bank, 2024a). The 7 Immediate Measures for Teacher Wellbeing enacted in 2023 included reducing the frequency of teachers’ self-assessment to once annually. Continued efforts are needed, including moving some administrative functions to a centralised service centre, adding administrative staff at the school level, and making greater use of technology.
After teachers, the quality of principals and other school leaders is the second biggest school-based factor in determining student outcomes. International research on school leadership shows that an outstanding principal is one focused on improving instruction rather than on administrative duties. Effective school leaders can raise student outcomes by up to 20% (Ministry of Education, 2013). The selection criterion for principals, however, is primarily based on their teaching tenure and seniority rather than leadership abilities. All too often, the job of a principal in Malaysia is considered as a brief, pre-retirement posting. Instead, principals should be chosen by capability through a structured, rigorous selection process rather than by tenure, and provided with job-specific training (Chan et al., 2024). As of 2013, 55% of principals received no training before or during their first three years of service.
4.3.4. Moving towards a less centralised education system
In many dimensions relevant for improving education outcomes, Malaysia’s education system is one of the most centralised in the world (World Bank, 2013). Responsibility for education is concentrated in the federal (central) government. The Ministries of Education and Higher Education formulate, coordinate, and determine national education policies, including matters such as curriculum standards, textbooks for public primary and secondary education, national standardised examinations, the language of instruction, school uniforms for students, and appointments of teachers and principals (Samuel et al. 2017). Below the Ministries, the education system has three levels: 16 State Education Departments (SEDs), 138 District Education Offices (DEOs) and the schools. The state and district offices monitor and coordinate programme implementation and the DEOs act as a bridge of communication between schools and the SEDs.
Centralised education systems have many advantages, such as facilitating nationwide uniformity in education and an equitable distribution of spending and assets. However, they also face challenges. First, subordinating the subject and pedagogical expertise of teachers and principals to the decisions made at the federal government level can lead to suboptimal outcomes. Top-down approaches tend to foster ”one-size-fits-all” methods. Second, communication problems can result from the flawed implementation of nationwide reforms at the school and in the classroom. Third, messages sent by the Ministry may differ from what teachers understand, as they pass through the state and district education authorities. Fourth, teachers’ limited “ownership” of reforms initiated by the federal government may undermine their success (Tee, 2024).
Malaysia’s steady stream of policy initiatives and blueprints coming from above may contribute to “reform overload” for teachers and principals (Tiong, 2023). According to one study, the centralised approach has “somewhat disempowered or de-professionalised teachers and school leaders, leaving little room for them to be more responsive to the distinct needs of their students” (Tee and Lee, 2024). The Malaysia Education Blueprint 2013-2025 noted that implementing policies through this network is “complex” and identified key challenges: i) the overlapping responsibilities of the federal, state, and district education levels; ii) limited coordination across divisions and administrative levels; iii) launching initiatives despite inconsistent information and insufficient support; and iv) weak outcome-based monitoring and follow through.
Across OECD economies, many education systems have increased school autonomy, notably by adapting curricula and teaching and learning to students’ needs. Decentralisation of education systems can allow local authorities to innovate and respond to local situations (OECD, 2018b) and increase efficiency. Many schools have become more autonomous, while becoming more accountable to students, parents and the wider public (OECD, 2023b). This would also enhance competition between schools, stimulating innovation and reducing mismatches between education supply and demand. Evidence suggests a positive relationship between greater school autonomy and learning outcomes, as measured by PISA tests (Lastra-Anadón and Mukherjee, 2019; OECD, 2023g).
However, the gains from increasing school autonomy are not automatic. Instead, they hinge on carefully combining autonomy and accountability, including a strong national framework and a clear strategic vision, well-adapted school leaders and teacher training programmes, and accountability mechanisms (OECD, 2018b), areas where Malaysia faces challenges. More autonomy should be accompanied by performance incentives, regular evaluations and corrective measures if performance falls short of expectations.
The Malaysia Education Blueprint 2013-2025 recognised the need for decentralisation: “The roles of the federal, state and district levels will be streamlined”, with the federal office focused on policy development and macro-level planning, and the state and district level offices strengthened to drive day-to-day implementation. The Blueprint states that the state and district offices “will increasingly be able to make key operational decisions in budgeting, such as maintenance allocations for schools, and in personnel, such as the appointment of principals”. The Blueprint calls for the Ministry of Education to “Allow greater school-based management and autonomy for schools that meet a minimum performance criteria”. This increased emphasis on school-based management will also be accompanied by sharper accountability for school principals. The guiding principle of decentralisation should be to allow teachers and principals to have greater say in defining the most appropriate means to achieve the policy objectives set by the federal government. Rather than setting a minimum performance criterion as a requirement for greater school-based autonomy, allowing autonomy may enable schools with the necessary capacity to achieve better results.
