Backed by sound fundamentals, Malaysia is well on track to continue its progress towards high-income developed status in the next five years.
Malaysia consolidates its position among the world’s top 20 most competitive economies, moving up two spots to no. 18 in the World Economic Forum’s (WEF) Global Competitive Index (GCI) 2015-2016. It remains the highest ranked among the developing Asian economies.
This is Malaysia’s highest ranking since 2005 in the highly-influential and closely monitored report, which includes 140 economies. In the context of the current challenging global environment, this upgrade is welcome news for Malaysia.
Minister of International Trade and Industry Dato’ Sri Mustapa Mohamed (pic) said this ranking is also an endorsement of the progress the nation has made in enhancing efficiency and competitiveness through the Government Transformation Programme (GTP) and Economic Transformation Programme (ETP).
“Backed by sound fundamentals, Malaysia is well on track to continue its progress towards high-income developed status in the next five years as it closes the gap with GNI per capita at USD10,660 last year,” he added.
The top 10 of the GCI rankings continues to be dominated by highly advanced economies, led by Switzerland, followed by Singapore, United States, Germany, Netherlands, Japan, Hong Kong SAR, Finland, Sweden and the United Kingdom.
WEF publishes an annual Global Competitive Report (GCR) based on the GCI which integrates both macro and microeconomic aspects of competitiveness. It uses 70% perception data obtained through the Executive Opinion Survey from high-level private sector executives and 30% statistical data. The report comprises 114 criteria which are organised into 12 pillars of competitiveness. The 12 pillars are Institutions, Infrastructure, Macroeconomic environment, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Development, Technological Readiness, Market Size, Business Sophistication and Innovation.
Performing most strongly in goods market efficiency and financial market development
WEF in its Global Competitive Report 2015-2016 highlighted that Malaysia ranks in the top 50 of each of the 12 pillars, performing most strongly in goods market efficiency (6th) and financial market development (9th, although down five this year).
“The country improves in most pillars, notably by 13 places in technological readiness (47th), which nonetheless remains its weakest feature. Small gains in macroeconomic stability (35th, up nine) are mainly the result of a reduced budget deficit (3.7% of GDP), the lowest in six years,” it said.
“Amid the good general assessment, the GCI points to specific areas for improvement, including the low participation rate of women in the labour force. The ratio—59 women for every 100 men—is one of the lowest (118th) outside the Arab world,” it added.
“The WEF’s findings affirm that the ETP has successful steered the nation out of the middle-income band and continues to build momentum to hit its high-income markers. Despite global volatilities, Malaysia enjoys good growth and is considered as one of the best-performing economies for more than five years now. While we appreciate the recognition, we cannot rest on our laurels. The challenges as highlighted by the WEF to ensure economic sustainability and growth, serve as a reminder there is no room for complacency. In an increasingly complex global economic arena, Malaysia as one of the most trade-dependent and open economies in the world has to be extra vigilant given the very volatile nature of global markets,” said Mustapa.
He said Malaysia was already heeding the WEF assessment that countries need to ensure higher productivity, nurture innovation, talent and entrepreneurship; and embrace long-term structural reforms to generate resilience for economic downturns.
“Malaysia had established a high-level Special Economic Committee chaired by the Prime Minister in August this year. Among the objectives of this Committee are to ensure the country’s growth momentum amid the volatile economic conditions globally as well as to ensure the prosperity and quality of life of all Malaysians are intact. The Government will also continue to ensure successful implementation of the National Transformation Policy which encompasses the economic and government transformation programmes,” he said.
In line with the WEF’s emphasis on higher productivity to address sluggish growth, renewed efforts will be undertaken to boost productivity in a focused and targeted manner with clear outcomes at the national, industry and enterprise level during the 11th Malaysia Plan period, the Minister added.
“The Malaysia Productivity Corporation, in partnership with both the public and private sectors, will forge ahead to enhance productivity for global competitiveness and innovation. In addition, there is a need to accelerate good regulatory practices to ensure the quality and effective delivery of public policy which is business friendly and people-centric,” he said.
He noted that Malaysia’s strong foundation of public-private partnership would help ensure the nation maintains its growth momentum to become one of the top investment and trade destinations in Asia. “While the government will prioritise measures that ensure the country’s growth and prosperity, the private sector will continuously step up efforts to invest in technology, pursue productivity, nurture innovation and talent,” Dato’ Sri Mustapa said.