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Showing posts with label competitiveness. Show all posts
Showing posts with label competitiveness. Show all posts

Tuesday, July 2, 2024

Competitiveness ranking: An objective perspective

MALAYSIA’S competitiveness ranking dropped by seven notches to 34 in 2024, from 27 in 2023.


It was the worst ranking on record as the lowest score was 32 in 2022 based on the available data since 1997.

The country’s ranking also slipped four rungs to 10 out of 14 countries in the Asia-Pacific region, making it the first time that Malaysia had ranked lower than Thailand (25 from 30 in 2023) and Indonesia (27 from 34 in 2023).

We must view the slip rationally and identify areas for improvement in order to undertake necessary actions for improvement. 

Prime Minister Datuk Seri Anwar Ibrahim had remarked: “We take an open approach and if there is constructive criticism to improve, we will do it. We will not take a too defensive stand if there are weaknesses that could be improved.”

From 1997 to 2024, it was observed that our country’s ranking had declined 14 times, went up 13 times while one time remained unchanged.

On a long-term trend analysis, Malaysia’s competitiveness ranking had been slipping since 2010

Our ranking had dropped by nine notches to 28 in 1999, 10 notches to 26 in 2005, six notches to 16 in 2011, 12 notches over four years to 24 in 2017.

In 2020, the ranking had declined by five notches to 27, and dropped by seven notches to 32 in 2022 from 25 in 2021 (see chart).

The highest ranking on record was 10 in 2010. Since then, it was hovering between 12 and 19 from 2012 to 2016, before slipping lower to between 22 and 34 from 2017 to 2024.

The government has eight years to achieve top 12 in the Global Competitiveness Index, one of the seven key performance indicators targeted under the Madani Economy Framework.

We have to analyse objectively the factors and components attributing to the competitiveness trends, and identify areas for improvement. Policymakers must use the findings of this report to benchmark progress, stimulate policy debate and identify potential challenges.

On the competitiveness landscape, the ranking for “government efficiency” dropped by four notches to 33 in 2024 from 29 in 2023, reflecting largely a drop in business legislation (to 50 in 2024 from 45 in 2023), societal framework (to 42 in 2024 from 39 in 2023) and institutional framework (31 in 2024 versus 29 in 2023).

The ranking for “business efficiency” dropped by eight notches to 40 in 2024 from 32 in 2023.

This was reflected in productivity and efficiency (53 in 2024 versus 36 in 2023), management practices (42 in 2024 versus 31 in 2023), attitudes and values (40 in 2024 versus 34 in 2023), Labour market (34 in 2024 versus 30 in 2023).

While the “infrastructure” ranking was maintained at 35 in 2024, the technological infrastructure slipped to 29 in 2024 (2023:16), while the ranking was still low for scientific infrastructure, health and environment, and education.

As for the “economic performance” competitiveness, it was ranked eight (seven in 2023), mainly due to a sharp drop in domestic economy to 35 in 2024 from 16 in 2023, as real gross domestic product growth slowed to 3.6% in 2023 (8.7% in 2022) on a normalisation of domestic demand post the Covid-19 pandemic as well as exports contraction.

We believe that the ranking for the domestic economy will improve in 2024-2025 as the economy will strengthen to grow by 4.5% to 5.5% over the medium-term, underpinned by continued expansion of domestic demand and stronger momentum of exports recovery.

However, we caution that domestic economic growth outlook remains subject to downside risks, mainly from the worsening of geopolitical tensions, stubborn inflation, as well as higher and longer interest rate in the US economy causing more financial volatility.

On the domestic front, any delay and execution risk in the implementation of approved investment projects and fiscal projects as well as slower consumer spending inflicted by the subsidy rationalisation’s cost adjustment would temper domestic economic growth.

Malaysia remains a sweet spot to investors.

The respondents of the Executive Opinion Survey have ranked the following top five key attractiveness factors for the economy. They were business-friendly environment (61.8% of total respondents), followed by cost competitiveness (58.8%), reliable infrastructure (52.9%), skilled workforce (44.1%), and dynamism of the economy (39.2%).

