Globally, logistics is an important economic activity valued at about USD 320 billion a year and growing at an annual rate of 3 to 10 percent. Malaysia has recognized the industry as the main key towards enhancing Malaysia’s progress on becoming a globally competitive fully developed nation (IMP3 2006‐2020, 2006).  It was predicted that the logistics industry would grow at 8.6% during the plan period (2006 – 2020) and contribute 12.1% to GDP by 2020. Therefore, the development of the human capital or human resource for the logistics industry in Malaysia becomes important in confirming the nation’s competitiveness.    Accordingly, the aim of this study is to produce a feasible framework of human resource development for the logistics industry in Malaysia.

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DEVELOPING A FUNDAMENTAL FRAMEWORK FOR HUMAN RESOURCE
DEVELOPMENT IN LOGISTICS INDUSTRY IN MALAYSIA
KHAZIZUL MAULOD PAHIM
SABARIAH JEMALI
Malaysia Institute of Transports (MITRANS)
Faculty of Business Management
Universiti Teknologi MARA
SYED JAMAL ABDUL NASIR SYED MOHAMAD
Faculty of Business Management
Universiti Teknologi MARA
Abstract
Globally, logistics is an important economic activity valued at about USD 320 billion a year and growing at an annual rate
of 3 to 10 percent. Malaysia has recognized the industry as the main key towards enhancing Malaysia’s progress on
becoming a globally competitive fully developed nation (IMP3 2006‐2020, 2006). It was predicted that the logistics industry
would grow at 8.6% during the plan period (2006 – 2020) and contribute 12.1% to GDP by 2020. Therefore, the
development of the human capital or human resource for the logistics industry in Malaysia becomes important in confirming
the nation’s competitiveness. Accordingly, the aim of this study is to produce a feasible framework of human resource
development for the logistics industry in Malaysia.
Keywords: Human resource development; human resource development framework; human capital; logistics, supply chain.
Introduction
Currently, there are many public and private higher learning institutions in Malaysia offering programmes on
transport and logistics. However, it is noted that these programmes are not streamlined and do not meet the
requirements of the industry [1][2][3][4]. Employment in this sector is not a preferred choice among the Malaysian
workforce due to poor perception of the industry and thus, does not attract the best brains [2][3]. Presently, there
is a lack of interest among the workforce to be employed in the industry and graduates in transport and logistics
fields lack practical skills and abilities required by the industry. It then, requires employers in the logistics
industry to provide special programmes to fill the skills gap [2][4]. The logistics industry requires a strong,
competent and experienced workforce along the entire logistics supply chain, which is able to undertake the
activities in accordance with international best practices.
Despite of the remarkable expansion of the industry, particularly in Malaysia there has been very little published
research in the area of logistics and supply chain resulting in a very limited dissemination of information for the
purpose coordination, learning, advancement and technology. There are many public and private higher
learning institution in Malaysia offering program on transport and logistics however it is noted that these
program are not streamlined and do not meet the requirement of the industry and employment in this sector is
not a preferred choice by the Malaysian workforce due to poor perception of the industry[3]. The Industrial
Malaysia Plan 3 2006‐2020 (IMP3) [4] has acknowledged the lack of qualified workforce in the logistics industry.