4.3.5. Making greater use of digital technologies
More than one-third of students in Malaysia do not have a digital device to participate in online home-based teaching and learning and four-fifths do not have high-speed internet access. The 2022 PISA study found that only 19% of Malaysian 15-year-olds used digital resources at least once a week to prepare a school assignment, about half of the OECD average (OECD, 2024b). The World Digital Competitiveness Ranking shows Malaysia in the middle of 69 countries and second among countries with a per capita income below USD 20 000 (Table 4.4). However, its ranking has fallen across all three sub-components of this measure since 2021.
Empirical evidence shows that the effectiveness of digital tools in improving learning outcomes is conditional on other policies, including adapting pedagogical approaches, curricula and assessments to digital education, building educators’ digital capacity, and aligning human resource policies with digital education (Boeskens and Meyer, 2025). The government has created plans aimed at implementing such policies:
The Ministry of Education created the DELIMa platform in 2020 as a comprehensive digital learning ecosystem to help teachers integrate digital technologies, including AI, into their lesson plans.
The Digital Education Strategic Plan 2021-25 aimed to integrate digital technology into the education system to empower students and educators.
Malaysia’s Digital Education Policy (DEP), launched in 2023, provides a framework for digital transformation, ensuring students and educators are digitally fluent and competitive.
Remaining gaps need to be addressed through targeted interventions. The 2018 PISA found that Malaysia has a significant digital divide in its education system, with rural areas lagging behind urban areas, and socio-economic gaps leading to disparities in digital resources. Funding for digital learning remains inadequate, especially for rural schools. Many schools still lack high-speed internet, digital devices and teacher training. Deteriorating physical infrastructure in some schools hinders efforts to integrate digital learning tools (Ismail, 2025). Continued efforts to strengthen digital learning platforms in underserved schools are a priority.
Among the 69 countries ranked by the International Institute for Management Development
4.3.6. Education reforms can help provide more equal opportunities
While improving average student performance is crucial, it is also important to reduce the gap between low and high-performing students. Inequality is partly due to regional disparities. The gap between urban and rural results on the SPM is a persistent concern (OECD, 2019b). While the share of the rural population has fallen from three-quarters in 1960 to around one-fifth, the gap between urban Peninsular Malaysia and rural East Malaysia remains significant. Indeed, absolute poverty rates in Sabah and Sarawak in East Malaysia were 17.7% and 8.4%, respectively, in 2024, based on Malaysia’s Household Income and Expenditure Survey. The “last mile” for education provision has proven challenging. During the last two decades, enrolment in primary school has plateaued at 95–98%. In Sabah, where 37.4% of rural households lived more than 9 kilometres away from a secondary school in 2019, 6.3% of primary school-age and 9% of secondary school-age children did not attend school (Tee, 2024). Inequality also varies by ethnicity; the poverty rate for the Bumiputera is 6.6% compared to 1.5% for ethnic Chinese. Public education spending helps improve equity by allocating more spending per student to states with lower per capita incomes, particularly Sabah and Sarawak (World Bank, 2024a).
As in most countries, socio-economic background has a significant influence on students’ learning outcomes in Malaysia, reflecting disparities in access to digital resources, quality learning environments and academic support at home. In the PISA 2022 study, Malaysian students from higher socio-economic backgrounds scored 80–90 points higher than their disadvantaged peers. Socio-economic status accounted for 18% of the variation in mathematics performance in Malaysia, compared with the 15% OECD average (Figure 4.17, Panel A). Between 2012 and 2022, the gap between the top and bottom 25% of students in terms of socio-economic status remained stable in mathematics and science but widened in reading. Students in poorer regions of the country face several challenges. First, many rural schools lack basic facilities and have limited internet access, a serious drawback, particularly during the pandemic. Second, they face a shortage of qualified teachers, as many educators prefer urban assignments. Third, lower-income families struggle to afford tuition, transport to school and uniforms.
