Kuala Lampur, May 14 -- KUALA LUMPUR, May 14 - Malaysia's top frontier firms have either failed to scale up or not innovated enough, hampering competitiveness and the creation of high-paying jobs, leading to underemployment concerns, according to the World Bank.

The warning comes as the bank raised concerns about skills-related underemployment among graduates in Malaysia, which it noted has risen over the last decade.

"Firm-level evidence reinforces this diagnosis. Most productive firms in Malaysia are not yet scaling as strongly as intended. This is a challenge as they offer better-paying jobs," the bank said in its latest Malaysian Economic Monitor released this morning.

Data indicating that national frontier firms are falling behind...