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The logistics industry requires a strong, competent and experience workforce along the entire logistics and
supply chain who are able to undertake the activities in accordance with international best practices.
A recent report [5] highlighted that Malaysia has the opportunity to create an additional value of about RM9‐11
billion over the next decade, which contributes approximately 12.1% to the GDP, if the supply‐chain
competitiveness is improved through more efficient transport and logistics services. They emphasized that by
reducing the supply chain cost will ultimately stimulate further national growth as the World Bank has estimated
that a 10% reduction in transportation costs can increase trade by 20%. Similarly, McKinsey Global Institute [6]
who is working on the productivity improvements in industry sectors across globes indicates that such efficiency
improvements are likely to translate into a GDP growth effect in a similar order. This creates a virtuous and
perpetuating effect on the economy. Thus, improving industry supply chains is a very substantial opportunity
that could significantly stimulate economic growth and thus enhance Malaysia’s competitiveness globally. We
can achieved all of this figures by implementing the HR functions such as the implementation of new
technologies, understand the nature of logistics / supply chain works. The improvement of skills and education
by create specially for the logistics practitioner, According to [7] lack of career path and succession planning are
the most commonly cited human resources challenges, and there is increasing need for succession and career
meeting. In summary, there may be appearing to be a shortage of sources of skills, education and professional
development opportunities. The current attraction challenges and the low awareness levels of the supply chain
sector and its career opportunities, there is a need to better educate and promote the sector in target marketplace
segment with particular emphasis on those making career and education decisions. Delivering this type of
promotion to attract new talent will require national infrastructure, perspectives, coordination, and funding.
The study arise from the needs to manage human resource development of the firm to be more effectively and
competitive. The rapid growths of logistics industry increase significantly and become one of the contributors to
GDP [4]. The issues and problems of training demand that firm continually assess its internal process and
capabilities to remain competitive. It is known that HRD can positively affect the organizational performance [8]
[9][10][4][11][12]. Numerous studies have shown a positive relationship between HRD practices and
organizational performance however, studies in Malaysia are quite scanty and limited in investigating this
phenomenon. There is no denying that HRD plays the important role in order to boost the logistics industry as
stated in the Industrial Master Plan 3 (IMP3, 2006). It also stressed that one of the strategic thrust in the logistics
industry is to ensuring and adequate supply of competent workforce to meet the long term requirement of the
industry. The IMP3 also state that the capabilities of the workforce will be enhance through among other re‐
training and long‐life learning of the personnel to meet short and long term needs of the industry in specific areas
of technical, commercial and operation skills.
Research in The Third Industrial Master Plan 2006‐2020 (IMP3) [4] shows the two aspects of human resource
requirement as:
“Ensuring sufficient availability the human resource as well as providing a facilitative environment for the workforce
to acquire the necessary skills in the professional and technical field to drive the economy to higher value added
activities”.
Due to the world globalization, it is vital to have such a skilled workers to influence on economic growth and
competitiveness as Malaysia now practice the knowledge based workers [4].
“The Services Sector, including logistics has been targeted as the engine of growth under Malaysia’s Third Industrial
Master Plan (IMP3). Total share of services in Malaysia’s GDP has expanded from 48.8 per cent in 1987 to 53.4 per
cent in 2007” [13]

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According to skills performance, the data in Productivity and Investment Climate Assessment (PICS) [14] shows
how firms and workers perceive the quality of education, skills, and training programmes in Malaysia.
Employers were asked about their experience in filling vacancies and deficiencies in the quality of their existing
workforce while employees were asked independently about the skills they lack the most in doing their job as
well as the adequacy between their field of education and the work they do [12].
The lack of supply of graduates was mix with the presence of skills mismatch as reported by firms. Due to
insufficient of university graduates, the companies have to employ workers with diploma qualification to do the
job of a graduate. The lack of graduates in tertiary education contributes to sub‐optimal hiring policies and loss of
productivity at the plant level. This mismatch of education also reflected the qualifications of unemployed
graduates registered for training schemes where about 40 per cent of them have qualifications, which are not
those required by the manufacturing sector [12].
The Productivity and Investment Climate Survey (PICS) [14] stated that the improvements in the skills of the
workforce can bring in substantial benefits [10][8] [15][16]. Individual firm’s view that they are incapable to
employ as many skilled workers as they want. Econometric estimates suggested that addressing the skills
constraint can provide large benefits to firms, raising the sales of most industries by 11 per cent of sales on
average [14]. The increase in skilled employment would have the greatest benefits in terms of increased sales
also have larger proportions of firms reporting concerns about skill shortages. There are also likely to be
substantial increases in average earnings to the extent that expansion in the supply of skilled workers allows
Malaysia to expand into sectors that are skilled [12][16][17].
According to PICS study[14],
“Even though Malaysia has a world class skills training infrastructure, it was noticed the firms that use these
facilities is low especially among the SMEs). Large number of firms reported that the availability of skills training
institutes and the existence of the levy‐grant scheme for retraining and skills upgrading of employees by Human
Resource Development Fund (HRDF), was critical in their decision to train. However, the firms that use skills
development institutes rate them very high. More than 75 per cent of managers rank the top three institutes they use
as of “good quality,” and around 20 per cent believe they are of “very good” quality. Firms believe that they would
train more if the processes for training were made more efficient”.
One of the factors that can contribute to the Malaysian economy is a lack of human capital and it has been raised
many times over the years [18]. The most recent issues about this is raised by World Bank which state that
Malaysia’s education system has been a major challenges for the country to boost the economic value chain [18].
DatukNoriyah Ahmad, the Economic Planning Unit Director General stated that estimated 80% of the country
population only have the minimum qualifications of SijilPelajaran Malaysia (SPM) or secondary 5
level,DatukNoriyah also mention that she have to look the ways to ways up‐skill our labour force because there is
a need of urgency to move up the value chain [18]. The increasing numbers of highly skilled and educated
Malaysian moving overseas for career advancement has effect the economic called “talent crunch”. These trends
especially involve the science and technology field [19]. The government’s lack of will power has to be address
and has to check its inability to capture or attract its talent pool. Education, meritocracy, equity limits, the scarcity
of high technology industries and security standard have been raised or on the other side, politicians and political
analysts have cited a lack of transparency in government [19]. Dr. Edmund Terence Gomez an Associate
Professor in Universiti Malaya said that Malaysia does not have the sufficient quantity of “quality” human capital
needed to boost the country’s economy and ShamsuddinBardan an Executive Director for Malaysia Employers
Federation points out that Malaysia has no shortage of grand plans and extravagant projects including