Providing equal learning opportunities for all students is a priority. Equity does not mean that all students obtain equal education outcomes, but rather that differences in students’ outcomes are unrelated to their socioeconomic status, over which students have no control (OECD, 2024d). For schools that consistently underperform, Malaysia implements targeted support measures such as strengthened instructional leadership, intensified coaching, resource optimisation and continuous monitoring. In line with the Malaysia Education Blueprint 2013–2025, the government strengthened the capacity of the State Education Departments (SEDs) and the District Education Offices (DEOs) to provide needs-based and context-specific solutions. In addition, School Improvement Partners (SIPartners+) and School Improvement Specialist Coaches (SISC+) provide coaching, mentoring, and technical support to school leaders and teachers (Padzil et al., 2019). Quality assurance within schools is also monitored through regular performance reviews, data analysis (including the SPM, school-based assessments and attendance/engagement indicators) and continuous improvement cycles led by the DEOs. The government also provides assistance to students from households in the bottom 40% of the income distribution through the Early Schooling Assistance programme, Underprivileged Student Trust Fund and the Supplementary Food Plan.
Note: Both panels are based on the 2022 PISA in mathematics. A negative score indicates that girls outperformed the boys.
Source: OECD (2023c), Full Report: PISA 2022 Results (Volume I) | OECD.
Other initiatives may help support disadvantaged students. One priority discussed above is expanding access to preschool and improving its quality, thereby helping children acquire essential educational and social skills. Better communication between parents and teachers, thereby encouraging parents to be more involved in their child’s education, is particularly important for disadvantaged students. Educational authorities should also set ambitious goals for disadvantaged students and monitor their progress. Initial teacher training and continuous teacher development should help teachers identify students’ needs and manage diverse classrooms, particularly as Malaysian schools no longer group students by achievement levels. PISA data show that countries in which teachers’ qualifications and experience are significantly better in advantaged schools than in disadvantaged schools tend to have larger performance gaps related to students’ socio-economic status and less equitable outcomes (OECD, 2018a). Introducing policies to encourage excellent teachers to teach in disadvantaged schools, as is done in Japan and Korea, for example, would result in more equitable outcomes.
In addition to concerns about the achievement gaps between rural and urban areas and by socioeconomic status, the gender gap is significant and widening. Indeed, girls outscored boys by 10 points in the 2022 PISA mathematics test, a 4-point increase since 2018 (Figure 4.17, Panel B). In contrast, in the OECD area, boys outscored girls by 9 points. In addition, Malaysian girls outscored boys in reading (by 31 points) and in science (13 points). The share of low performers (students scoring below Level 2 proficiency) was also significantly higher among boys across all subjects in PISA 2022. The Malaysia Education Blueprint 2013-2025 noted that boys’ scores were declining in nationwide tests administered at the end of primary school, grade 9 and secondary school. In 2015, boys were three times more likely than girls to drop out of school before completing secondary education (Noman and Kaur, 2022). Consequently, while the enrolment of boys and girls was virtually equal in primary and lower secondary schools, by Form 6 (age 18), women accounted for 61% of students. While the rising performance and share of women in education has been an important step for gender equality, low performance among boys is a concern in Malaysia, as in many other countries.
A number of explanations have been offered for boys’ lower educational attainment. First, many boys from disadvantaged families drop out of school to support their families. In addition, those who remain in school may also work, contributing to poorer grades. Second, the lack of male teachers to serve as role models may discourage boys. Third, boys may have higher rates of behavioural problems and attention shortages. Fourth, cultural and attitudinal norms may tend to associate reading and academic diligence with lower masculinity. The early departure of boys from education may also be a social problem, in part as many are thought to be involved in unlawful activities (Noman and Kaur, 2022). To address these disparities, the government is developing pedagogy that is responsive to gender and enhancing early literacy programmes to support boys’ foundational skills. In the long term, bridging the gender gap requires a whole-school and community approach that nurtures positive learning identities among boys, strengthens mentorship and male role models, and promotes participation in academic and co-curricular activities.
4.4.1. Placing equal value on vocational and academic pathways
Technical and vocational education and training (TVET) is defined as having an occupational direction and an emphasis on practices required in industry and services. It is recognised as a driver of inclusion and labour force participation, thereby reducing the share of young people not in education, employment or training (NEETs). Malaysia’s NEET rate increased from 8% in 2019 to 10% in 2025 amid post-pandemic adjustments, but it remains below the average of its ASEAN peers. However, the enrolment of young people in TVET in Malaysia is well below the ASEAN and OECD averages (Figure 4.18). As in some other countries, TVET was viewed as an option for poor-performing students, leading to low-paid, dirty, dangerous and difficult jobs. The Malaysia Education Blueprint 2013-2025 stated that the government would “construct an education system less focused on traditional academic pathways and place an equal value on much-needed technical and vocational training”. The government argues that TVET is no longer associated with preparing workers for low-paying jobs; it is now a priority to develop a skilled workforce by teaching science, technology, engineering and mathematics (STEM) subjects and digital skills.