By fostering a more business-friendly environment and thriving ecosystem, Malaysia can unlock the full potential of its investment opportunities, entrepreneurial spirit and innovative capabilities. Both public and private sectors have to step up efforts in reskilling and upskilling the workforce.

The Malaysia Economy Madani Framework, New Industrial Master Plan 2030 and National Energy Transition Roadmap has laid the direction, initiatives and policy thrusts to transform the economy and manufacturing industries into high technology as well as green sustainability.

Malaysia has embarked on a series of incremental reforms to address competitiveness issues related to subsidies, transparency in public procurement, over-reliance on foreign workers, technological capacities as well as skills development.

Nevertheless, the following bottom five indicators have the lowest percentage of respondents are effective labour relations (17.6%), competitive tax regime (17.6%), competency of government (16.7%), strong research and development culture (15.7%), and quality of corporate governance (11.8%).

The taskforce comprising of representatives from public and private sectors not only need to sustain the improvements or even raise their ranking higher but also work on

improving the components and factors that contributing to a decline in competitiveness ranking.

The government, through a Special Task Force to Facilitate Business or Pemudah platform, is drafting a document entitled “New Deal For Business” to boost business confidence, stimulate economic growth as well as drive national digital transformation.

The need for a new look at the new deal for business. In an increasingly complex economic and business environment, we have to redouble our efforts to reduce business paint points, address structural impediments and situational challenges as well as undertake reforms towards dealing with bureaucratic red tape, inefficient and outdated regulations and undue regulatory burden faced by investors and businesses when doing business in Malaysia.

The pain points for businesses amongst others are problems of lengthy processes for registration, inconsistency application processes across states and lengthy approval time for incentives, the difficulty in complying with regulations, complexity in getting a construction permit, layering at various agencies and departments, burden of providing the same information multiple times as well as outdated rules, regulations and laws.

There are also funds and incentives support as well as financial related pain points such as tedious application procedures and processing, resulting in slow disbursement of fund and low utilisation rate.

Delivering a new deal for business must go beyond ‘business as usual” and “government knows all”, requiring a long-term commitment to maintain a cordial and clean relationship between government-business to create a conducive ecosystem where business feels empowered to invest, to innovate and to create good jobs.

Priority actions are as follows:

> “Act, Enable, Influence” framework, which offers a comprehensive approach to outline a defined sustainable and meaningful relationship between government

and businesses with a culture of collaboration to achieve common goals to grow our economy. The Government is not merely an actor implementing consistent

and simpler rules and regulations, but also listen to businesses and allow the right business voices’ active participation in policy development and shaping the

operating environment.

> Maintaining an effective open, inclusive and honest engagement between business and government (Federal, state and local authorities) with innovative and critical thinking can provide certainty and consistency for businesses as well as break down barriers to efficiency and high productivity.

> Developing new ways to oversee and assess the impact of regulations on business, including a full review of existing and new government’s policies and regulations are developed to ensure businesses are consulted at all stages.

> Three Rs of effective REGULATORY REFORMS: First, RETAIN regulations that support the basic rules of a market economy. Second, REPLACE regulations that

have legitimate aims but also have harmful unintended consequences. Third, REPEAL regulations that are motivated primarily by the manipulation of public

policy for unproductive rent-seeking.

> PEMUDAH to monitor and assess the competitiveness performance of Federal, state and local authorities in reforming processes and regulations for making them more efficient, accessible and simple as well as to avoid costly regulations for businesses and investors. Focus on regulating the exercise of power to constantly streamline administration and delegate power, improve regulation, and upgrade services.

> Provide a central dashboard as policy tool to monitor and analyse the performance of government websites and digital services (e.g. tracking website traffic, automated reports with key metrics to inform the progress of KPI, benchmark performance compared to other government websites).

