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Booklet WCY 29 Mei 2013 1 - MPC

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CONTENTS<br />

World Competitiveness Yearbook:<br />

The Methodology<br />

How The Report is Compiled<br />

3<br />

4<br />

APPENDICES<br />

The World Competitiveness<br />

Scoreboard <strong>2013</strong><br />

Competitiveness Rankings by<br />

GDP Per Capita Less Than<br />

USD20,000<br />

Competitiveness Rankings by<br />

Population Greater than 20<br />

Million<br />

Competitiveness Rankings by<br />

Asia-Pacific Region and ASEAN<br />

Region<br />

Characteristics of Most<br />

Competitive Economies in <strong>WCY</strong><br />

<strong>2013</strong><br />

Competitiveness Performance<br />

of United Arab Emirates (UAE)<br />

The Methodology of Computing<br />

the Rankings of <strong>WCY</strong> <strong>2013</strong><br />

IMD World Competitiveness<br />

Yearbook <strong>2013</strong> Press Release<br />

33<br />

35<br />

36<br />

37<br />

38<br />

39<br />

40<br />

41<br />

Highlights<br />

5<br />

Malaysia’s Performance in the 4<br />

Competitiveness Factors<br />

Malaysia’s Economic Performance<br />

among the Best in the World<br />

Government Efficiency:<br />

Transitioning Beyond Red Tape<br />

Business Efficiency: A Better<br />

Business Nation Through Efficiency<br />

Forging Ahead Through<br />

Infrastructure<br />

Malaysia on Track to Become High<br />

Income Nation<br />

11<br />

10<br />

15<br />

19<br />

23<br />

28<br />

Inter-Agency Planning Group<br />

(IAPG) on Competitiveness Data<br />

43<br />

Industries’ Perspectives<br />

<strong>29</strong><br />

2


WORLD COMPETITIVENESS YEARBOOK: THE METHODOLOGY<br />

The World Competitiveness Yearbook (<strong>WCY</strong>) is published by the Institute for Management<br />

Development (IMD), based in Lausanne, Switzerland. For over 20 years, the IMD World<br />

Competitiveness Yearbook has benchmarked the performance of the world’s most competitive<br />

economies. The <strong>WCY</strong> contains a detailed profile for 60 economies as well as extensive section<br />

of data tables with global rankings covering over 300 indicators. The data are primarily hard<br />

data, measurable statistics to provide the most objective assessment of countries’<br />

competitiveness in today’s global world. This hard data is complemented by perceptions of<br />

competitiveness by the business community from the Executive Opinion Survey (EOS).<br />

2. The World Competitiveness Yearbook <strong>2013</strong> (<strong>WCY</strong> <strong>2013</strong>) presents competitiveness<br />

ranking in four categories:<br />

i) global (overall);<br />

ii) by size (Population exceeding 20 million; and population less than 20 million);<br />

iii) by wealth (GDP per capita greater than USD20,000 and GDP per capita less than<br />

USD20,000); and<br />

iv) by regions (Europe-Middle East-Africa, Asia-Pacific, and The Americas).<br />

3


3. The <strong>WCY</strong> is recognised as the leading annual report on the competitiveness of nations and<br />

has been a pioneer in competitiveness since 1989. It measures the different facets of a<br />

country’s competitive environment: Economic Performance, Government Efficiency,<br />

Business Efficiency and Infrastructure as follows:<br />

HOW THE REPORT IS COMPILED<br />

4. This report is based on quantitative or statistical data and qualitative or perception data,<br />

obtained from the feedback of the private sector through the Executive Opinion Survey<br />

(EOS). The survey was administered from January to March <strong>2013</strong> by the Malaysia<br />

Productivity Corporation (<strong>MPC</strong>) as a partner institute to IMD. Respondents also took part<br />

in online surveys through the IMD’s website.<br />

5. The perception data is used to complement the statistical data to quantify issues that are<br />

not easily measured, for instance Management Practices and Labour Relations.<br />

Respondents involved in this survey are from the business community representing the<br />

Small and Medium-Sized Enterprises (SMEs), large companies including the Multi-National<br />

Corporations (MNCs) and also Government Linked Companies (GLCs).<br />

6. In determining overall competitiveness of nations, 4 competitiveness input factors, 20<br />

sub-factors and 333 criteria are utilised in the <strong>WCY</strong> <strong>2013</strong>. Among the criteria, 246 criteria<br />

(quantitative data: 130 and perception data: 116) are taken into consideration to determine<br />

the overall competitiveness ranking, while 87 criteria are used as background information.<br />

4


HIGHLIGHTS<br />

7. Malaysia was ranked 15 th out of 60 economies<br />

compared to 14 th position last year. Malaysia<br />

achieved top ten positions in two of the four<br />

factors assessed; Business Efficiency is ranked<br />

4 th and Economic Performance 7 th . The top ten most<br />

competitive nations are USA, Switzerland, Hong Kong,<br />

Sweden, Singapore, Norway, Canada, UAE, Germany<br />

and Qatar. At 15 th position, Malaysia<br />

continues to be ahead of Australia (16 th ), United<br />

Kingdom (18 th ), China (21 st ), Korea (22 nd ), and<br />

Japan (24 th ). The success of these competitive<br />

economies relies mainly upon export-oriented<br />

manufacturing, diversified economies, strong small<br />

and medium enterprises (SMEs) and fiscal discipline.<br />

8. Among the top 10 economies, UAE surged to 8 th<br />

position from 16 th recorded last year, overtaking eight<br />

economies including Malaysia. Significant<br />

improvements in UAE’s performance are registered in<br />

all the four competitiveness factors, achieving top<br />

performance in Government Efficiency. Notable<br />

improvements were also made in Business Efficiency,<br />

and Economic Performance, improving by 10 and 7<br />

positions respectively. However, Infrastructure in UAE<br />

appears to be lagging specifically in Scientific<br />

Infrastructure, Health & Environment and Education.<br />

Some of the key attractions in the UAE as mentioned<br />

in the report are dynamism of the economy, business<br />

friendly environment, reliable infrastructure, open and<br />

positive attitudes, policy stability and predictability,<br />

competency of government and access to financing.<br />

9. The competitiveness performance in the overall<br />

scoreboard of the 60 economies is shown in Appendix<br />

1 while Table 1 presents the Top 15 Countries of the<br />

World Competitiveness Scoreboard <strong>2013</strong>.<br />

Malaysia is<br />

ranked<br />

among the<br />

Top 15<br />

countries,<br />

achieving<br />

Top 10<br />

positions in<br />

Business<br />

Efficiency<br />

and<br />

Economic<br />

Performance.<br />

MALAYSIA<br />

Canada<br />

7 (89.13)<br />

United States<br />

1(100.00)<br />

Switzerland<br />

2 (93.36)<br />

AMONG TOP COUNTRIES<br />

Germany<br />

9 (86.20)<br />

Netherlands<br />

14 (83.16)<br />

Luxembourg<br />

13 (83.31)<br />

Norway<br />

6 (89.59)<br />

Sweden<br />

4 (90.53)<br />

United Arab Emirates<br />

8 (88.44)<br />

15<br />

Denmark<br />

12 (83.51)<br />

Qatar<br />

10 (85.51)<br />

Malaysia<br />

15 (83.15)<br />

Hong Kong<br />

3 (92.78)<br />

Singapore<br />

5 (89.86)<br />

Taiwan<br />

11 (85.20)<br />

5


Table 1: Top 15 Countries of the World Competitiveness Scoreboard <strong>2013</strong><br />