TVET in Malaysia includes a large number of institutions and fields. As of 2024, there were 673 public TVET institutions owned and operated by 12 federal government ministries and various agencies, as well as 28 at the state government level (Table 4.5). In addition, there are 697 private TVET institutions, accredited by multiple government agencies, including the Ministries of Education and Human Resources. Together, 4 876 TVET courses are offered across a wide range of disciplines and skills, ranging from elementary skills to certificates and diplomas, including bachelor’s degrees. In 2023, a total of 409 000 students were enrolled in the 1 345 TVET institutions.
Note: For youth between the ages of 15 and 24. The ASEAN average includes countries with available data. Data from 2000 are not available for Australia, Brunei Darussalam, Germany, and Singapore.
Source: World Bank (2020), Education Statistics - All Indicators, https://databank.worldbank.org/source/education-statistics-%5e-all-indicators
Note: Individual ministries operate different types of TVET institutions. For example, the Ministry of Higher Education operates community colleges, polytechnics and the Malaysian Technical Universities Network.
Source: National TVET Council Secretariat (MTVET), Brief Facts About TVET Malaysia, faktamtvet.pdf.
At the end of Form 3 (grade 9), secondary students choose their path for upper secondary school based on their academic performance and interests. For those choosing TVET in Form 3, the Ministry of Education has provided Vocational Colleges (KV) since 2012 and Technical High Schools (SMT) since the early 21st century. The number of students choosing the TVET option more than doubled between 2022 and 2025 to nearly 69 000, accounting for about 18% of the Form Four (grade 10) cohort that year.
The participation of secondary school students in TVET increased from 6.3% in 2021 to 11.4% in 2025, according to the Ministry of Education. Moreover, the share of students entering TVET programmes at the end of secondary school increased from 31.3% in 2020 to 53.6% in 2024, reflecting greater recognition of the value of vocational education in the labour market. The Thirteenth Malaysia Plan aims to raise it to 60% by 2030 by strengthening the “TVET ecosystem” and increasing students’ early exposure to TVET as an alternative learning pathway, making them better informed and prepared when making decisions on education. TVET has been included in the curricula of primary and lower secondary education to nurture curiosity and reduce the social stigma attached to TVET (Wan et al., 2018). At the tertiary level, the Ministry of Higher Education owns and operates two types of institutions: i) community colleges, established primarily in rural areas since 2001, offer certificate and diploma programmes in a range of TVET subjects to students with the SPM; and ii) polytechnics were first established in 1969 and now enrol 84 556 students. Certificate and diploma programmes are offered at the tertiary level by the other 11 ministries shown in Table 4.5.
The National TVET Policy 2030 calls for making TVET a “premier career choice” for students. However, TVET is sometimes perceived as a second-choice pathway for academically weak students, thereby reducing its appeal to students and parents and discouraging the enrolment of high-performing students. Strengthening the progression from TVET in secondary schools to tertiary TVET, including diploma and degree-level programmes, would demonstrate long-term career prospects in TVET. Increasing interest in TVET is reflected in the polytechnics, which recorded the second-highest number of first-choice online applications behind only the Universiti Teknologi MARA in 2026. Expanding dual training/apprenticeships that combine classroom and workplace learning across more sectors should be a priority. Teachers and counsellors could better highlight opportunities in the labour force and TVET (OECD, 2023d). This may require increasing the number of guidance counsellors in schools. In public schools, the guideline for the counsellor-to-student ratio is one counsellor for every 350 pupils in primary schools and 500 in secondary schools (Wei, 2025).
Further raising the quality of TVET requires addressing a number of challenges:
Skills mismatches: the TVET system is shifting from a supply-oriented approach focused on funding, enrolment of students and increasing the number of certificate holders to a demand-driven, industry-led model. Government agencies implement the National Occupational Skills Standard (NOSS), developed with industry experts, to ensure that training content aligns with occupational requirements. Employers participate through Sector Skills Committees and TVET curriculum review. While employers are involved in the design and review of TVET programmes, they play a consultative role rather than a decision-making role (Aziz and Subramaniam, 2023). The National TVET Policy 2030, introduced in 2024, calls for stronger and more institutionalised collaboration between TVET providers and employers by expanding incentives and establishing legal provisions to encourage industry involvement (Secretariat of the National TVET Council, 2024). The Malaysia Higher Education Blueprint 2026-2035 calls for the creation of a TVET Chamber of Commerce to allow the private sector to directly influence training. Evidence from a large-scale vocational training programme in Brazil suggests that participants’ odds of finding a job afterwards were only systematically higher in those training programmes whose content was closely coordinated with employers (OECD, 2020c).