By Lee Heng Guie who is Socio-Economic Research Centre executive director. The views expressed here are the writer’s own.

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Arrest decline in productivity and competitiveness in Malaysia

Reversing declining R&D investments

 The country's gross expenditure on the segment has been on downtrend in the past couple of years. More investments are needed in high-growth areas that will yield strong returns.


Sack Anyone Who Doesn’t Perform

Sack anyone who doesn’t perform – PM and other ministers should learn from Tiong



Thursday, February 29, 2024

Poor ringgit performance due to a lack of competitiveness in Malaysia, a 28-year-old problem as a result of 1MDB financial scandal and the subsequent corruptions.

 

The ringgit's poor performance can be attributed to a lack of competitiveness in Malaysia over the past 28 years, says a World Bank economist. Apurva Sanghi said this was partly a consequence of the 1Malaysia Development Bhd (1MDB) financial scandal.

 

PETALING JAYA: The ringgit’s poor performance can be attributed to a lack of competitiveness in Malaysia over the past 28 years, says a World Bank economist.

Apurva Sanghi said this was partly a consequence of the 1Malaysia Development Bhd (1MDB) financial scandal.

“Weak ringgit is ultimately a symptom of long-term decline in Malaysia’s competitiveness,” Apurva said on X.

The economist said while many Asian countries also slid following the 1998 financial crisis, Malaysia’s lack of reforms had affected its economy in the long run.

He added that Malaysia opted for short-term solutions to boost the ringgit in the immediate aftermath of the financial crisis.

Apurva said it consequently hurt the currency in the long run, adding that the government’s measures resulted in its GDP and exports falling.

He said the Thai baht and South Korean won outperformed the ringgit as both countries arguably reformed the most after the financial crisis.

Separately, Perikatan Nasional chairman Tan Sri Muhyiddin Yassin said the government should own up to its own failures instead of pointing fingers at others.

Muhyiddin said it is unreasonable for the government to blame the Opposition for the fall of the ringgit when they are the ones in power.

“They are the government of the day and have the responsibility, role and power to manage the country,” he said during his Pagoh constituency Chinese New Year celebration at a temple in Bukit Pasir yesterday.

The Pagoh MP was responding to former Sabah chief minister Datuk Seri Salleh Said Keruak, who said the Opposition’s constant claims about trying to topple the government mean they should shoulder some of the blame for the weak ringgit.

 

https://www.facebook.com/share/r/htSk5YiWYyri4v5M/?mibextid=D5vuiz




Soul-searching for ringgit solutions





Monday, May 9, 2022

Is education fit for the future?

 


EDUCATION is the most controversial of subjects.

 
 One thing is clear, whilst the quantity of educated manpower is critical to national strength, quality may matter more.

Parents quarrel about the quality of education for their kids, just as societies are deeply divided on education as it defines the future.

Is the current education system fit for purpose to cope with a more complex, fractious future, fraught with possible war?

According to Stanford University’s Guide to Reimagining Higher Education, 96% of university chief academic officers think that their students are ready for the workforce, where only 11% of business leaders feel the same.

As the population and work force grow, the gap between skills demanded by employers and the education received by school leavers is widening, so much so that many are finding it hard to get the jobs that they want.

As technology accelerates in speed and complexity, the quality of education becomes more important than ever. Is it for the elites or the masses?

The Greek philosopher Aristotle recognised that the aim of education is for knowledge, but there was always a different view as to have knowledge for the individual or whether education must prepare the individual to fulfil the needs of society.

Feudal systems hardly paid attention to the masses, whereas most ancient institutes of higher learning were for elites, either for religious orders or in Chinese history, to prepare for civil or military service, but blended with self-cultivation.

Conservative think tank American Enterprise Institute (AEI) has just produced a fascinating study on the implications of higher education for national security.

Covering the period 1950-2040, the study acknowledged that the United States attained uncontested power status, because it had the highest levels of educational attainment and manpower.