COUNTRIES<br />

<strong>2013</strong> 2012<br />

RANK VALUE RANK VALUE<br />

USA 1 100.00 2 97.76<br />

Switzerland 2 93.36 3 96.68<br />

Hong Kong 3 92.78 1 100.00<br />

Sweden 4 90.53 5 91.39<br />

Singapore 5 89.86 4 95.92<br />

Norway 6 89.59 8 89.67<br />

Canada 7 89.13 6 90.<strong>29</strong><br />

UAE 8 88.44 16 82.49<br />

Germany 9 86.20 9 89.26<br />

Qatar 10 85.51 10 88.48<br />

Taiwan 11 85.19 7 89.96<br />

Denmark 12 83.51 13 84.88<br />

Luxembourg 13 83.31 12 86.05<br />

Netherlands 14 83.16 11 87.16<br />

Malaysia 15 83.15 14 84.22<br />

MALAYSIA’S<br />

PERFORMANCE<br />

GDP per Capita Less Than<br />

USD20,000<br />

Population Greater Than<br />

20 Million<br />

Asia-Pacific Region<br />

ASEAN Region<br />

BY<br />

CATEGORIES<br />

<strong>2013</strong> 2012<br />

1 st<br />

2 nd<br />

5 th<br />

4 th<br />

2 nd<br />

5 th<br />

4 th<br />

2 nd<br />

Top Performer<br />

MALAYSIA<br />

USA<br />

HONG KONG<br />

SINGAPORE<br />

6


10. In the category of countries with GDP per capita less<br />

than USD20,000, Malaysia attained 1 st position<br />

among 30 countries (Appendix 2). Among <strong>29</strong> countries<br />

with population greater than 20 million, Malaysia<br />

achieved 5 th position (Appendix 3), while in the<br />

Asia-Pacific region, Malaysia is ranked 4 th and 2 nd in<br />

the ASEAN region (Appendix 4). The major contributing<br />

factors to Malaysia’s competitiveness performance<br />

include Management Practices, International Trade,<br />

Labour Market, Finance and Prices.<br />

11. The <strong>WCY</strong> assessed countries based on four<br />

competitiveness factors and twenty sub-factors. The four<br />

competitiveness factors are Economic Performance,<br />

Government Efficiency, Business Efficiency and<br />

Infrastructure.<br />

12. Economic Performance which gives a macroeconomic<br />

evaluation of the domestic economy improved to 7 th<br />

position this year. Despite the weak external<br />

environment, the Malaysian economy performed better<br />

than expected, delivering faster and higher quality<br />

growth. Malaysia recorded a strong growth of 5.6% in<br />

2012, underpinned by consumption and investment<br />

spending.<br />

Malaysia a ained<br />

1 st posion<br />

among<br />

30 countries<br />

with GDP per<br />

capita of less<br />

than USD20,000<br />

and is 2 nd in<br />

ASEAN.<br />

13. Consumer confidence picked up amidst positive income<br />

growth, improvement in employment, low inflation<br />

environment and a supportive government. This is<br />

reflected in major improvements recorded specifically in<br />

employment to 11 th position (2012:25 th ); Domestic<br />

Economy to 18 th position (2012:<strong>29</strong> th ); and International<br />

Trade to 5 th position (2012:6 th ).<br />

Economic<br />

Performance<br />

improved to<br />

Top 7 th posion.<br />

7


14. Business Efficiency which measures the extent to<br />

which the national environment encourages<br />

enterprises to perform in an innovative, profitable and<br />

responsible manner, improved by 2 rungs to be ranked<br />

a credible 4 th (2012:6 th ). The sub-factors which<br />

comprise Labour Market, Finance, Management<br />

Practices, Attitudes and Values are all ranked in the<br />

top ten. Although Productivity and Efficiency has<br />

improved to 22 nd position (2012:23 rd ), it is still an area<br />

of concern. In this regard, to sustain labour cost<br />

competitiveness and propel the country into a high<br />

income nation, productivity and efficiency gains<br />

through initiatives such as reskilling, automation and<br />

technology are crucial.<br />

Business Efficiency<br />

improved by<br />

2 rungs<br />

to a credible<br />

4 th posion.<br />

15. Technological Infrastructure which improved by 3<br />

positions to 13 th position (2012:16 th ) had contributed to<br />

the overall performance of the Infrastructure factor.<br />

Infrastructure is currently ranked 25 th and had been<br />

steadily improving for the last three years. However,<br />

infrastructure needs to be further enhanced,<br />

specifically in the areas of Health & Environment,<br />

Education and Scientific Infrastructure. While the<br />

Ministry of Health (MOH) has been assessing,<br />

reviewing and piloting various initiatives aimed at<br />

strengthening the national health sector in order to<br />

address the emerging challenges and issues faced by<br />

the health system, it is worthwhile to note that<br />

indicators such as health expenditure, life expectancy<br />

at birth, healthy life expectancy and number of<br />

physicians and nurses (medical assistance) are<br />

ranked above 40 among 60 economies in this report.<br />

16. The government had rolled-out numerous policy<br />

initiatives and institutional support such as the<br />

National Policy on Environment, National Green<br />

Technology Policy, National Innovation Strategy as<br />

well as National Broadband Initiative to steer the<br />

Infrastructure factor<br />

ranked 25 th<br />

remains an area<br />

of concern,<br />

specifically in<br />

Health &<br />

Environment,<br />

Educaon and<br />

Scienfic<br />

Infrastructure.<br />

8


economy towards an innovation-led economy. It is<br />

encouraging that Malaysia is recognised as one of the<br />

countries that heavily invests in science and<br />

technology as quoted by the UNESCO<br />

Director-General, Irina Bokova. However, education,<br />

which is a sub-factor of Infrastructure which is ranked<br />

at 34 th (2012:33 rd ) would need to be further<br />

prioritised. With the implementation of the National<br />

Education Blueprint <strong>2013</strong>-2025, Malaysia would be<br />

able to produce highly skilled and holistic human<br />

capital who are able to compete in the international<br />

arena.<br />

17. Government Efficiency which measures the<br />

conduciveness of government policies declined by 2<br />

positions. The sub-factors that contributed to this<br />

decline are Societal Framework, Business Legislation,<br />

and Institutional Framework. This highlights that there<br />

are still weaknesses in the system which need to be<br />

scrutinised and addressed. The government is<br />

committed to building a resilient, dynamic and<br />

innovative economy; enhancing security and public<br />

safety; strengthening women’s participation; fighting<br />

corruption as well as revitalising the public service and<br />

enhancing good governance. With regards to budget<br />

deficit, the government had been successful in<br />

reducing the deficit from 6.7% in 2009 to 4.5% in 2012<br />

and is committed to reduce the deficit further to 3% by<br />

2015.<br />

MALAYSIA<br />

AMONG TOP COUNTRIES<br />

15<br />

Numerous policies<br />

had been rolled<br />

out to enhance<br />

infrastructure.<br />

The government<br />

is commi ed to<br />

building a resilient,<br />

dynamic and<br />

innovave economy.<br />

Canada<br />

7 (89.13)<br />

United States<br />

1(100.00)<br />

Switzerland<br />

2 (93.36)<br />

Germany<br />

9 (86.20)<br />

Netherlands<br />

14 (83.16)<br />

Luxembourg<br />

13 (83.31)<br />

Norway<br />

6 (89.59)<br />

Sweden<br />

4 (90.53)<br />

Denmark<br />

12 (83.51)<br />

Qatar<br />

10 (85.51)<br />

United Arab Emirates<br />

8 (88.44)<br />

Malaysia<br />

15 (83.15)<br />

Hong Kong<br />

3 (92.78)<br />

Singapore<br />

5 (89.86)<br />

Taiwan<br />

11 (85.20)<br />

9


MALAYSIA’S PERFORMANCE IN THE 4 COMPETITIVENESS FACTORS<br />

The <strong>WCY</strong> assessed<br />

countries based on<br />

four compeveness<br />

factors and twenty<br />

sub-factors. The four<br />

compeveness<br />

factors are Economic<br />

Performance,<br />

Government Efficiency,<br />

Business Efficiency and<br />

Infrastructure.<br />

The overall performance of Malaysia in the four competitiveness and 20 sub-factors is as shown:<br />

Table 2: Malaysia’s Performances in 4 Competitiveness Factors and 20 sub-factors<br />