Adapting to technological change: rapid industrial change challenges the ability of TVET institutions to keep their training up to date. TVET courses in emerging sectors such as AI, the digital economy and renewable energy are being implemented. Encouraging the sharing of expertise and technology between industry and TVET providers is an objective of the National TVET Policy 2030.
The competency of TVET instructors: Many instructors were hired based on academic achievements, while less attention was given to their industrial experience. Such a background is problematic as TVET focuses on hands-on experience (Azahar, 2023). Continuous Professional Development (CPD) programmes, industry experience and Train-the-Trainer initiatives are used to help instructors remain current with technological advancements.
Inadequate funding: spending on TVET increased by 5.3% in the 2026 budget, exceeding the 3.3% increase in the overall education budget. Still, its share of education spending is less than 12%, which may be inadequate to achieve the goal of putting TVET on par with the academic pathway. Limited budgets may impede TVET institutions' ability to upgrade machinery and workshops, leading to obsolete training equipment that fails to align with current industry practices.
Another important issue to address is the fragmented TVET governance. The large number of ministries and agencies involved in TVET (Table 4.5) presents challenges for programme coordination and recognition, as well as fragmented data systems (OECD, 2024d). This results in the duplication of programmes, inconsistent standards and slow responsiveness to industry needs. The National TVET Council (MTVET) was established in 2020 to enhance coordination of TVET. The Thirteenth Malaysia Plan calls for the establishment of a TVET Commission (in addition to the MTVET) as a dedicated entity to supervise TVET institutions. It is unclear how the National TVET Commission will interact with MTVET and the planned National Education Council. Establishing more supervisory bodies may further complicate TVET policies (Wan, 2025b).
In 2024, the Parliamentary Special Select Committee on Nation-building, Education and Human Resources Development proposed limiting the TVET sector to only three ministries or agencies (Malay Mail, 2024). Given that the National TVET Council consists almost exclusively of ministries that supply TVET services, a better approach would be to rely on a ministry that does not provide TVET services. The end result would be to shift the government from a provider of TVET services to a coordinator responsive to the needs of workers and employers.
Fragmentation is also found in the multiple accreditation bodies. The Department of Skills Development (JPK) in the Ministry of Human Resources and the Malaysian Qualifications Agency (MQA) in the Ministry of Higher Education operate independently. Consequently, the same courses may be offered with different certifications and standards, confusing employers about the quality of graduates. Moreover, several TVET providers have their own certification systems (Azahar, 2023). The National TVET Policy 2030 calls for standardising accreditation between the JPK and MQA. A TVET rating system (Penarafan Tunggal Program TVET) was introduced in 2024. It will determine funding for institutions based on a range of criteria, including graduate employability, wage levels, industry collaboration, and rural social initiatives.
4.4.2. Promoting lifelong learning
The Malaysia Education Blueprint (Higher Education) 2015-2025 states that “Lifelong learning enables Malaysians to meet the changing skill needs of a high-income economy and maximise the potential of individuals who are currently outside the workforce through reskilling and upskilling opportunities”. As the majority of those affected by structural economic changes are already in the workforce, adult learning systems must play a key role in up- and re-skilling to respond to changing skill needs. A 2024 study by TalentCorp, an agency in the Ministry of Human Resources, examined 10 key sectors that employ 3.5 million workers. It estimates that 18% (620 000 employees) will be highly impacted by AI, digitalisation and the green economy over the next three to five years (TalentCorp, 2024). Skill mismatches create a need for lifelong learning. The TVET reforms to align skills with emerging industry demands will also provide the basis for lifelong learning. Increased opportunities for adult training may also make TVET more appealing to students. In today’s rapidly changing environment, lifelong learning programmes are attracting interest, as 61% of surveyed workers indicated an interest in upgrading their technical skills, but only 36% received training (Randstad, 2022). The Malaysia Higher Education Blueprint 2026-2035 set a goal to “Institutionalise recognition of lifelong learning resources as valuable scholarly achievements” and is emphasising micro credentials, which have proven effective in some OECD countries (OECD, 2023h).
