The study intends to look into the Human Capital Development in Malaysia: Challenges and Prospects. In 10th Malaysia Plan, Federal Government is more focus on non- physical development (Human Capital Development). It shows that the ratio of allocation on non- physical projects and physical projects has changed from 22:78 during the 9th Malaysia Plan to 40:60 in the 10th Malaysia Plan. Due to the shift in allocation, we will evaluate the past performance of the 9th Malaysia Plan to the development of human capital development and whether the past performance can affect the sudden shift to the non- physical projects in 10th Malaysia Plan. After that, we will discuss further about the challenges facing by human capital development and its possible solutions. Moreover, we are also focus on the policies implemented, the impacts and also the future directions due to the increment of the human capital development.

Keywords: Human Capital Development, Challenges and Prospects, Past Performance of Human Capital Development, Policies, Impacts, Future Directions.

2.0 PROBLEM STATEMENT

Human capitals refer to the processes that related to the education, training and other professional initiatives in order to improve or increase the level of knowledge, skills, abilities, values and social assets. Non- physical projects are referring to the human capital development or skills development. Examples of non- physical projects are initiatives to enhance profession attractiveness and improve teacher performance, R&D investments, skill and re-skilling programmed, venture funding geared and nurturing of technopreneurs. Human capital development is getting wider attention due to the globalization. Developing country is more emphasis on the development of human capital towards accelerating the economic growth by putting more efforts on it. Thus, human capital development is playing a very important role in Malaysian economy.

Malaysia appears to be stuck in the middle income trap. It is going to be a challenge for Malaysia to achieve its Vision 2020 by the target year. One of the reason for Malaysia failed to escape from the trap is Malaysia unable to compete with other country such as Taiwan and South Korea. For Taiwan, it has been identified as one of the fastest growing economies for the past 50 years and its improvement also has been honored as “economic miracle”. Taiwan is well known for its high technology industries over the past two decades. It has been identified has the fourth largest information hardware and semiconductor industries in the world presently. Moreover, the high quality and innovative products that “make from Taiwan” are sold worldwide. The other reasons are Malaysia is lack of skilled workers. We are unable to attract skilled foreigners to our country while skilled Malaysians are leaving.

If we compared with those advanced countries such as Norway and Switzerland, both of these countries are more focus on nurturing highly skilled human resources rather than expensive mega projects. However, the development of human capital in Malaysia is not as well-established as these countries. Why does this phenomenon occur? This might happened because of some of the reasons such as the previous administration are more focus on the expensive mega projects that causes the human resource development scheme failed to develop. Moreover, Malaysia is lack of skilled workforce and Malaysia hope can be more productive and innovative. As a result, it can explain that why the government will sudden shift the allocation for non- physical projects from the ratio of 22:78 during 9th Malaysia Plan to 40:60 during 10th Malaysia Plan.