MALAYSIA’S<br />

PERFORMANCE<br />

4 FACTORS<br />

IN<br />

COMPETITIVENESS<br />

Economic Performance<br />

<strong>2013</strong> 2012<br />

· Domestic Economy 18 <strong>29</strong><br />

· International Trade 5 6<br />

· International Investment 14 11<br />

· Employment 11 25<br />

· Prices 10 10<br />

Government Efficiency<br />

· Public Finance 20 21<br />

· Fiscal Policy 11 12<br />

· Institutional Framework 15 13<br />

· Business Legislation 24 21<br />

· Societal Framework <strong>29</strong> 25<br />

7<br />

15<br />

10<br />

13<br />

Business Efficiency<br />

· Productivity & Efficiency 22 23<br />

· Labour Market 6 6<br />

· Finance 9 10<br />

· Management Practices 4 4<br />

· Attitudes and Values 4 5<br />

Infrastructure<br />

<strong>2013</strong> 2012<br />

4 6<br />

25 26<br />

· Basic Infrastructure 12 8<br />

· Technological Infrastructure 13 16<br />

· Scientific Infrastructure 28 28<br />

· Health and Environment 42 36<br />

· Education 34 33<br />

Improved ranking, Declined ranking, Unchanged ranking<br />

Total countries: <strong>2013</strong> = 60, 2012 = 59<br />

10


MALAYSIA’S ECONOMIC PERFORMANCE AMONG THE BEST IN THE WORLD<br />

18. The Malaysian economy performed better than<br />

expected in 2012, with a higher growth of 5.6%<br />

(2011:5.1%). The strong growth was supported by<br />

resilient domestic demand, which cushioned the<br />

negative impact of the weak external environment.<br />

Domestic demand recorded its highest rate of<br />

expansion for the decade, supported by stronger<br />

consumption and investment spending. The continued<br />

resilience in domestic demand was underpinned<br />

largely by sound macroeconomic fundamentals; the<br />

more diversified and balanced economic structure, the<br />

stronger and more developed financial system and<br />

greater flexibility in macroeconomic policies. The last<br />

quarter of 2012 recorded a growth of 6.4% which was<br />

the highest quarterly growth recorded in the last 3<br />

years and has expanded the economic growth to 5.6%<br />

for the year, despite an increasing volatile and<br />

challenging global landscape. In <strong>2013</strong>, GDP is<br />

expected to grow by 5 to 6%.<br />

19. There was also a sizeable improvement in<br />

employment growth and unemployment remained at<br />

a low 3%. With the implementation of mega projects<br />

such as the KLIA2, Mass Rapid Transit (MRT) and the<br />

second Penang Bridge, had contributed to<br />

employment growth. In 2012, 39 projects were<br />

implemented with investments amounting to RM32.1<br />

billion which are projected to contribute RM6.63 billion<br />

to GNI in 2020 and create 94,702 new jobs. Growth in<br />

the services sector has further supported income<br />

“Malaysia’s<br />

economic<br />

performance<br />

has consistently been<br />

ranked among the<br />

top ten in the last<br />

three years<br />

(<strong>WCY</strong> 2011-<strong>2013</strong>).<br />

This year’s<br />

improvement by three<br />

rungs to 7 th posion<br />

from 10 th last year, is<br />

mainly contributed by<br />

a vibrant Domesc<br />

Economy, strong<br />

Internaonal Trade<br />

and high<br />

Employment growth”.<br />

11


growth and stable employment prospects. Malaysia’s<br />

implementation rate on liberalisation of the<br />

services sector was commendable at 87.7%. The<br />

24 sub-sectors to be liberalised broadly cover<br />

transport, logistics, environmental services, healthcare<br />

and tourism. This liberalisation process has also<br />

contributed in bringing high employment numbers with<br />

approximately 7.2 million out of the 12 million people<br />

employed.<br />

20. In terms of international trade, Malaysia’s trade was<br />

sustained despite challenges. Total trade increased by<br />

3% to RM1.31 trillion with an increase in exports by<br />

0.6% to RM702.2 billion and imports amounting to<br />

RM607.4 billion. Trade surplus in 2012 remains high at<br />

RM94.8 billion. Exports expansion was underpinned<br />

by the diversification in export products and market.<br />

With the on-going crises in the Euro zone and some<br />

parts of East Asia, Malaysia has intensified export<br />

promotion programmes in the Middle-East and North<br />

African Region. Our imports have risen steadily mainly<br />

due to the import of capital and consumption goods.<br />

Among the bilateral Free Trade Agreements (FTA)<br />

that have been concluded by Malaysia include,<br />

agreements with Australia, Chile, India, New Zealand,<br />

Pakistan and Japan, while the on-going bilateral FTA<br />

Implementaon rate<br />

on liberalisaon<br />

of the services sector<br />

was commendable at<br />

87.7%. This<br />

liberalisaon process<br />

has contributed<br />

in high employment<br />

of 7.2 million<br />

out of<br />

12 million<br />

employed.<br />

are with the European Union and Turkey.<br />

21. Despite the decline in the ranking for investment to<br />

14 th position (2012:11 th ), investment activity was a<br />

key driver of the domestic economy during the<br />

year, with increased capital spending by both the<br />

private and public sectors. Private investment was<br />

particularly robust, recording a double-digit growth<br />

of 22%. The share of private investment rose to 15.5%<br />

of GDP in 2012, the highest since 1998. This was led<br />

by strong capital spending in the consumer-related<br />

services sectors, domestic-oriented manufacturing<br />

12


sectors and the implementation of major infrastructure<br />

projects. Public investment also registered a strong<br />

growth of 17.1%, driven by higher capital spending by<br />

public enterprises. In addition, the strong investment<br />

performance was also attributed to the commencement<br />

and progress of several infrastructure projects,<br />

including those under the ETP, and the steady<br />

improvement in the investment climate.<br />

22. In terms of Foreign Direct Investment (FDI), Malaysia<br />

attracted RM34.8 billion in foreign investments in 2012<br />

and as the economy picks up, FDI is expected to increase<br />

to about RM37 billion. Malaysia’s strategy is to focus on<br />

high value added and quality investments in line with<br />

its objective to move up the value chain to become a high<br />

income, knowledge-based economy. In the first quarter of<br />

<strong>2013</strong>, domestic investment contributed 62.9% amounting<br />

to RM31 billion. While domestic investment dominates,<br />

Malaysia continues to remain a competitive investment<br />

location for foreign investors as total FDI approved<br />

increased by 90.6% to RM18.3 billion during the period<br />

compared with RM9.6 billion previously.<br />

Investment acvity<br />

was a key driver of<br />

the domesc<br />

economy. Malaysia<br />

a racted RM34.8<br />

billion in foreign<br />

investments in<br />

2012 and FDI is<br />

expected to<br />

increase to about<br />

RM37 billion.<br />

23. Sustained efforts to address the concerns on prices of<br />

household goods are seeing results as Malaysia’s<br />

position remains unchanged at 10 th<br />

position. Earlier<br />

proactive measures to address this issue such as the<br />

Bantuan Rakyat 1Malaysia which is now currently on its<br />

second phase has so far distributed a total of RM5.3<br />

million in aid.<br />

24. This as well as programmes such as 1Malaysia Clinics,<br />

Kedai Rakyat 1Malaysia, and Menu Rakyat 1Malaysia are<br />

all government sponsored initiatives to further overcome<br />

the rakyat’s concerns on food, education and living<br />

expenditure. Inflation is expected to remain low,<br />

averaging 2% to 3% in <strong>2013</strong>.<br />

Proacve measures<br />

to address concerns<br />

on prices had been<br />

successful.<br />

13


Among the criteria in the top 10 positions for Economic Performance:<br />

· Diversification of the economy (industries, export markets, etc.) is<br />

extensive, ranked 3 rd (2012: 4 th )<br />

· Employment growth, ranked 6 th (2012: 37 th )<br />

· Direct investment flows abroad (% of GDP), ranked 7 th (2012:9 th )<br />

· Real GDP Growth, ranked 8 th (2012:14 th )<br />

· Real GDP Growth per capita, ranked 10 th (2012:19 th )<br />

· Consumer price inflation, ranked 10 th (2012:20 th )<br />

Areas for Improvement under the Economic Performance:<br />

· GDP per capita, ranked 47 th (2012:47 th )<br />

· GDP (PPP) per capita, ranked 45 th (2012: 44 th ).<br />

14


TRANSITIONING BEYOND RED TAPE<br />

25. In the <strong>WCY</strong> <strong>2013</strong>, Malaysia is well placed among the<br />

top 15 countries for Government Efficiency<br />

(2012:13 th ), registering improvements in Fiscal<br />

Policy and Public Finance. Boosted by a strong<br />

domestic economy, Malaysia’s public finance<br />

improved to 20 th position, contributed by a decline in<br />

external debt to RM252.8 billion at the end of 2012.<br />

This is equivalent to 28% of the GNI (compared to 30%<br />

in 2011). Generally, Malaysia has solid economic<br />

fundamentals with an A minus rating scale from<br />

Standard & Poor’s rating scale and is deemed less<br />

risky, making Malaysia a good pick for FDI.<br />

26. Malaysia’s Fiscal Policy also improved to 11 th<br />

position in the <strong>WCY</strong> <strong>2013</strong> (2012:12 th ). The<br />

