Sustained growth in wages and income must be underpinned by sustained improvement in worker productivity, in order for domestic businesses to maintain global competitiveness. Countries with greater relative export competitiveness tend to also have stronger currencies — and a higher standard of living — over the longer term. And the underlying driver for productivity gains is an educated and skilled workforce. To successfully attract high-value investments and move up the value chain, the country needs people with the necessary skills and knowledge to meet the demand for the jobs to be created. In short, an educated and skilled workforce is the foundation to economic success and wealth of nations. We think most people will agree with all of the above.
As a country, for years and years we have talked about the pressing need for education reforms to arrest the decline in the quality of Malaysia’s public education system. Yet, there has been little evidence of urgency when it comes to reforms and certainly even less to show for it. Worse, successive governments have opted to outsource education to the private sector — in effect, limiting access to quality education to the privileged. Over time, this erodes the equality of opportunity in the job market for those in the lower income groups, exacerbating the income-wealth divide between the haves and the have-nots.
Hence, it comes as a positive surprise to see the state of Sarawak initiate the first major concrete policy change — to remove the race-based quota system for university admission in favour of meritocracy. If successful, perhaps this will lead to greater reforms at all levels of education, and across the nation.
The most common and enduring argument for the quota system is that it promotes social equality and inclusiveness. In reality, what these affirmative actions do is to lower the overall admission standards — when they are based on criteria other than meritocracy. Instead of having the best students compete for university places, a quota system tends to have the opposite effect — sending our best and brightest to further their education abroad, where they are assured of enrolment as long as they study hard and deliver the necessary results.
The repercussions are: one, many of these best and brightest will go on to find jobs where they graduate, choosing not to return to the country, worsening the brain drain. Two, the financial toll exacted from middle-income families (to send their kids overseas) hurts their purchasing power, domestic consumption and economic growth potential. And three, in the absence of real competition, even good students will not perform as well as they could have. Why bother to go the extra mile if you are already top of the class? There is pride in achievement and competition drives excellence. Even worse, when students who gain admission due to quota instead of merit (that is, they have lower grades) struggle to keep up, we lower the passing thresholds. By rigging the system to ensure equality of outcomes, we effectively lower the quality of the entire education system.
Yes, the government must ensure the equality of opportunity to all Malaysian students, rich and poor. And yes, the underprivileged will lose out — whether because they don’t have the money to pursue higher education, have less exposure to experiences outside of textbooks, limited resources to go for private tuition or that they may have other priorities and family obligations and so on and so forth. But these issues can and should be resolved with targeted assistance — instead of a broad-stroke quota system that ends up compromising the standards of public education.
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For example, to ensure that rural students can gain admission, the Sarawak government is upgrading educational facilities and allocating RM15 million annually to provide free tuition for students in Forms 3 and 5. Governments can offer scholarships and other forms of financial support, including building boarding schools and offering free full board to poorer or rural students. Additional tuition and other special needs assistance (as they are identified) can be provided to help struggling students improve their grades.
But the fundamental principle to achieve equality must be to raise the bottom to meet the top, not lower the top to meet the bottom.
Enrolment to tertiary education based solely on meritocracy is, we believe, a move in the right direction. But it is only the first step. Raising the standards of public education is a very long game. It takes years, more likely decades, of non-partisan policy commitment to bear fruit. For instance, Finland began its education transformation in the 1970s and Finnish students only started noticeably outperforming the rest of the world in the late 1990s. It takes 15 to 20 years, starting from pre-school, to achieve one full cycle of graduating students. Hence, it makes sense to learn from the experience of other nations. Apart from Finland, countries such as Vietnam, Singapore and Norway have successfully developed high-quality, inclusive public education systems over the past decades. We are by no means education experts, but we see common denominators.
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Good teachers do produce good students in general, excellent teachers are more likely to produce excellent students. Conversely, poorly educated teachers must harm the potential of their students. Therefore, to raise the quality of students, we must first improve the quality of teachers and even more critically, the way of teaching, especially in the increasingly knowledge-based and AI-driven economy. This means shifting away from strictly textbook teaching to a more open environment — one that fosters creative and critical thinking, communication and interpersonal skills, teamwork and collaboration. Instead of memorising and regurgitating facts, students are not only taught the concepts but to understand, apply and translate concepts into practical and real-world problem-solving skills. They should be encouraged to be curious, to ask questions and even challenge their teachers to open debates. Some will show greater affinity for vocational training and should be encouraged to pursue this track. Singapore, for example, uses a streaming system that aligns a student’s aptitude with possible future career paths.