In 1950, the United States, with less than 5% of the world’s population, had 45% share of world population aged 25 to 64 with completed tertiary education.

In comparison, India had 5% and China about half of that.

By 2020, the United States’ share had dropped to roughly 16%, whereas China was catching up, whilst India had just under 10%.

By 2040, depending on different estimates, China may double its share to between 15% and 20%, whereas India would have overtaken the United States with 12%, leaving the United States third with 10%.

It is a truism that education matters for economic growth and power.

Every additional year of schooling for children is estimated to add 9% to 10% increase in per capita output.

If you add in “business climate” with improvements in education, health and urbanisation, these factors explain five-sixths of differences in output per capita across countries.

Under the liberal world order, America encouraged the spread of global education, so much so that the global adult illiteracy (those without any schooling) fell from 45% in 1950 to only 13% by 2020.

This worldwide expansion in education was good for the world, but it also reduced the comparative advantage of the education and technology front-runners, particularly the United States.

The AEI study reported that the share of global adult population with at least some tertiary education increased from under 2% in 1950 to 16% today and would approach 22% by 2040.

In 1950, eight of the top 10 largest national highly educated working age labour pool was in advanced countries. By 2020, their share was half.

By 2040, this is likely to be only three out of 10.

In essence, India and China would take the lead in total highly trained manpower, especially in science and technology, with the United States “an increasingly distant third place contestant.”

The AEI study illustrates why increasingly American universities will be more selective in their future foreign student intake, especially in science and technology which may have impact on national security matters.

As late as 2017, MIT manifested global ambitions in its strategic plan, “Learning about the world, helping to solve the world’s greatest problems, and working with international collaborators who share our curiosity and commitment to rigorous scientific inquiry.”

That global vision may be cut back in light of the growing geopolitical split into military blocs. Western universities may no longer be encouraged to train foreign students into areas where they can return to compete in key technologies.

In short, geopolitical rivalry will determine the future of resources allocated to education, research and development and technology.

No country can afford liberal education in which every student is encouraged to do what he or she wants to do.

Students today want to be more engaged in the big social issues, such as climate change and social inequality.

But at the same time, they expect more experiential immersion into careers that are more self-fulfilling.

Instead, institutes of higher learning are forced by economics to provide more shorter term courses to upgrade worker skills, using new teaching methods and tools, especially artificial intelligence, virtual reality etc.

At the national level, governments will push universities into more research and development and innovation to gain national competitiveness, including R&D on defence and national security sectors.

This means that the education pipeline or supply chain will also be bifurcated like global supply chains that are being disrupted and split by geopolitics.

The conversation on what should go into the curriculum for education is only just beginning. Much of this is to do with funding.

As higher levels of education are more expensive, especially in the high technology area, whilst governments budgets are constrained, universities will turn to private sources of funding.

The more society polarises, the more likely that such funding would turn towards entrenchment of vested interests, rather than solutions to structural problems.

Education is controversial precisely because it is either a unifying social force or a divisive one.

One thing is clear, whilst the quantity of educated manpower is critical to national strength, quality may matter more.

The Soviet Union had the second largest share of educated manpower during the Cold War, but it did not save it from collapse.

Will our future education system provide leaders who are able to cope with the complexities of tomorrow?

As the poet T S Eliot asked in his poem “The Rock” in 1934, “where is the wisdom we have lost in knowledge?”

That question is being asked not just in universities, but by society as a whole.

Andrew Sheng writes on global issues from an Asian perspective. The views expressed here are the writer’s own. 

Source link.

 

Related posts:

 

What ails our Malaysian universities ?

 

Malaysia's education policy must champion Meritocracy instead of Mediocrity system

 

Losing faith in reform of Malaysian education system

Friday, August 17, 2018

Governance woes behind US trade war

Illustration: Peter C. Espina/GT

For now, there is still no end in sight to the brewing trade war between the world's two economic heavy hitters. Ignoring voices of objection at home, the Donald Trump administration announced that the second tranche of tariffs on $16 billion in Chinese goods will take effect later this month. Though Trump has yet to fulfill his campaign promise to levy a 45-percent tax on Chinese goods, his logic on trade policy refuses to change.