government has succeeded in lowering the budget<br />

deficit to 4.5% of the Gross Domestic Product (GDP) in<br />

2012 from a high of 6.7% in 2009. Prudent fiscal<br />

management has kept Malaysia in check with its own<br />

self imposed public debt ceiling to GDP ratio below<br />

55% which has helped to maintain the budget deficit<br />

and external debt ratios within safe limits. Federal<br />

government revenue is projected to grow by double<br />

digits with expected revenue of 1.9% growth in the first<br />

quarter of <strong>2013</strong>. The budget deficit is expected to be<br />

further reduced to about 3% by 2015.<br />

27. Malaysia scored a ranking of 15 th (2012:13 th ) for<br />

Institutional Framework impacted directly by declines<br />

in the interest rate spread and the real short term<br />

interest rate. The Financial Sector Blueprint launched<br />

by the Central Bank will further strengthen the<br />

Government Efficiency<br />

was well placed<br />

among the top 15<br />

countries. Solid<br />

economic<br />

fundamentals<br />

as well as prudent<br />

fiscal management<br />

augurs well<br />

for Malaysia’s<br />

transformaon.<br />

Budget deficit had<br />

been lowered to<br />

4.5% and is<br />

expected to be<br />

further reduced<br />

to about 3%<br />

by 2015.<br />

15


capacity of the financial sector in supporting<br />

Malaysia’s transformation towards becoming a high<br />

value added and high income nation. The perception<br />

towards Societal Framework specifically in the areas<br />

of political instability, ageing of society as well as safety<br />

and security of personal property has adversely<br />

affected Malaysia’s performance, registering a decline<br />

to <strong>29</strong> th position (2012:25 th ). Despite much<br />

progress in fighting crime at all levels especially street<br />

crimes, it is an uphill task to convince the public. While<br />

crime still persists in Malaysia, and the rakyat are<br />

justifiably concerned, figures indicate that crime rate<br />

had indeed fallen. Throughout the country, there were<br />

nearly 210,000 crimes in 2009 declining to below<br />

160,000 in 2011. From January to May 2012, a<br />

significant decline in crime rate of 28% was registered.<br />

A new initiative is currently being undertaken with the<br />

setting up of a new crime prevention department which<br />

Crimes had been reduced<br />

to below 160, 000 in 2011<br />

compared to 210,000<br />

in 2009.<br />

From January to<br />

May 2012, a significant<br />

decline in crime rate of<br />

28% was registered.<br />

will formalise strategies to prevent and reduce crime.<br />

28. While proactive measures continue to be undertaken by<br />

the PEMUDAH Focus Group on Business Process<br />

Re-engineering (FGBPR) to modernise business<br />

licensing, perception towards Business Legislation in<br />

Malaysia with regards to openness, competition and<br />

regulations as well as labour regulations has led to a<br />

decline to 24 th<br />

position for business legislation<br />

(2012:21 st ). To further enhance transparency and<br />

accountability, the government has implemented<br />

various initiatives such as the implementation of the<br />

Integrity Pact and the Corporate Integrity Pledge.<br />

The implementation of a proper public service directory<br />

through the Business Licensing Electronic Support<br />

System (BLESS) further supports businesses by<br />

removing red tape as it redirects all queries regarding<br />

different licensing to the appropriate departments under<br />

one unified and cohesive platform. In addition, the<br />

To further enhance<br />

transparency and<br />

accountability, the<br />

government implemented<br />

the Integrity Pact, the<br />

Corporate Integrity<br />

Pledge and the Business<br />

Licensing Electronic<br />

Support System (BLESS).<br />

16


number of government agencies accepting online<br />

payment through the e-Payment facilities had<br />

increased to 250 agencies covering 551 services in<br />

2012 as compared to 42 agencies covering only 170<br />

services in 2008.<br />

<strong>29</strong>. PEMUDAH’s role in procedural reform is one of the<br />

key drivers on cutting bureaucratic red tape as the<br />

various application processes are streamlined,<br />

modernised or eliminated entirely to ensure a smooth<br />

and quick process while reducing redundancy. Thus<br />

far, PEMUDAH has helped to save approximately<br />

RM7<strong>29</strong> million in costs and streamlined a total of<br />

over 600 licenses to just 452 licenses.<br />

30. With the launch of the National Blue Ocean Strategy, a<br />

strategic deployment aimed at providing and improving<br />

various services through strategic partnerships<br />

between government agencies and the private sector,<br />

the government has established the Urban<br />

Transformation Centres (UTCs) and the Rural<br />

Transformation Centres (RTCs). These are in line with<br />

the Government Transformation Programme (GTP) and<br />

serve as a benchmark for excellence in public service<br />

for the people living in rural and urban areas with a<br />

core focus on customer service as well as the<br />

convenience of a one-stop centre when it comes to<br />

dealing with the federal and state departments.<br />

UTCs and RTCs<br />

were established<br />

to provide be er<br />

customer services<br />

and convenience of<br />

a one stop-centre.<br />

Processes are<br />

streamlined,<br />

modernised or<br />

eliminated. A total<br />

of over 600 licenses<br />

were streamlined<br />

to just 452 and<br />

RM7<strong>29</strong> million<br />

in cost saving<br />

was achieved.<br />

PEMUDAH-the Special Taskforce to Facilitate Business<br />

connues to undertake iniaves to improve the<br />

business environment. These include business<br />

process re-engineering in various licensing processes<br />

and procedures; implementaon of web-based<br />

e-payment facilies for online payments naonwide;<br />

and fine tuning the one-stop centre approval processes.<br />

17


Among the criteria in the top 10 positions for Government Efficiency:<br />

· Pension funding is adequately addressed for the future, ranked<br />

3 rd (2012:4 th )<br />

· Legal and regulatory framework encourages the competitiveness of<br />

enterprises, ranked 4 th (2012:6 th )<br />

· Start-up procedures, ranked 5 th (2012:11 th )<br />

· Real corporate taxes do not discourage entrepreneurial activity, ranked<br />

5 th (2012: 8 th )<br />

· Creation of firms is supported by legislation, ranked 8 th (2012:9 th )<br />

· Government decision are effectively implemented, ranked 9 th (2012:13 th )<br />