Little data exists on adult training opportunities in Malaysia. The 2020 World Bank Enterprise Survey of Malaysia reported that 37% of participant firms offered formal training to their employees, compared to the ASEAN average of 27% (Figure 4.19). Training is discouraged by its upfront costs, the loss of working time during training and the concern that employees receiving training will take their skills to rival firms. The government’s Human Resource Development Corporation (HRD Corp) was established in 1993 to encourage employers to provide employee training. Employers with ten or more workers are required to pay a 1% levy on their total payroll. The system pools resources that are subsequently channelled back to firms in the form of training grants and incentives, thereby ensuring that skills development remains industry-driven and responsive to economic needs. The utilisation of the levy increased significantly from 71% in 2023 to 95% in 2025, reflecting the growing commitment of companies to invest in upskilling and reskilling their workforce.
Note: Only training with a structured, defined curriculum (e.g., classroom work, seminars, lectures, workshops, and audiovisual presentations and demonstrations) is included. Large firms have 100 or more workers and small firms have 5 to 19 workers.
Source: World Bank, Enterprise Surveys, https://www.enterprisesurveys.org/en/enterprisesurveys.
The Thirteenth Malaysia Plan set a goal to “Empower lifelong learning through accessible programmes especially for senior citizens through the “Third Age University’ concept”. TVET institutions, notably the polytechnics and community colleges discussed above, offer lifelong learning courses in various fields. The Plan also calls for improving governance of lifelong learning to institutionalise it in the education system. The great diversity within adult learning systems suggests that strong coordination mechanisms are essential to prevent the duplication of training courses and ensure that policies are developed in a coherent manner and complement each other. To enhance flexible learning pathways for adults, the Malaysia Higher Education Blueprint 2026–2035 calls for developing the Accreditation of Prior Experiential Learning (APEL).
Malaysia’s higher education sector has a diverse range of public and private institutions. Public higher education comprises 20 universities, in addition to the community colleges and polytechnics discussed above (Table 4.6). Private higher education includes universities, colleges, university colleges and branch campuses of foreign universities and accounted for 62% of the 1.1 million students in 2025. The student numbers include more than 140 000 international students, led by inflows from China and Indonesia, attracted, in part, by the rising quality of Malaysia’s tertiary education. The number of Malaysian universities ranked in the top 200 of the QS World University Rankings rose from one in 2012 to five in 2025. All five are public universities. Malaysia saw substantial growth in research output, with publications increasing by 1.7 times and citations doubling between 2015 and 2022, led by Malaysia’s five research universities (Ministry of Higher Education, 2026). In 2024, Malaysia ranked 25th globally in scientific output as measured by citations from the SCOPUS database (Scimago, 2024).
Higher education is an important source of income, given Malaysia’s status as a top ten destination for international students (Ministry of Education, 2015). International students are encouraged, as they improve the dynamism of Malaysia’s higher education sector and make it more responsive to the demands of a knowledge-driven world economy (Chassie et al., 2023). The Malaysia Higher Education Blueprint 2026-2035 aims to transform Malaysia from a regional to a global educational hub.
Source: Ministry of Higher Education.
The share of Malaysia’s tertiary graduates in STEM programmes is exceptionally high compared to other ASEAN countries and selected OECD countries (Figure 4.20), reflecting the longstanding objective of a 60:40 ratio of science to non-science students in higher education (Wan et al., 2018). STEM subjects have been introduced in primary and lower secondary school curricula and the government has launched initiatives, such as STEM4ALL, to increase interest. At the end of lower secondary school, students choose between STEM subjects and liberal arts for upper secondary school.
While the 60% target was not achieved, the share of tertiary students in STEM programmes has risen from 41% in 2021 to 51% in 2024. Further increasing the share is challenging given low interest among many students, who view STEM subjects as more difficult and less appealing and a lack of qualified STEM teachers, especially in rural areas. Women accounted for 53.2% of STEM graduates in 2021, compared with the United Nations’ estimate that their global share is only 35% (Gong, 2023). As noted above, Malaysian girls outperform boys in science and mathematics in the PISA. Nevertheless, they are underrepresented in STEM, given that women account for 62% of undergraduate students and lag men in terms of employment. In 2021, the overall employment rate of male STEM graduates was 72% compared with 69% of female STEM graduates. However, the gap narrowed from 7 percentage points compared to 2015 (Hamid et al., 2023).