4. 4
Multimedia Super Corridor (MSC) and E‐Village but the questions is could the country get enough people with
the right skills and attitude to sustain them.
“There is no point coming up with multi‐billion‐dollar projects if we do not have the right people to fill up the
positions. As it is, we’re already facing difficulties attracting the right skills and talents to propel our economy up the
value chain”. Explain Shamsuddin the Executive Director for Malaysia Employers Federation (MEF)[19].
Therefore, the problems statement for this study is to propose or develops a Human Resources Development
framework for the logistics industry in Malaysia in order to keep pace with the global challenge and have a
competitive nature.
Literature Review
A. Logisics Industry Overview
i. Global overview
“Economic competitiveness is relentlessly driving countries to strengthen performance, and improving
trade logistics is a smart way to deliver more efficiencies, lower costs and added economic growth,”
said World Bank Group President Robert B. Zoellick, who is visiting Berlin January 13 ‐15 to discuss
global development and economic issues. “Streamlining the connections among markets,
manufacturers, farmers and consumers offers tremendous growth and investment opportunities and
should be a top focus for developing country growth strategies. As we issue this global report, I’m
pleased to be in Germany, the top performer on efficient logistics” [20].
According to OtavianoCanuto the Vice‐President and Head of Network Poverty Reduction and Economic
Management.
“Improving logistics performance has become important in recent years as logistics now contribute a major impact on
economy activity. Logistics performance index 2007 and 2010 indicate that countries at the same level of per capita
income, those with the best logistics performance experience additional growth: 1 % in Gross Domestics Product
(GDP) and 2 per cent in trade. In order to boost the economic and emerge in stronger and more competitive positions
found that it is really relevant as developing countries need to invest in better trade logistics”[21]
Logistics Performance Index report by World Bank in 2007 and 2010 shows that high income countries lead the
top logistics rankings. Most of the top 10 ranking is alike the LPI report for 2007. Most of them are the key
players in the logistics sector, occupying important places in a variety of global and regional supply chains. The
results mirror the openness of these countries to international trade and investment as part of their successful
economic development strategy [21].
ii. Asia overview
The Asian economic crisis late 1990’s act as catalyst for companies seeking the transformational change. The
growth is seem to be returning to the region and the possibility of change will be exponentially, challenging the
current situation for many existing trading patterns, arrangement and relationship [22].