The reason why the US has provoked and intensified the trade war lies in the incapacity of the global system. Specifically, division of labor in the globalized era has led to the exodus of the US manufacturing industry out of the country. Meanwhile, the US claims that China's "predatory" economy has developed itself into the biggest beneficiary in the system.

That's why the Trump administration insists on attacking China's "stealing" practice in the name of "safeguarding US national interests," regardless of the cost of torpedoing the existing international order.

The robust stock market and economic growth of the US as well as the decline in unemployment have further boosted Trump's confidence in escalating the trade war. His trade policy has gained more acceptance among Americans. However, the logic behind his trade war can hardly hold water.

The era of globalization has been an inevitable development of human society. As people in the global village are more interconnected, trans-regional flow of finance, technology, information, service and talent has re-optimized global production resources, inspiring the development of countries and regions.

The unprecedented development of productivity and international division of labor has prompted developed countries which boast capital and technology advantages to transfer their low-end industries to other countries where labor and land costs are relatively low. Then a great many multinationals have mushroomed, which has objectively precipitated the growth of developing countries.

Economic liberalism has become a paragon of democracy with which developed nations dwell upon with relish. It's also an important pillar for the postwar international order. When developed countries sat on the top of the industrial chain to reap benefits, they never complained about the unfairness of the system but instead became its most powerful defender.

Ironically, the US - the founder of the global system - has now become its most proactive opponent. The Trump administration attacks the "unfair" global system and views China as being complicit in bringing about the fall of the US manufacturing industry and loss of jobs. Such rhetoric has led people to believe that the stature of the US has fallen to a third world country's.

Globalization is not without problem. Apple is a paradigm of a globalized industrial chain, but it's not a nice story. Developing countries at the low end of the industrial chain can only get disproportionally meager profits while lucrative gains flow to developed nations. In this way, the US deficit is far less than the book figures.

More severely, low-end manufacturing has worsened the environment, putting the health of the public in jeopardy. But the US-led developed world just passed the buck.

Emerging economies like China are resigned to be just a factory of developed countries, so they work hard to develop hi-tech and produce high-value-added products to create a level-playing field with developed countries. This is the law of market economy, which, however, has become a threat to its national security and an enemy of its economy in the view of the US.

The strange logic can hardly justify itself.

Denying others a share of the spoils is not the essence of the era of globalization. If developed countries think there's something wrong with the global system, they can appeal to international organizations to carry out reform, instead of resorting to short-sighted practices like threatening with tariffs.

Trump's trade war actually stems from domestic conundrums notably industrial hollowing-out and loss of everyday jobs. The problems are not a result of globalization but of domestic mismanagement. It seems that forcing jobs back home will create jobs, but it can't last long because it will fail to stimulate the fundamental driving force of industrial development. If Trump can make more efforts at boosting the real economy instead of waging a trade war, he may get closer to "Make America Great Again."

Credit: By Zhang Tengjun Source:Global Times Published: 2018/8/15 The author is an assistant research fellow at the China Institute of International Studies. opinion@globaltimes.com.cn

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Tuesday, June 6, 2017

Arrest decline in productivity and competitiveness in Malaysia



COINCIDENTLY, two major reports were released on June 1 on the decline of our national productivity and competitiveness. The first was our own Productivity Report 2016/2017, which was launched by Minister of International Trade and Industry Datuk Seri Mustapa Mohamad (pic) and the second one was the World Competitiveness Yearbook WCY issued by the Institute for Management Development.

This coincidence in decline is understandable since both productivity and competitiveness are closely inter-related. Lower productivity leads to lower international competitiveness.

Productivity

Our labour productivity fell short of our 11th Plan target of 3.7% growth by 0.2% to 3.5% last year. This is a small decline and has been rightly explained with confidence by the Minister of Trade in positive terms when he said that Malaysia was “on track”.