· Equal opportunity legislation in your economy encourages economic<br />

development, ranked 9 th (2012:10 th )<br />

Areas for improvement under Government Efficiency:<br />

· Government subsidies, ranked 55 th (2012;52 nd )<br />

· Females in parliament, ranked 52 nd (2012: 43 rd )<br />

· Redundancy costs, ranked 47 th (2012:47 th )<br />

· Interest payment, ranked 46 th (2012:47 th )<br />

· Real short - term interest rate, ranked 45 th (2012:33 rd )<br />

18


A BETTER BUSINESS NATION THROUGH EFFICIENCY<br />

31. Malaysia ranked significantly higher for Business<br />

Efficiency at 4 th position this year (2012:6 th ). This<br />

position is bolstered by the effectiveness of several key<br />

criteria which include Attitudes and Values, ranked 4 th<br />

(2012:5 th ), Finance, ranked 9 th (2012:10 th ) as well as<br />

Productivity & Efficiency, ranked 22 nd (2012:23 rd ). Key<br />

to the business environment are issues pertaining to<br />

talent as well as human capital which are crucial to<br />

sustain Malaysia’s competitiveness. Strategic<br />

programmes include review of the education system,<br />

review of existing and proposed labour legislation and<br />

policies, foreign worker policies, upskilling and upgrading<br />

the workforce, and strengthening human resource<br />

management had been prioritised. The effectiveness of<br />

these programmes are reflected in Management<br />

Practices, Attitudes and Values as well as Labour<br />

Market achieving top 10 positions at both 4 th and 6 th<br />

respectively.<br />

32. For Malaysia to compete regionally and globally, Malaysia<br />

must unleash productivity-led growth and innovation. In<br />

this context, efforts to drive productivity and innovation<br />

through higher Total Factor Productivity (TFP) is<br />

imperative. To achieve this, Malaysia has to ensure that<br />

private sector investment grows by at least 12.8% per<br />

annum with TFP growth of 2.3% and productivity growth<br />

of 4.6%. Boosting productivity involves many<br />

socio-economic dimensions. Especially important is to<br />

inculcate a high performance culture across all strata of<br />

the economy, creating high performing institutions, firms,<br />

industries as well as high potential corporate leaders and<br />

Malaysia improved<br />

its Business Efficiency<br />

ranking to 4th in <strong>2013</strong>.<br />

The effecveness of<br />

programmes<br />

pertaining to talent<br />

as well as human<br />

capital had been<br />

successful as<br />

reflected in<br />

Management<br />

Pracces, A tudes &<br />

Values as well as<br />

labour market<br />

achieving top 10<br />

posions at both<br />

4th & 6th<br />

respecvely.<br />

19


employees. The Government has introduced the<br />

1Malaysia Training Centre (1MTC) to optimise the use<br />

of existing resources and training facilities. This is one<br />

of the initiatives under the National Blue Ocean<br />

Strategy (NBOS) to enhance the government delivery<br />

service and strategic decision making process in<br />

relation to the optimum use of public training institutes.<br />

33. Malaysia’s productivity grew at a faster pace than<br />

many OECD countries. However, the productivity level<br />

can be further improved through automation, higher<br />

technology, R&D, as well as higher skills. The sectors<br />

under the ETP such as the electrical and electronics<br />

and ICT sectors recorded improvements in their<br />

labour productivity performance as well as in their<br />

labour competitiveness as a result of higher growth in<br />

value created or output generated by each employee<br />

relative to the growth in wage rates. To ensure that<br />

wages commensurate with higher productivity,<br />

organisations are encouraged to implement<br />

Performance-based Remuneration Systems. To<br />

move into higher income we need a quantum leap in<br />

productivity and minimum wage is expected to bring<br />

about an increase in overall productivity.<br />

34. Recognising that a country cannot be competitive if<br />

only the public sector is expediting changes and<br />

improvements, the private sector delivery system also<br />

Performance -based<br />

Remuneraon<br />

Systems will ensure<br />

that growth in<br />

wages commensurate<br />

with higher<br />

producvity.<br />

Electrical & Electronics<br />

and ICT sectors<br />

recorded improvements<br />

in producvity<br />

performance as well<br />

as in their<br />

labour<br />

compeveness.<br />

needs to be examined. In line with the aspirations to<br />

improve business service delivery, a Focus Group on<br />

Private Sector Efficiency and Accountability Towards<br />

Consumerism had been established to address issues<br />

of human capital, consumer management, information<br />

technology and various aspects of consumerism in<br />

developing business policy. The setting up of this<br />

Focus Group serves as a catalyst for the private<br />

sector to improve their delivery system for service<br />

excellence.<br />

20


35. To drive the efficiency of the nation, the government has<br />

embarked on Value Management Analysis for all its<br />

public service projects and programmes. The benefits of<br />

the analysis and its long term implications are a 20%<br />

overall reduction in costs, an invaluable<br />

system that<br />

allows for the measurement of productivity and<br />

consistency as well as quality over time. Projects will also<br />

be prioritised based on their requirements.<br />

Value Management Analysis<br />

implemented.<br />

21


Among the criteria in the top 10 positions for Business Efficiency:<br />

· Customer satisfaction is emphasised in companies, ranked 2 nd (2012:4 th )<br />

· Stock market capitalisation, ranked 4 th (2012:6 th )<br />

· Employee training is a high priority in companies, ranked 5 th (2012:7 th )<br />

· The corporate values take into account the values of employees, ranked<br />

4 th (2012:5 th )<br />

· Social responsibility of business leaders is high, ranked 4 th (2012: 9 th )<br />

· The national culture is open to foreign ideas, ranked 5 th (2012:20 th )<br />

· Flexibility and adaptability of people are high when faced with new challenges,<br />