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China is the top performer with 3.49 logistics performance index followed by Malaysia 3.44 and Thailand at the
third place 3.29. To become competitive in markets, companies must continuously strive to gain maximum return
on their investment in resources. Many companies have identified the logistics or supply chain management
process as an area of opportunity to add value, whereby they can reduce costs and increase efficiencies [23].
Besides, there is a growing recognition that supply chain management operations can have a strong effect on
customer service levels, thereby enhancing revenues [23]. Reducing costs and improving the quality of logistics
and transport system will improved the international market access and lead directly to increased trade and
through this to higher incomes and a wider scope for significant reduction in poverty and this situation make
Asia progress on logistics has failed to keep pace with its growth in trade, developing countries in other region
now catching up so faster progress on logistics development will be crucial to sustain East Asia Competitive
Advantages [24].
iii. Malaysia overview
Through the expansion of traditional markets of the United States of America and the European Union and the
diversification in growth markets of east and west Asia. The merchandise trade of Malaysia’s is assuming to reach
2.8 trillion by 2020 and it is believed that the total cargo by marine will increase by three‐fold from 252.6 million
tonnes in 2005 to 751 tonnes in 2020 while the air cargo trade expected to increase two‐fold, from 1 million tonnes
in 2005 to 2.4 million tonnes in 2020 meanwhile, the railway freight will increase almost five‐fold from 4 million
tonnes in 2005 to 18.6million tonnes in 2020 [4]. Malaysia has achieved ranking 29th in the World Logistics
Performance Index 2010. Malaysia has fall into the upper middle income countries and achieved second ranking
of the categories [21]. According to [4], one of the strategic thrust in order to achieve the target is ensuring the
adequate supply of competent workforce to meet the long term requirement to the industry and the capabilities
of human workforce will be enhance through re‐training and long life learning of the staff. The joint‐ventures
with the other international institution will provide the skills and capabilities of the Malaysian workforce to reach
the global standards [4].
The Needs for Training
In today’s global market place, companies and employees within the logistics industry require specialized and
affordable training and development to increase their competitiveness with the continued growth of the
transportation industry companies and it is also stated that employee in the global transportation require specific
technical knowledge in the area of the industry fundamental, operation knowledge, customer service, sales and
negotiation skills [8].
Amanda & Lucy [8] say that employee training can improve the performance productivity of staff and ensure
they have the skills that industry needs. The possible training benefit would be increased employee motivation,
satisfaction and morale, increased competitiveness, consistency message, increased efficiency, reduction in
employee turnover & increased innovation in strategies & product.
There are employers identify that technical development courses is very important for personnel in the supply
chain sector and according to[17], training in logistics is very important as:
• Lack of awareness and understanding of the logistics sector.
There is a lack of sector awareness amongst the future workforce participant, so some training has to be
undertaken in order to build some awareness and understanding of the logistics industry.

6. 6
• Attracting, developing and retaining supply chain specialist an emerging priority.
IT and policy change influencing the supply chain/logistics businesses. Due to shortage of workforce,
retaining the supply chain specialist is vital as they have the experience in the industry.
• Emerging occupations/specialist skills set.
Due to new technology adapted in the industry and vary from each other, human resource strategies will
need to adaptable to match a variety types of job ranging from semi‐skilled (operational) to professional
(technical) to executive level (managerial).
Usually relations between supply and demand were focus on the effectiveness and the company objective
according to contractual term such as time of delivery, cost and etc. [25]. It is also stated that the more complex
the system becomes, the greater the needs for trained professional transport operator as they are capable of
understanding and managing the ever changing demand of the market and it is also said that there are two types
of training can be identified (1) main concern is to develop specialist and competencies in existing professional
level (mostly at managerial and operative role and (2) for those who will called to carry out managerial and
operative role. This research also stated that transport in Europe the administration knowledge is losing the
importance because of the elimination of customs barriers while knowledge of integrated logistics, ICT and
marketing become more importance nowadays.
Study in HR in Logistics/Supply Chain Area
A review of the major human resource challenges in the sector reveal a limited pool of skilled employees and the
need to develop skill sets to cope with emerging technologies and a global market place. In addition, the sector
must overcome general lack of awareness and understanding of the supply chain sector and its occupations. In
order to achieved 12.1% to the GDP over the next decades or RM 9 – 11 billion (IMP3), the government have to
take the positive action by improving the logistics or supply chain using the HR function. It is believed that by
stressing HRD activities towards logistics can improve the productivity and efficiency and directly achieved 12.1
% GDP [4].
Some research suggest that effectiveness of supply chain has been limits by organizational implementation
barriers and could be improved by human resource factors [26][27][28][29]. According to [30], the evaluation of
SCM resulted from the integration of manufacturing and marketing process. The aspect of development of
internal human resources as a means to enhance SCM practices has yet to be studied. However, such effort may
improve the likelihood of a firm maximizing its SCM performance.
Conclusion
In the previous study, they have highlighted the issues of HRD in the logistics industry. So, this paper is to
examine and develop the framework for human resource development in the logistics industry in Malaysia.
Based on the literature, hopefully there will be a framework in this industry in order to make the industry more
competitive and have a good image and perception by the people especially the fresh graduates. This research not
only can be a guidancefor the industries to look for their potential workers but also can promote the logistics
industry in Malaysia as a one of the industry that contribute to country development and income.

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Acknowledgement
The authors would like to thank Malaysia Intitute of Transports (MITRANS), UiTM for the MLC research grants.
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