I think he will agree that we must be concerned enough to ask what are the causes and whether this is just a mere slip or could it be the beginning of a trend.

We have to take this fall as a wake up call, in case this decline happens again next year and later on. We have to review many recurrent and uncomfortable issues like brain drain and unemployed graduates - who could number over 200,000 - also reflect the low productivity of many graduates who are newly employed. The lower productivity can be attributed to our low use of automation, high employment of unskilled foreign and cheap labour and the new challenges of the digital economy.

The Minister’s proposal for the Government and private sector to “join forces to embark on initiatives” to improve productivity in nine sectors “of lower productivity”, is most welcome. The private sector has to make profit unlike the Government. Hence it has a greater sense of urgency in wanting to improve not only labour productivity but productivity from all factors of production, including good governance and integrity and quality services to the public. Thus it will be very interesting for the public to be made fully aware of the productivity improvements that should materialise not only in the private sector, but for the Government as well. For instance government departments can learn from the private sector how to provide better or excellent services in the fields of health and education and counter services at police stations, Customs, Immigration, etc .

Productivity in both the private sector and the government machinery should improve to raise our total national productivity. Only then will our nation be able to compete much more efficiently and effectively in the global economy.

We can have the best Productivity Blueprint like that which was launched on May 8 but our productivity can continue to slip and even slide, if we do not ensure that the blueprint is fully implemented and its progress diligently monitored and improved along the way. One way to seriously pursue our goal to raise productivity would be to increase the small sum of only RM200mil for a new Automation Fund. Modern machinery and equipment are expensive but the returns in terms of higher productivity can be very significant. So let’s go for higher productivity with greater automation and not approach the challenge on an ad hoc and piecemeal basis. The Treasury would need to support the Productivity Blueprint much more productively!

Competitiveness


Malaysia registered its lowest ranking in five years in the WCY.

This reflects our decline in productivity as competitiveness is the other side of the coin. However, I am surprised that the relationship is so sensitive. Just a drop of 0.2% in productivity can cause a drop in our international competitiveness ranking from 19th place to the 24th!

What this could show is that while we are sluggish in our productivity, other countries are much more aggressive in improving both their productivity and competitiveness.

There is thus no point in taking pride that we scored better in our ranking compared to the industrial countries like Austria (25th) Japan (26th) and Korea (29th). They are highly developed countries which enjoy much higher standards of living and a better quality of life that we do. They have reached the top of Mount Fuji and other mountains, while we are still climbing up from a lower economic base.

The drop in our competitiveness is significant and we have to take this decline very seriously. Malaysia slipped in all four sectors, that is, economic performance, business efficiency, government efficiency and infrastructure. That is why it is essential to investigate in depth into all these major falls in performance and tell the public what is being done to improve our rankings and ratings.

It is appreciated that Malaysia Productivity Corp’s Director General Datuk Mohd Razali Hussain has established Nine Working Cluster Groups to examine these poor indicators and report on improvements that must be made expeditiously.

Conclusion

It is good that we have these reports on productivity and international competitiveness to benchmark our national performance against them. We have to take advantage of these annual indicators and ensure that we keep improving rather than falling in productivity and competitiveness .

Our efforts to improve will be watched closely by our domestic and particularly international investors and international competitors .

We can only hope that these declines are not just coincidental but are also not developing declining trends. This could spell pessimism and falling confidence in our socio-economic management.

Instead we should take these set backs as warning signals and rededicate ourselves to a greater commitment to higher competition, more meritocracy and building a better socio-economic and political environment in Malaysia.

TAN SRI RAMON NAVARATNAM

Chairman Asli’s Centre of Public Policy Studies

Related links:  

Launching of Productivity Report 2016/2017 - Ministry of International ...

 

World Competitiveness Rankings - IMD

 

Fix election processes before GE14

 

CM may have too much on his plate - Nation | The Star Online

 


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