Malaysia moves up competitive ladder, economists credit Govt for this

Regional News

KUALA LUMPUR: Malaysia has made positive strides to jump up five positions in the latest Global Competitiveness Report (GCR) by the World Economic Forum (WEF which is based in Geneva, Switzerland.

Malaysia is ranked 21st this year from 26th last year, ahead of nations such as South Korea and New Zealand, in the GCR 2011-2012 which covered 142 countries.

In the Asia-Pacific region, Malaysia is ranked 6th (from 8th last year) while Singapore is ranked first, followed by Japan, Hong Kong, Taiwan and Australia.

The WEF defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country.

The GCR uses 30% and 70% statistical and survey data respectively, and examined 12 pillars ranging from institutions, infrastructure, financial market development to innovation.

Malaysia achieves a score of 5.08 (compared with 4.88 last year) out of a maximum of seven, and the GCR noted that the higher ranking this year was due to “improvements across the board”.

“Malaysia’s progress is particularly noteworthy in the Institutions and Macroeconomic Environment pillars, as well as in several measures of market efficiency. In addition, its macroeconomic situation has improved markedly over the past year to reach 29th place, even though the country continues to run a budget deficit of about 5% of gross domestic product,” stated the GCR. It was also pointed out that Malaysia had an efficient and sound financial sector which was placed among the world’s most developed,

just behind Singapore and Hong Kong and a highly efficient goods market, ranked 15th.

Meanwhile, Switzerland retained its first place again this year in the GCR while Singapore overtook Sweden for second position.

Northern and Western European countries dominate the top 10 with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the United Kingdom (10th).

The United States was ranked 5th (from 4th last year) while Japan remained the second-ranked Asian economy in 9th place, despite falling three places since last year.

In a briefing yesterday, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said Malaysia was ranked 3rd (from 7th last year) in the pillar of Financial Market Development

Mustapa said the country’s improved ranking in the GCR reflected the strong fundamentals of the Malaysian economy, and the success of the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP).

He pointed out that foreign direct investment (FDIs) in Malaysia surged to RM21.3bil in the first half of 2011, compared with RM12.1bil a year ago.

“Also, we have made improvements in the criteria of crime and violence, organised crime, and reliability of police services.”

In the first half of 2011, the crime index had seen a reduction of 9.6% while overall street crime incidence fell by 41.6%.

“We are on the right track. Malaysia will continue to be a very good investment destination.”

However, there was a decline for Malaysia in the pillar of Technological Readiness where the country was ranked 44th (from 40th last year).

Mustapa said the country had not done well in the Technological Readiness pillar in the last few years.

“When it comes to innovation, research and development (R&D), we have been lagging,” he said.

Mustapa said the Government had taken steps to improve the situation, including the formation of the Special Innovation Unit (UNIK) under the Prime Minister’s Department.

“UNIK is an initiative we took to enhance innovation in Malaysia. It co-ordinates R&D, commercialisation of findings by universities and also concerns our ability to absorb new technologies from abroad. It has done well in the last seven or eight months.”

Meanwhile, economists contacted by StarBiz said the Government should be given due credit for the improved ranking in the GCR.

TA Securities Holdings Bhd economist Patricia Oh said the improvement in Malaysia’s ranking was positive news.

“Due credit should be given to the Government. Going forward, the challenge will be to further improve competitiveness in view of the uncertainties in the United States and Europe,” she said.

MIDF Research chief economist Anthony Dass concurred, and said the GTP and ETP initiatives as well as the increase in FDIs this year had definitely helped Malaysia improve its ranking in the GCR.

“Going forward, now we need to improve in the area of technology and innovation. However, this will take some time. More FDIs can also result in technology transfer,” said Dass.
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By: Thomas Huong, [email protected]
Source: The Star Online, Sept. 8, 2011
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