While the multinational corporations hire some technical personnel to work on design, testing and product developments, the supply of R&D engineers and technicians is too small for them to expand their R&D in Penang. Although the overall stock of human capital has increased in terms of outputs from tertiary institutions, there are deficiencies. Local graduates’ wait period for a job has increased and their wages have stagnated, suggesting that tertiary and secondary graduates’ skills do not match those required by employers. The contrast between the wage premiums of local graduates and those from abroad is significant and suggests a mismatch between local education programmes and labour market requirements.