This article first appeared in The Edge Malaysia Weekly on January 18, 2021 - January 24, 2021

THOSE who have been to the corporate headquarters of Penang-based automated vision inspection equipment maker ViTrox Corp Bhd usually leave impressed by the architecture of the building. A bird’s eye view of ViTrox Campus 2.0 — located in the heart of Batu Kawan Industrial Park — reveals an eye-shaped structure on a green building with its own solar photovoltaic (PV) system.

Notably, ViTrox Campus 2.0 features V-Cafe, an open and conducive alternative space for training programmes, workshops, recreation, and a gym. The facility also incorporates an eco-pond with a rainwater harvesting system for irrigation, a garden in the centre to promote a greener working environment, and a sky herb garden to promote healthy eating habits.

It is not often that we see a home-grown company investing in a work space that inspires innovation and creates a relaxed environment that balances the body, mind and soul. But ViTrox did not build its new head office — perhaps comparable with Google’s (only not as big and fancy but more zen-like) — just to show off. Its decision to relocate from Bayan Lepas in July 2018 was a strategic move to attract and retain talent.

Due to the foreign exchange rate, most — if not all — Malaysian companies will be at a disadvantage when competing against multinational corporations (MNCs) for local talent. When it comes to pay and employee benefits, the MNCs are usually willing and able to offer more. So, what can local companies do to overcome this obstacle in hiring and retaining staff?

While foreign direct investments (FDIs) create job opportunities, develop local talent and stimulate the economy, there are concerns about foreign MNCs displacing local businesses, discouraging entrepreneurship in the host country as well as profit repatriation.

What should the government do to address these disadvantages? Greatech Technology Bhd executive director and CEO Tan Eng Kee says the Penang-based automation specialist holds firm to the aspiration of grooming talent for the country’s automation industry. “Give a man a fish and you feed him for a day. Teach a man how to fish and you feed him for a lifetime. This is the ethos businesses today need to build their future on. Bring in the young talent, groom them, and the return on investment will be greater,” he remarks.

Tan believes Malaysia’s economy can be strengthened if local companies like Greatech could retain their design hubs in the country even as they expand abroad. “Greatech is very focused on its business direction. We will always be a factory automation solutions provider. We hope that when one thinks of automation, Penang will come to mind first,” he says.

Premier integrated circuit (IC) designer Oppstar Technology Sdn Bhd managing director Ng Meng Thai concedes that one of the challenges faced by his company is still the availability of talent in Malaysia and the rest of Asean.

“With talent getting scarce, our cost per employee also grows. We can only grow according to the availability of the talent in the market. Malaysia faces the same challenges as our neighbouring countries, where we are facing a shortage of science students and engineers,” he points out.

Oppstar usually serves 10 companies at any point in time, and the number is expected to grow. The number of people that it employs, however, is limiting its ability to grow its client base.

“Unlike automation or manufacturing, where some companies can provide one or two machines or products to their clients as a start, for us to serve our customers well and for meaningful execution, we would prefer to provide more than 5 to 10 people for a single project. Hence, at the moment, it is the total people that we have that is more of a limitation than the number of clients that we can get,” says Ng.

Mike Snell, corporate vice-president of manufacturing at Lam Research Corp, says MNCs can play a role in assisting the Malaysian electrical and electronics (E&E) sector to move up the value chain. “Wafer fab equipment is a high-value manufacturing business. We are interested in developing the talent, raising the median wage and creating job opportunities,” he stresses.

Lam Research is a California-based wafer fabrication equipment maker that is investing US$225 million (close to RM1 billion) to put up a new manufacturing facility at Batu Kawan Industrial Park, becoming a neighbour to local E&E firms such as ViTrox and Inari Amertron Bhd.

“Some people may think MNCs and FDIs discourage entrepreneurship. But we do our part in contributing to the country’s economy and we care about our communities. We believe companies like ours provide great opportunities for entrepreneurs interested in semiconductor products and services,” Snell argues.

For instance, Lam Research is continually on the lookout for strong partners who can support its product localisation plans and add value to its supply chain. “Entrepreneurs can take the opportunity to learn and understand the type of business we operate, the challenges we face either in products or equipment, and offer innovative solutions. If these solutions have been proved to be effective, there is no reason for us not to engage them,” says Snell.

Lam Manufacturing Malaysia general manager Soon Kuek concurs. “The idea of Lam Research coming to Malaysia is really to contribute to the local economy. We get something out of it, and Malaysia will also get some benefits in return. It is a very good business situation,” says the Penang native.

In addition to generating job opportunities that require skill sets that are in high demand, Lam Research is also creating a supply chain in Penang, and it will come from two fronts, says Kuek. “First, some of our suppliers outside Malaysia will follow us and come here. Second, we could develop the local suppliers.”

When Lam Research qualifies suppliers, the group actually gets them to the qualification and development processes. In that sense, there is knowledge transfer. This also enriches its portfolio.

“All these are intangible elements that are difficult to be measured in dollars and cents. We will grow the talent pool. We will try to increase the median wage and hence, attract more talent,” says Kuek.

Dr Yeah Kim Leng, professor of economics at Sunway University Business School, acknowledges that the shortage of good talent continues to be a challenge for local firms. Not only do the big MNCs have deep pockets but they are also at the higher end of the value chain, enabling them to pay better salaries and hence, attract talent.

“Unless they can increase their productivity and achieve higher value-added capability, it will be a challenge for local companies to compete for talent against the MNCs. Fortunately, we do have an ample supply of local talent. It is just that the quality can be improved,” he says.

Yeah urges local companies to invest in R&D, talent training and skill upgrading. “The thing about talent is that they can move around. They can be approached by the highest bidders, and usually the MNCs will win. That’s why local firms must move up the value chain, rather than being part of the supply chain. We have to have our own innovative products and services, as well as cutting-edge technology,” he points out.

Lee Heng Guie, executive director of the Associated Chinese Chambers of Commerce and Industry of Malaysia’s Socio-Economic Research Centre, admits that the talent issue is a major concern of local firms. “The currency is one big factor, but I don’t think it is the only factor. For talented individuals to come back to Malaysia or for them to remain in the country, it is all about the working environment,” he says.

“People wish to earn more money for their families, so the first thing they ask is ‘How much will I be getting?’ In that regard, of course, the MNCs can pay better, especially at the management level.”

But more importantly, employees who work at MNCs tend to have a broader perspective as they could be sent overseas for training, which is good for their career development and advancement, says Lee. “All these are non-monetary benefits and gains. Like it or not, MNCs do have such advantages. Local companies may not be able to offer such benefits, but the least they could do to retain talent is to reward their employees based on merit and performance without favouritism.”

Interestingly, Lee disagrees that FDIs discourage entrepreneurship. “MNCs never stop their employees from leaving, but they pay them well enough to stay and make them feel like they are assets to the companies. If you perform, you will be rewarded and given more opportunities. That’s how you retain talent,” he says.

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