ranked 6 th (2012:10 th )<br />

· Labour force growth (% of change), ranked 7 th (2012:8 th )<br />

· Attracting and retaining talents is a priority in companies, ranked<br />

7 th (2012:21 st )<br />

· The image abroad of your county encourages business development,<br />

ranked 7 th (2012:14 th )<br />

· Productivity of companies is supported by global strategies (supplies,<br />

offshoring, outsourcing), ranked 9 th (2012:11 th )<br />

Areas for improvement under Business Efficiency:<br />

· Female labour force, ranked 53 rd (2012:53 rd )<br />

· Labour Productivity (PPP) (Estimates: GDP (PPP) per person employed per<br />

hour, US$), ranked 46 th (2012:44 th )<br />

· Part–time Employment (% of total employment), ranked 49 th (2012:47 th )<br />

· Labour force, ranked 48 th (2012:48 th )<br />

22


FORGING AHEAD THROUGH INFRASTRUCTURE<br />

36. Malaysia’s Infrastructure as measured by the<br />

extent to which basic, technological, scientific and<br />

human resources meet the needs of business is<br />

ranked at 25 th<br />

position (2012:26 th ). Among the four<br />

competitiveness factors assessed in the report, the<br />

Infrastructure factor is the lowest ranked<br />

indicating that more needs to be done in this area.<br />

While Technological Infrastructure has improved<br />

to 13 th position (2012:16 th ) with higher<br />

investments in telecommunication and improvements<br />

in mobile telephone subscribers, broadband<br />

subscribers and internet bandwidth speed remain<br />

areas of concern. Basic Infrastructure, Health and<br />

Environment as well as Education are areas of<br />

focus for the country. Health and Environment<br />

declined to 42 nd position (2012:36 th ), Basic<br />

Infrastructure to 12 th position (2012:8 th ), Education<br />

to 34 th position (2012:33 rd ) while Scientific<br />

Infrastructure remained at 28 th .<br />

37. Malaysia continues to expand its basic<br />

infrastructure facilities by constantly renewing and<br />

adapting towards new technologies that are available.<br />

Development for various multi-billion rail infrastructure<br />

projects are still in progress which include the Urban<br />

Mass Rapid Transit system as well as a High Speed<br />

Rail project linking Kuala Lumpur to Singapore in just<br />

90 minutes. The KLIA 2 low cost carrier terminal is<br />

also expected to be fully operational this year and will<br />

support additional logistics requirements of the<br />

Among the four<br />

compeveness<br />

factors assessed,<br />

the infrastructure<br />

factor ranked<br />

25 th indicang<br />

that more needs<br />

to be done in<br />

this area.<br />

Specifically, areas<br />

of concern<br />

are Health &<br />

Environment,<br />

Educaon and<br />

Scienfic<br />

Infrastructure.<br />

nation. On a smaller scale, a new project to adopt<br />

23


solar power as a means to reduce school carbon footprints<br />

is also on trial. This new initiative is expected to expose<br />

alternative energy to millions of young Malaysians as well as<br />

serve as a stepping stone towards empowering all public<br />

infrastructures in the future. Malaysia is constantly<br />

raising the standard of living for the rakyat through providing<br />

Various mega<br />

projects which<br />

include the urban<br />

mass rapid transit<br />

and KLIA2 are in<br />

progress. The High<br />

Speed Broadband<br />

Project is also under<br />

way.<br />

financial aid, affordable homes in key urban and rural areas,<br />

as well as transforming rural areas by upgrading key<br />

infrastructures available and promoting technological<br />

adoption. Basic amenities such as paved or gravel roads,<br />

access to treated water, uninterrupted electricity access and<br />

basic accommodation are among the necessities that the<br />

government has secured for all.<br />

38. Malaysia’s Technological Infrastructure has seen a greater<br />

focus in recent years. A strategy that would encompass<br />

both the supply and demand aspects of broadband had<br />

been identified. On the supply aspect, broadband infrastructure<br />

and services will be rolled out throughout the country. The<br />

delivery of services will be through wired and wireless<br />

connectivity, while the existing broadband and cellular<br />

coverage expanded under the Universal Service Provision<br />

(USP) initiative. For the high economic impact areas, the<br />

current broadband services will be upgraded to provide higher<br />

speed of more than 10Mbps. The Government signed a Public<br />

Private Partnership (PPP) agreement with Telekom Malaysia<br />

Berhad (TM) to roll out the High Speed Broadband (HSBB)<br />

Project.<br />

39. Understanding that the supply alone is insufficient, an effective<br />

strategy was implemented to encourage demand with the<br />

emphasis on Awareness, Attractiveness and Affordability. The<br />

approach for creating awareness will be through continuous<br />

government and private sector involvement in the awareness<br />

programmes and capacity building initiatives. The adoption of<br />

fibre optic broadband across key urban sectors have<br />

spurred the growth of a broader base for broadband and<br />

A total of<br />

2,825 new<br />

Kampung Tanpa<br />

Wayar,<br />

Pusat Internet<br />

1Malaysia and<br />

Time3 wireless<br />

towers have been<br />

built.<br />

communication infrastructure. With such a large scale<br />

24


oadband adoption, the government aims to further<br />

reduce the cost of adoption as well as increase the<br />

penetration in rural areas. A total of 2,825 new<br />

Kampung Tanpa Wayar, Pusat Internet 1Malaysia and<br />

Time3 wireless towers have been built to support this<br />

large expansion. In order to improve the attractiveness<br />

of online content, efforts will be focused to enhance<br />

and promote e-Government, e-Education and<br />

e-Commerce.<br />

40. Basic access to universal healthcare also plays a<br />

pivotal role in ensuring a higher standard of living. The<br />

government has implemented Klinik 1Malaysia, a 90%<br />

subsidied government funded healthcare service that<br />

ensures access for the rakyat to quality healthcare at<br />

affordable rates. As at end of 2012, a total of 350<br />

government clinics as well as 245 Klinik 1Malaysia are<br />

operational. Dialysis treatment has also been a priority<br />

with 150 dialysis machines in government<br />

hemodialysis centres available across the country and<br />

there are plans to establish Heart Centre and Cancer<br />

Centre in major hospitals. With regards to<br />

environment and sustainability, the government has<br />

rolled out various policy initiatives such as the<br />

National Policy on Environment and the National<br />

Green Technology Policy. These policies were<br />

introduced to promote environmentally sound and<br />

sustainable development by establishing the legal and<br />

institutional framework for environmental protection.<br />

A total of 350<br />

government clinics as<br />

well as 245 Klinik<br />

1Malaysia are<br />

operaonal and there<br />

are plans to establish<br />

Heart Centre and Cancer<br />

Centre in major<br />

hospitals. Various policy<br />

iniaves to promote<br />

environmentally sound<br />

and sustainable<br />

development had been<br />

introduced.<br />

41. The Education National Key Economic Area has made<br />

great strides. Some key examples are early childcare<br />

and education, basic primary and secondary<br />

education, technical education and vocational training,<br />

and tertiary education for both domestic and<br />

international students. As schools are the focal point<br />

of education for all growing children between the ages<br />

of 5-17, the government has focused its efforts on<br />

25


ensuring a higher standard of education. One of the<br />

programmes that has produced results is the School<br />

Improvement Programme (SIP) which was introduced<br />

to raise the standards of underperforming public<br />

schools. Another programme that has been<br />

implemented is the High Performance Schools<br />

Programme which adopt international benchmarks in<br />

rewarding high performance schools with financial and<br />

management perks.<br />

42. With top tier foreign universities moving in to establish<br />

Malaysian branch campuses across the country,<br />

future prospects for tertiary education in Malaysia<br />

remain bright. This is especially true at locations such<br />

as Educity@Iskandar, where globally recognised<br />

institutions including Newcastle University Medicine<br />

Malaysia, Netherlands Maritime Institute of<br />

Technology, Raffles University Iskandar, University of<br />

Southampton Malaysia and Reading University<br />

Iskandar have set up campuses. High-quality<br />

education infrastructure in Malaysia therefore plays a<br />

dual role to transform the education sector in<br />

Malaysia into a vibrant economic sector and to<br />

provide the training required for the country’s own<br />

School improvement<br />

and High Performance<br />

School Programme<br />

were introduced.<br />

Globally recognised<br />

instuons of<br />

higher learning have<br />

set up campuses in<br />

Malaysia and augurs<br />

well for Malaysia’s<br />

terary educaon.<br />

needs.<br />

26


Among the criteria in the top 10 positions for Infrastructure:<br />

· Public and private sector ventures are supporting technological development,<br />

ranked 2 nd (2012: 10 th )<br />

· Investment in telecommunications, ranked 3 rd (2012:7 th )<br />

· Funding for technological development is readily available, ranked<br />

4 th (2012:9 th )<br />

· Technological regulation supports business development and innovation,<br />

ranked 5 th (2012:8 th )<br />

· Development and application of technology are supported by the legal<br />

environment, ranked 6 th (2012:14 th )<br />

· Technological cooperation between companies is developed, ranked<br />

6 th (2012:11 th )<br />

· Management education meets the needs of the business community, ranked<br />

9 th (2012:14 th )<br />

Areas for improvement under Infrastructure:<br />

· Secondary school enrollment, ranked 56 th (2012:56 th )<br />

· Fixed telephone lines, ranked 54 th (2012:51 st )<br />

· Energy intensity, ranked 54 th (2012:52 nd )<br />

· Internet bandwidth speed, ranked 52 nd (2012:44 th )<br />

· Total health expenditure, ranked 51 st (2012:48 th )<br />

· Human development index, ranked 45 th (2012:43 rd )<br />

27


Malaysia on Track to Become High Income Naon by 2020<br />

with the Naonal Transformaon Programme<br />

“ We need the support of the people to make even more significant strides and<br />

to implement programmes that will ensure a consistent delivery of measures<br />

to influence the sosio-economic landscape of the naon.”<br />

The placing of Malaysia among the top 15 most competitive countries by IMD is indicative that the<br />

foundation and supporting infrastructure to encourage competitiveness is in existence. However, the<br />

Government acknowledges that much more needs to be done to enhance Societal Framework, Scientific<br />

Infrastructure, Education, Health & Environment which have been identified as ‘hotspots’ in the<br />

competitiveness heat map below. The Government has emphasised and emplaced policies and<br />

incentives to drive competitiveness in the country; it is now pivotal for the public and private sectors, as<br />

well as academia to further leverage on these initiatives. Amplifying an organisational culture that is willing<br />

to allow fresh and divergent ideas to take root is imperative towards enhancing<br />

the nation’s<br />

competitiveness. Malaysia needs to continuously strive to advance its competitiveness achievement. This<br />

is particularly important in the context of achieving high income economy status by 2020. In this regard,<br />

Malaysia needs to focus on addressing the following challenges:<br />

· Reduce budget deficit- achieving fiscal balance for economic sustainability.<br />

· Intensify regulatory review initiatives to modernise the business environment.<br />

· Leverage flexible skills and talent development for higher productivity and to meet market needs.<br />

· Enhance environmentally sustainable development for better quality of life.<br />

· Strengthen the innovation ecosystem — intensifying commercialisation of R&D and<br />

technological capabilities.<br />

Heat Map of Malaysia’s Performance in the World Competitiveness Yearbook<br />

WORLD COMPETITIVENESS<br />

YEARBOOK<br />

ECONOMIC PERFORMANCE<br />

DOMESTIC ECONOMY<br />

INTERNATIONAL TRADE<br />

INTERNATIONAL INVESTMENT<br />

EMPLOYMENT<br />

PRICES<br />

GOVERNMENT EFFICIENCY<br />

PUBLIC FINANCE<br />

FISCAL POLICY<br />

INSTITUTIONAL FRAMEWORK<br />

BUSINESS LEGISLATION<br />

SOCIETAL FRAMEWORK<br />

BUSINESS EFFICIENCY<br />

PRODUCTIVITY & EFFICIENCY<br />

LABOUR MARKET<br />

FINANCE<br />

MANAGEMENT PRACTICES<br />

ATTITUDES AND VALUE<br />

INFRASTRUCTURE<br />

BASIC INFRASTRUCTURE<br />

TECHNOLOGICAL INFRASTRUC-<br />

TURE<br />

SCIENTIFIC INFRASTRUCTURE<br />

HEALTH AND ENVIRONMENT<br />

EDUCATION<br />

RANK<br />

<strong>2013</strong><br />

(n=60)<br />

2012<br />

(n=59)<br />

2011<br />

(n=59)<br />

7 18 5 14 11 10 15 20 11 15 24 <strong>29</strong> 4 22 6 9 4 4 25 12 13 28 42 34<br />

10 <strong>29</strong> 6 11 25 10 13 21 12 13 21 25 6 23 6 10 4 5 26 8 16 28 36 33<br />

7 28 3 13 19 6 17 19 9 17 30 <strong>29</strong> 14 27 8 17 6 7 27 13 18 <strong>29</strong> 36 35<br />

28


INDUSTRIES’ PERSPECTIVES<br />

YBhg. Tan Sri Datuk Yong Poh Kon<br />

PEMUDAH Co-Chair & President Federation of<br />

Malaysian Manufacturers<br />

Scoring 15 out of 60 economies is a credible score, though it is one position below last year's<br />

ranking of 14. If we go into the individual parameters, there are many in which Malaysia has<br />

ranked amongst the top 10 or 20 and this augurs well for the future of the country. However,<br />

there are two parameters in which we are at the lower end of the class—namely Health where we<br />

are positioned 42 nd , and Education where we are number 34 out of 60.<br />

An improvement in the Health parameter goes beyond the Ministry of Health, and needs the<br />

co-operation of the Local Councils in better cleanliness and sanitation to eliminate, for<br />

example mosquito breeding grounds. In Education, much needs to be done to this important area<br />

as amongst all the parameters, this particular parameter is the key to the long term<br />

competitiveness of the country.<br />

The fact that Education has worsened from 33 rd to 34 th would mean we need to redouble our<br />

efforts to improve our scores in PISA and TIMSS international benchmarks. If our ranking in<br />

education continues like this to be much worse than our overall ranking, then sooner or<br />

later our overall ranking will slide down to match our education ranking because in the final<br />

analysis, the long term competitiveness of a country is very much dependent on the quality of<br />

the human capital in the country.<br />

The business sector as well as the parents in the country would like the Government to devote<br />

resources and new programmes to improve on our education score as the key to greater<br />

proficiency in the English Language, Science, Mathematics, and Reasoning. However it is<br />

fortunate that there are international benchmarks to which we can measure ourselves with.<br />

