Malaysia vs. Indonesia

Malaysia's multi-ethnic population consists of the bumiputera - Malays and other indigenous peoples - (62%), ethnic Chinese (21%), ethnic Indians (6%), and foreigners (10%).  The majority of Malaysia's ethnic Chinese and Indians trace their roots to the British colonialists' recruitment of hundreds of thousands of Chinese and Indians as mine and plantation workers between the early-19^th century and the 1930s.  Most Malays have maintained their rural lifestyle, while the entrepreneurial Chinese have achieved greater wealth and economic dominance.  In order to eradicate Malay poverty, the Malaysian Government in 1971 adopted policies that gave preference to the bumiputera in public university admissions, government jobs and contracts, and property ownership.  Affirmative action continues to benefit well-off urban bumiputera but has done little to alleviate poverty for their more numerous rural counterparts.  The policies have pushed ethnic Chinese and Indians to study at private or foreign universities (many do not return) and have created and sustained one of the world's largest civil services, which is 85-90% Malay. 

The country's age structure has changed significantly since the 1960s, as fertility and mortality rates have declined.  Malaysia's total fertility rate (TFR) has dropped from 5 children per woman in 1970, to 3 in 1998, to 2.1 in 2015 as a result of increased educational attainment and labor participation among women, later marriages, increased use of contraception, and changes in family size preference related to urbanization.  The TFR is higher among Malays, rural residents (who are mainly Malay), the poor, and the less-educated.  Despite the reduced fertility rate, Malaysia's population will continue to grow, albeit at a decreasing rate, for the next few decades because of its large number of reproductive-age women.  The youth population has been shrinking, and the working-age population (15-64 year olds) has been growing steadily.  Malaysia's labor market has successfully absorbed the increasing number of job seekers, leading to sustained economic growth.  However, the favorable age structure is changing, and around 2020, Malaysia will start to become a rapidly aging society.  As the population ages, Malaysia will need to better educate and train its labor force, raise productivity, and continue to increase the number of women workers in order to further develop its economy.

More than 1.8 million Malaysians lived abroad as of 2015, including anywhere from 350,000 to 785,000 workers, more than half of whom have an advanced level of education.  The vast majority of emigrants are ethnic Chinese, seeking better educational and job opportunities abroad because of institutionalized ethnic discrimination favoring the Malays.  The primary destination country is nearby Singapore, followed by Bangladesh and Australia.  Hundreds of thousands of Malaysians also commute across the causeway to Singapore daily for work.

Brain drain is an impediment to Malaysia's goal of becoming a high-income country.  The situation is compounded by a migrant inflow that is composed almost entirely of low-skilled laborers who work mainly in manufacturing, agriculture, and construction.  Officially, Malaysia had about 1.8 million legal foreign workers as of mid-year 2017 - largely from Indonesia, Nepal, the Philippines, and Bangladesh - but as many as 3 to 4 million are estimated to be in the country illegally.  Immigrants outnumber ethnic Indians and could supplant the ethnic Chinese as Malaysia's second largest population group around 2035.

Indonesia has the world's fourth-largest population.  It is predominantly Muslim and has the largest Muslim population of any country in the world.  The population is projected to increase to as much as 320 million by 2045.  A government-supported family planning program.  The total fertility rate (TFR) - the average number of births per woman - from 5.6 in the mid-1960s to 2.7 in the mid-1990s.  The success of the program was also due to the social acceptance of family planning, which received backing from influential Muslim leaders and organizations.

The fertility decline slowed in the late 1990's when responsibility for family planning programs shifted to the district level, where the programs were not prioritized.  Since 2012 the national government revitalized the national family planning program, and Indonesia's TFR has slowly decreased to 2.3 in 2020.  The government may reach its goal of achieving replacement level fertility - 2.1 children per woman - but the large number of women of childbearing age ensures significant population growth for many years. 

Indonesia is a source country for labor migrants, a transit country for asylum seekers, and a destination mainly for highly skilled migrant workers.  International labor migration, both legal and illegal, from Indonesia to other parts of Asia (most commonly Malaysia) and the Middle East has taken place for decades because of high unemployment and underemployment, poverty, and low wages domestically.  Increasing numbers of migrant workers are drawn to Australia, Canada, New Zealand, and the US.  The majority of Indonesian labor migration is temporary and consists predominantly of low-skilled workers, mainly women working as domestics.

Indonesia's strategic location between Asia and Australia and between the Pacific and Indian Oceans - and its relatively easy accessibility via boat - appeal to asylum seekers.  It is also an attractive transit location because of its easy entry requirements and the ability to continue on to Australia.  Recent asylum seekers have come from Afghanistan, Burma (Rohingyas), Iraq, Somalia, and Sri Lanka.  Since 2013, when Australia tightening its immigration policy, thousands of migrants and asylum seekers have been stranded in Indonesia, where they live in precarious conditions and receive only limited support from international organizations.  The situation for refugees in Indonesia has also worsened because Australia and the US, which had resettled the majority of refugees in Indonesia, have significantly lowered their intake.