4.5.1. A declining share of young people is enrolling in tertiary education
Tertiary enrolment increased from only 3% of the relevant age group in 1979 to a peak of 45% in 2016 (Figure 4.21, Panel A). As in many countries, the increase in the enrolment rate was led by women, who surpassed men in 1994. In 2024, the gender enrolment gap in tertiary education reached 14 percentage points. Although the Malaysia Education Blueprint (Higher Education) 2015-2025 set a target of a 53% overall tertiary enrolment rate by 2025, the share declined to 39% in 2024. The rate has fallen below Malaysia’s ASEAN peers, except Viet Nam, and the 63% average for other upper-middle-income countries (Figure 4.21, Panel B). Some private higher education institutions, which do not receive direct government support, face serious financial problems and some have been forced to close (Ministry of Higher Education, 2026). An estimated 55% of private universities are suffering losses and 64% are in some form of financial stress (Williams, 2025).
Note: Tertiary graduates in science, technology, engineering and mathematics as a share of total graduates.
Source: OECD (2023b).
The Malaysia Higher Education Blueprint 2026-2035 states, “The current gap in future-ready skills and practical, industry-relevant training is contributing to both unemployment, where graduates face challenges in securing jobs, and underemployment, where they are employed in roles that do not fully utilise their skills and qualifications”. In other words, Malaysia faces a significant mismatch between the skills of graduates and labour market demands. One study reported that only 43.4% of degree holders in 2021 secured employment aligned with their academic qualifications (Gong, 2023). Typically, these workers take lower-skilled jobs. The 2025 Labour Force Survey reported that the skill-related underemployment rate among tertiary graduates is 36%. Another study found that 40% of university graduates work in low-skilled jobs that do not require university degrees (The Burning Glass Institute and the Strada Education Foundation, 2024).
The disappointing outcomes for many tertiary graduates tend to discourage youth from pursuing higher education. In 2021, two-thirds of new graduates earned less than MYR 2 000 (approximately USD 500) per month—a rate virtually unchanged since 2010 (Simamora, 2025).
From the employers’ perspective, skill mismatches create skill shortages. A 2024 company survey found that 64% of firms faced moderate to extreme skill shortages (Quintos, 2025). Employers report “that graduates lack the requisite knowledge, skills and attitudes”, according to the Malaysia Education Blueprint (Higher Education) 2015-2025.
The mismatch issue is connected to the lack of high-skilled jobs, which have not increased in line with the number of tertiary graduates, leading to the “overeducation dilemma” (Wei and Yew, 2024). In 2018, 60% of university graduates remained unemployed a year after graduation (Tee, 2024). One study found that 287 000 university graduates entered the labour market in 2023, but only 48 700 high-skilled jobs were available (World Bank, 2024b). The lack of high-skilled jobs is linked to weak innovation and technological advancement. R&D spending in Malaysia is less than 1% of GDP. This also contributes to Malaysia’s brain drain; during the past 50 years, 1.86 million citizens, equivalent to 5.6% of today’s population, have left the country, primarily to work in Singapore.
Note: Data for missing years in Panel A are extrapolated.
Source: World Bank, School enrollment, tertiary (% gross) | Data, accessed 27 February.
4.5.2. Directions for reform to improve higher education
To address skill mismatches, the Malaysia Higher Education Blueprint 2026-2035 called for industry “to collaborate with higher learning institutions by co-developing curricula, supporting research and offering internships”. Business leaders are matched with university programmes and, in some cases, offer internship opportunities to students. In addition, every new academic programme undergoes Ministry of Higher Education’s screening process to assess whether the curriculum aligns with current and future industry needs to the extent possible. The Department of Skills Development (JPK) is also updating nearly 2 000 national skills standards (NOSS) to reflect emerging areas such as renewable energy, cybersecurity, automation, and digitalisation. Under the Thirteenth Malaysia Plan, the government aims to reduce skill-related underemployment among tertiary graduates to 30% by 2030 by introducing a mandatory paid internship scheme for students, encouraging SMEs to offer industrial training for university students and greater collaboration between public universities and the private sector. While some have voiced concerns that universities have become too industry-focused and less focused on academic objectives (Lee, 2019), this risk should be weighed against the benefits of reducing skill mismatches.
There may also be a case for more profound reforms of higher education institutions, both in funding and governance. Government financing accounted for 90% of public universities’ funding in 2024, compared to an average of 73% across the OECD area (OECD, 2025). The remaining funding comes from tuition fees and other income generated by universities. The Malaysia Higher Education Blueprint 2026-2035 calls for public universities to diversify their funding sources, in part by closer integration with the private sector through partnerships. This could also make course content more relevant for private employers, although some have raised concerns that it will divert attention from the main priorities of teaching and research. Income diversification by universities is a reasonable objective but has been difficult to implement in practice.