<strong>29</strong>


INDUSTRIES’ PERSPECTIVES<br />

YBhg. Tan Sri Azman Shah Dato' Seri Harun<br />

PEMUDAH Member,<br />

President of Malaysian Employers Federation &<br />

Member of <strong>MPC</strong> Board of Directors<br />

There are many programmes such as the transformation programmes (ETP & GTP) by<br />

PEMANDU, as well as initiatives to facilitate business by PEMUDAH and also through various<br />

government agencies at all levels. Implementation of these programmes and initiatives could be<br />

further hastened and this requires faster response from a more quality and knowledgeable<br />

workforce.<br />

The Business Efficiency performance improved by two rungs to 4 th from 6 th , and this is<br />

commendable. The Business community has done a fair good response, in providing relevant<br />

inputs in various discussions forums throughout the year. Again here, human resource in terms<br />

of productivity levels is an issue. Human capital development could further equip the private<br />

sector employees to create more value.<br />

In terms of Government Efficiency which has dropped 2 places, there is a need to have a<br />

quicker response to the public. The international community has been quick to provide feedback<br />

and suggestions to improve efficiency. However, there appears to be a gap between<br />

suggestions given and the rate of implementation. Enforcement of decisions are slow to filter<br />

down to the operational level. This has been a bone of contention with the private sector.<br />

Although information through the social media, ICT platforms, newsletters in printed and/ or<br />

electronic format are available, the public may still not be aware. Outreach through the various<br />

media has to be intensified to ensure that the latest developments, initiatives and programmes to<br />

enhance efficiency are effectively transmitted.<br />

30


INDUSTRIES’ PERSPECTIVES<br />

YBhg. Dato' Pardip Kumar Kukreja<br />

Immediate Past President Malaysian Associated Indian<br />

Chambers of Commerce & Industry (MAICCI) &<br />

Chairman, PEMUDAH of Focus Group on Private Sector<br />

Efficiency and Accountability towards Consumerism<br />

There is only one way for us to further improve our competitiveness ranking, i.e. to take this<br />

matter seriously and to keep the pressure on the system to ensure improvements are being done.<br />

All stakeholders must be accountable. We must build a culture of INITIATIVE in the system,<br />

instead of a culture of INCENTIVE.<br />

The impact is huge. Absolutely huge. Investors will go to either the most efficient countries<br />

(Singapore, Hong Kong) or the countries with the cheapest labour (Myanmar, Indonesia,<br />

Vietnam). We are neither at the moment. We certainly cannot offer the cheapest labour but we<br />

can surely offer to be the most efficient. That is where we should be heading.<br />

To sustain the competitiveness, the Government will need to do a few things. Firstly, the quality<br />

of education must be stepped up really fast. High Quality Primary and Secondary education is the<br />

foundation of Good Human Capital. Secondly, we must be able to sell in the Government<br />

Transformation Program to all levels of the Government Service, especially the front line. The<br />

impact and the understanding of the need for this change at the front line is still wanting. At the<br />

higher levels we are fine. And last but not least in this sector, the pay scale of the Government<br />

sector must move up to attract talent and also to eradicate corruption.<br />

Human Capital is the Key to Business Efficiency. There must be a continuous search for best<br />

talent. We must even encourage foreign talent at the Mid-Level Management. A ratio of about<br />

25% allowance for foreign talent can be considered. Inculcating a higher level of business ethics<br />

is another way. The quality of service at our retail level is wanting. We must step up the Human<br />

Capital development in this area. We are a destination to almost 23 million tourists a year. This<br />

sector if well nurtured, it has great potential for economic benefits to the nation.<br />

31


INDUSTRIES’ PERSPECTIVES<br />

YBhg. Dato’ Saw Choo Boon<br />

Board Member, Shell Malaysia &<br />

Chairman, PEMUDAH<br />

Focus Group on Public Relations<br />

Whilst it is disappointing that we have essentially maintained our ranking, this is no mean feat<br />

due to the intense competition between countries to improve their competitiveness. Initiatives to<br />

improve competitiveness take time to implement. There are many being implemented and we<br />

should expect continual improvement going forward.<br />

The good news is that we did do extremely well in two criteria; improved Economic Performance<br />

ranking from 10 th to 7 th and improved Business Efficiency ranking to 4 th . For further<br />

improvement, areas requiring attention are international investment, free trade agreements<br />

(FTAs), and productivity and efficiency especially when we have just introduced minimum wage<br />

and extended the retirement age.<br />

The two criteria requiring significant improvements are Government Efficiency (Rank 15 th ) and<br />

particularly Infrastructure (Rank 25 th ). The work on economic transformation by PEMANDU and<br />

facilitating business by PEMUDAH needs to be given more impetus, particularly in improving<br />

business legislation (ease of doing business, labour regulations) and the societal framework<br />

(judiciary, personal security).<br />

Good infrastructure is essential to the country’s move up in the value chain and transiting from an<br />

efficiency-driven to an innovation-driven economy. We need to improve in all the areas of<br />