While some may be truly passionate about teaching (a calling), most people are pragmatic when it comes to choosing their professions. Society’s perception of teachers, career progression and monetary rewards matter when it comes to attracting top talents. For example, in the early 2000s, Norway tackled the poor public perception of its education system by raising the minimum standards for entry into its teacher preparation programme, which now requires a fiveyear master’s degree. This helped raise the profession’s status in society, attracting top graduates into choosing this career path.
Teaching is a highly respected profession in Finland. Prospective teachers are competitively selected from the pool of college graduates — only the top 15% are admitted into a three-year graduate-level teacher preparation programme, which is entirely free of charge and with a living stipend. Training includes both extensive coursework on how to teach — with a strong emphasis on using research based on state-of-the-art practice. They also receive continuous professional development and support on the latest educational research and methods. Highly-trained teachers are given greater autonomy in the classroom and leeway to craft more detailed curriculum, suitable to their respective student pool, around a national standard. The emphasis is on learning, not testing.
Additionally, Finland offers universal access to high-quality pre-school, early childhood education and care that are primarily play-based. Acclimatising a child to peer interaction improves his or her social skills, emotional intelligence, cognitive development, self-confidence and so on, and has proven to build a better foundation for when he or she starts formal school and promotes better educational outcomes in later years. Artificial intelligence (AI)-driven tools such as ChatGPT can help equalise access.
Singapore’s education system is widely regarded as one of the best in the world. The country has highly selective and stringent entry requirements into the National Institute of Education, the sole teacher education institution in the country. Only graduates in the top academic percentiles need apply! Shortlisted candidates are then interviewed by a panel of experienced principals, who assess their aptitude for teaching, as well as communication skills, passion for education, and the potential to be a good role model. Only one out of three shortlisted applicants typically make it through the selection interview. Teacher candidates then spend up to a year in schools as untrained contract teachers. The schools are tasked with assessing their suitability for the teaching profession. Starting salaries for teachers are comparable to those of accountants and engineers in the civil service.
It goes without saying that the development of a high-quality education system requires strong government commitment and support. For instance, the Communist Party of Vietnam has positioned education at the centre of its political agenda since the leadership of Ho Chi Minh in 1945. Its leaders understand that education is essential for nation-building and global competitiveness. Significant resources were allocated to the cause. Its curriculum is continuously evolving with the times, including the current emphasis on science, technology, engineering and mathematics (STEM) as well as critical thinking, in addition to a more traditional focus on socialist ideology.
Understandably, undertaking education reforms, especially when it is a politically sensitive issue, is difficult for any democratically elected government, whose agenda is necessarily short-term focused. Education is a long game, and the payback will not be evident for years to come. But investing in improving the quality of education is crucial. If anything, it has become even more urgent. Deglobalisation is a secular trend. A fragmented, AI-driven digital global economy will increasingly be dominated by the US and China. Smaller economies, including Malaysia, will find it incrementally harder to fight for capital, investments and global market share, without a sustained competitive advantage that stems from strong productivity gains. That requires an educated and skilled workforce that is better able to embrace and adapt to rapid technological advancements, to reap the benefits of digitalisation and move the economy up the value chain. AI will not replace humans. But humans using AI tools will replace humans without AI. We will elaborate on what we mean by this next week.
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The Malaysian Portfolio gained 0.5% for the week ended Nov 20, outperforming the benchmark FBM KLCI, which fell 0.8%. United Plantations (+4.7%), Gamuda (+3.2%) and KSL Holdings (+2.3%) were the top gainers, while the three losing stocks were Insas Bhd – Warrants C (-6.9%), IOI Properties Group (-3.6%) and UOA Development (-1.1%). Last week’s gains boosted total portfolio returns to 204.7% since inception. This portfolio is outperforming the FBM KLCI, which is down 12.7% over the same period, by a long, long way.
The Absolute Returns Portfolio also ended higher last week, up 0.7% and lifting total returns since inception to 17.6%. We disposed of all our shares in Tencent Holdings and Itochu Corp, netting a 28.1% return on our cost of investment in the eight months since we first started this portfolio. We reinvested the proceeds into Indonesia-based footwear retailer MAP Aktif Adiperkasa and Palantir Technologies, a US company specialising in software platforms for big data analytics. Both stocks performed well in the days since our acquisition, up 5.6% and 1.6%, respectively. Other notable gainers include OCBC (+1.3%), CRH (+1%) and Swire Properties (+1%). On the other hand, shares for Uber (-2.2%), DBS (-1.4%) and Talen Energy (-0.2%) ended in the red for the week.
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