Tuition fees in public universities ranged from the equivalent of USD 2500 to USD 5000 in 2025. Scholarships provided by private companies and the government's loan schemes have greatly helped students from low-income households. The Higher Education Student Loan Fund (PTPTN) offers loans for tuition and living fees at an interest rate of 1%. In addition, the government’s Council of Trust For The People (MARA) provides loans of up to MYR 2000 (USD 500) to households with a monthly income below MYR 4000 (USD 1000). Based on the national poverty line in 2020, more than half of the new graduates in a 2017 study came from households below the poverty line (Lim, 2020). These initiatives have created significant pathways to greater socioeconomic mobility, as the average monthly income of workers with tertiary education is more than double that of those with secondary education. However, the high non-payment rate for the PTPTN raises questions about its sustainability.
One option would be to allow universities to raise tuition fees for those who can contribute more. Means-tested tuition fees, combined with grants for students from low-income households, can help meet the demand for higher education, promote equity, while sharing the costs of higher education between the state and students. In Italy, for example, full-time undergraduates are required to contribute with an income-dependent annual tuition fee. Australia and Canada have study support mechanisms to help lower-income students cover fees.
Encouraging universities to raise more of their own resources could also go along with more autonomy and effective accountability mechanisms. The Malaysia Economic Blueprint (Higher Education) 2015-25 stated that “many decision rights are still concentrated at the Ministry level rather than at higher learning institutions, creating supervisory burdens and potential inefficiencies. These constraints also make it difficult for higher learning institutions to move quickly in response to global and local trends”. Reform could begin by allowing public universities to choose their management and board members through an independent committee, replacing the political process led by the Ministry of Higher Education. The independent leadership would then be responsible for meeting key performance indicators set by the government (Bajunid et al., 2018; Wan, 2025a). More autonomy in hiring and salary decisions would enable better resource allocation. Currently, the Ministry exercises broad regulatory and disciplinary powers over faculty, who are employed as civil servants. The Malaysia Economic Blueprint (Higher Education) 2015-25 states that “rigid career development pathways restrict the degree to which higher learning institutions are able to attract, recruit, and retain the best talent”. More autonomy would also enhance academic freedom (Lee, 2019), as the government’s strong role can contribute to the politicisation of education policies (Tee, 2024). Reducing block grants and making more funding conditional on performance has the potential to improve higher education outcomes.
The Malaysia Economic Blueprint (Higher Education)2015-25 set a goal to allow higher learning institutions to earn the autonomy to operate freely within the existing regulatory framework, but this remains a work in progress. The Thirteenth Malaysia Plan announced that a “pilot project to give autonomy to universities will also be implemented to improve financial sustainability and competitiveness of higher education institutions”. This would entail outcome-based performance contracts between the Ministry of Higher Education and public universities and could provide interesting insights to feed into future reforms. Such reforms would bring the legal framework for public universities closer to that of private universities. A unified framework would reduce inconsistent practices, divergent priorities and variations in student rights between private and public universities (Ministry of Higher Education, 2026).
More autonomy could also be granted with respect to selecting prospective students. Bumiputera students accounted for 82% of students at public universities, even after excluding Universiti Teknologi MARA (UiTM), Malaysia’s largest university with 190 000 students that is exclusively for Bumiputera students. While race-based quotas were ended in 2002, one path to public universities via the matriculation colleges favours Bumiputera applicants. The more difficult path to university for the non-Bumiputera population (30% of the total) may be one factor contributing to brain drain. Reconciling affirmative action objectives with better education outcomes may require expanding access to public universities for all students and giving stronger weight to academic merit in the selection process.
The government has encouraged more self-financing by public universities and aims for a gradual reduction in government financial support. Already, government spending per student in public institutions has edged down by 8% from MYR 20 700 in 2014 to MYR 19 000 (USD 4 700) in 2024 in nominal terms. Rebalancing the allocation of education spending will require whole-of-government coordination, including the Ministries of Finance, Education and Higher Education, under the 1966 Education Act. However, if university leaders are unable to meet the challenge to raise more own resources, Malaysia’s public universities are at risk of regressing. Evidence suggests that the returns to public spending are higher at lower stages of the education system, including preschool, primary and secondary schools, and TVET. Moreover, the government currently spends only 68 cents per primary school student for each dollar spent on tertiary students (Figure 4.4) and only a fraction of that for preschool (Figure 4.7). This strengthens the case for some rebalancing of higher education spending towards earlier stages of education. The medium-term pace of budget spending on public universities could then be conditioned on whether labour-market relevance and governance of public universities can be improved, including through more autonomy and accountability, and additional fiscal space becomes available.
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