infrastructure, especially in R&D, Health & Environment and Education.<br />

32


Appendix 1<br />

THE WORLD COMPETITIVENESS SCOREBOARD <strong>2013</strong><br />

<strong>2013</strong> 2012<br />

COUNTRIES<br />

RANK VALUE RANK VALUE<br />

USA 1 100.00 2 97.76<br />

Switzerland 2 93.36 3 96.68<br />

Hong Kong 3 92.78 1 100.00<br />

Sweden 4 90.53 5 91.39<br />

Singapore 5 89.86 4 95.92<br />

Norway 6 89.59 8 89.67<br />

Canada 7 89.13 6 90.<strong>29</strong><br />

UAE 8 88.44 16 82.49<br />

Germany 9 86.20 9 89.26<br />

Qatar 10 85.51 10 88.48<br />

Taiwan 11 85.19 7 89.96<br />

Denmark 12 83.51 13 84.88<br />

Luxembourg 13 83.31 12 86.05<br />

Netherlands 14 83.16 11 87.16<br />

Malaysia 15 83.15 14 84.22<br />

Australia 16 80.51 15 83.19<br />

Ireland 17 79.59 20 78.47<br />

United Kingdom 18 79.15 18 80.14<br />

Israel 19 78.21 19 78.57<br />

Finland 20 78.19 17 82.47<br />

China Mainland 21 77.04 23 75.77<br />

Korea 22 75.17 22 76.75<br />

Austria 23 74.71 21 77.67<br />

Japan 24 74.53 27 71.35<br />

New Zealand 25 73.94 24 74.88<br />

Belgium 26 73.13 25 73.48<br />

Thailand 27 72.97 30 69.00<br />

France 28 71.33 <strong>29</strong> 70.00<br />

Iceland <strong>29</strong> 69.01 26 71.54<br />

Chile 30 67.99 28 71.<strong>29</strong><br />

Lithuania 31 66.49 36 63.42<br />

Mexico 32 65.63 37 63.18<br />

Poland 33 65.44 34 64.18<br />

Kazakhstan 34 64.90 32 66.89<br />

Czech Republic 35 64.61 33 66.19<br />

33


THE WORLD COMPETITIVENESS SCOREBOARD <strong>2013</strong> (cont’d)<br />

<strong>2013</strong> 2012<br />

COUNTRIES<br />

RANK VALUE RANK VALUE<br />

Estonia 36 64.42 31 66.95<br />

Turkey 37 63.61 38 62.24<br />

Philippines 38 63.15 43 59.27<br />

Indonesia 39 61.81 42 59.50<br />

India 40 59.89 35 63.60<br />

Latvia 41 58.68 - -<br />

Russia 42 56.81 48 55.16<br />

Peru 43 56.63 44 58.71<br />

Italy 44 56.33 40 60.64<br />

Spain 45 56.<strong>29</strong> 39 61.12<br />

Portugal 46 56.23 41 60.38<br />

Slovak Republic 47 54.49 47 55.67<br />

Colombia 48 54.37 52 51.89<br />

Ukraine 49 54.23 56 46.88<br />

Hungary 50 53.50 45 57.34<br />

Brazil 51 53.00 46 56.52<br />

Slovenia 52 51.00 51 52.96<br />

South Africa 53 50.63 50 53.16<br />

Greece 54 49.99 58 43.05<br />

Romania 55 49.70 53 48.93<br />

Jordan 56 48.80 49 53.24<br />

Bulgaria 57 47.80 54 48.45<br />

Croatia 58 44.11 57 45.30<br />

Argentina 59 42.27 55 48.20<br />

Venezuela 60 31.88 59 31.45<br />

34


Appendix 2<br />

COMPETITIVENESS RANKINGS BY<br />

GDP PER CAPITA LESS THAN USD20,000<br />

COUNTRIES<br />

<strong>2013</strong> 2012<br />

RANK VALUE RANK VALUE<br />

Malaysia 1 83.15 2 84.22<br />

China Mainland 2 77.04 3 75.77<br />

Thailand 3 72.97 5 69.00<br />

Chile 4 67.99 4 71.<strong>29</strong><br />

Lithuania 5 66.49 11 63.42<br />

Mexico 6 65.63 12 63.18<br />

Poland 7 65.44 9 64.18<br />

Kazakhstan 8 64.90 7 66.89<br />

Czech Republic 9 64.61 8 66.19<br />

Estonia 10 64.42 6 66.95<br />

Turkey 11 63.61 13 62.24<br />

Philippines 12 63.15 15 59.27<br />

Indonesia 13 61.81 14 59.50<br />

India 14 59.89 10 63.60<br />

Latvia 15 58.68 - -<br />

Russia 16 56.81 20 55.16<br />

Peru 17 56.63 16 58.71<br />

Portugal 18 56.23 28* 60.38*<br />

Slovak Republic 19 54.49 19 55.67<br />

Colombia 20 54.37 23 51.89<br />

Ukraine 21 54.23 27 46.88<br />

Hungary 22 53.50 17 57.34<br />

Brazil 23 53.00 18 56.52<br />

South Africa 24 50.63 22 53.16<br />

Romania 25 49.70 24 48.93<br />

Jordan 26 48.80 21 53.24<br />

Bulgaria 27 47.80 25 48.45<br />

Croatia 28 44.11 28 45.30<br />

Argentina <strong>29</strong> 42.27 26 48.20<br />

Venezuela 30 31.88 <strong>29</strong> 31.45<br />

MALAYSIA’S PERFORMANCE BYGDP PER CAPITA<br />

LESS THAN<br />

USD20,000<br />

2 nd 3 rd 4 th 5 th<br />

1 ST<br />

35


Appendix 3<br />

COMPETITIVENESS RANKINGS BY<br />

POPULATION GREATER THAN 20 MILLION<br />

COUNTRIES<br />

<strong>2013</strong> 2012<br />

RANK VALUE RANK VALUE<br />

USA 1 100.00 1 97.76<br />

Canada 2 89.13 2 90.<strong>29</strong><br />

Germany 3 86.20 4 89.26<br />

Taiwan 4 85.19 3 89.96<br />

Malaysia 5 83.15 5 84.22<br />

Australia 6 80.51 6 83.19<br />

United Kingdom 7 79.15 7 80.14<br />

China Mainland 8 77.04 9 75.77<br />

Korea 9 75.17 8 76.75<br />

Japan 10 74.53 10 71.35<br />

Thailand 11 72.97 12 69.00<br />

France 12 71.33 11 70.00<br />

Mexico 13 65.63 15 63.18<br />

Poland 14 65.44 13 64.18<br />

Turkey 15 63.61 16 62.24<br />

Philippines 16 63.15 20 59.27<br />

Indonesia 17 61.81 19 59.50<br />

India 18 59.89 14 63.60<br />

Russia 19 56.81 23 55.16<br />

Peru 20 56.63 21 58.71<br />

Italy 21 56.33 18 60.64<br />

Spain 22 56.<strong>29</strong> 17 61.12<br />

Colombia 23 54.37 25 51.89<br />

Ukraine 24 54.23 28 46.88<br />

Brazil 25 53.00 22 56.52<br />

South Africa 26 50.63 24 53.16<br />

Romania 27 49.70 26 48.93<br />

Argentina 28 42.27 27 48.20<br />

Venezuela <strong>29</strong> 31.88 <strong>29</strong> 31.45<br />

MALAYSIA’S PERFORMANCE<br />

BY POPULATION<br />

GREATER THAN<br />

20 MILLION<br />

1 st 2 nd 3 rd 4 th<br />

5 th<br />

36


Appendix 4<br />

COMPETITIVENESS RANKINGS BY ASIA–PACIFIC REGION<br />

<strong>2013</strong> 2012<br />

COUNTRIES<br />

RANK VALUE RANK VALUE<br />

Hong Kong 1 92.78 1 100.00<br />

Singapore 2 89.86 2 95.92<br />

Taiwan 3 85.19 3 89.96<br />

Malaysia 4 83.15 4 84.22<br />

Australia 5 80.51 5 83.19<br />

China Mainland 6 77.04 7 75.77<br />

Korea 7 75.17 6 76.75<br />

Japan 8 74.53 9 71.35<br />

New Zealand 9 73.94 8 74.88<br />

Thailand 10 72.97 10 69.00<br />

Philippines 11 63.15 13 59.27<br />

Indonesia 12 61.81 12 59.50<br />

India 13 59.89 11 63.60<br />

COMPETITIVENESS RANKINGS BY ASEAN REGION<br />

<strong>2013</strong> 2012<br />

COUNTRIES<br />

RANK VALUE RANK VALUE<br />

Singapore 1 89.86 1 95.92<br />

Malaysia 2 83.15 2 84.22<br />

Thailand 3 72.97 3 69.00<br />

Philippines 4 63.15 5 59.27<br />

Indonesia 5 61.81 4 59.50<br />

Hong Kong<br />

1 (92.78)<br />

Thailand<br />

10 (72.97)<br />

Taiwan<br />

3 (85.19)<br />

India<br />

13 (58.89)<br />

MALAYSIA<br />

AMONG ASIA-PACIFIC<br />

COUNTRIES<br />

Korea<br />

7 (75.17)<br />

Japan<br />

8(74.53)<br />

China Mainland<br />

6 (77.04)<br />

Philippines<br />

11 (63.15)<br />

Malaysia<br />

4 (83.15)<br />

Singapore<br />

2<br />

Australia (89.86)<br />

5 (80.51)<br />

Indonesia<br />

12(61.81)<br />

New Zealand<br />

9 (61.81)<br />

37


Appendix 5<br />

CHARACTERISTICS OF MOST COMPETITIVE ECONOMIES IN <strong>WCY</strong> <strong>2013</strong><br />

USA SWITZERLAND HONG KONG SWEDEN<br />

Year <strong>2013</strong> 2012 Year <strong>2013</strong> 2012 Year <strong>2013</strong> 2012 Year <strong>2013</strong> 2012<br />

Rank 1 2 Rank 2 1 Rank 3 1 Rank 4 5<br />

· Implementation of the Volcker<br />

· Switzerland’s normative<br />

· Strategically located in the<br />

· Sweden has taken the<br />

Rule separating proprietary<br />

trading from typical banking<br />

services and the treatment of<br />

European bank’s US<br />

operations restores market<br />

confidence in the overall<br />

stability of Europe’s financial<br />

sector.<br />

· US companies are highly<br />

sophisticated and innovative<br />

supported by an excellent<br />

university system that<br />

collaborates strongly with the<br />

business sector in R&D.<br />

· Being the world’s largest<br />

national economy and leading<br />

global trader, US has the<br />

ability to expand the output<br />

of the most competitive<br />

industries and products,<br />

through exports and raises<br />

U.S. incomes; via shifting<br />

work efforts to the most<br />

competitive areas of economy<br />

to help raise the productivity<br />

and average compensation<br />

earned from an employment.<br />

· National Export Initiative (NEI)<br />

by the federal government<br />

targets to create new job<br />

opportunities by expanding<br />

exports through various<br />

in-house Institutions – the<br />

Commerce Department, the<br />

Agriculture Department, the<br />

Small Business Administration<br />

(SBA), and the Export-Import<br />

Bank. The NEI is part of the<br />

smart, aggressive and<br />

progressive trade policy of<br />

the United States which plays<br />

a critical role in the overall<br />

economic recovery program.<br />

framework aims for optimal<br />

health promotion and disease<br />

prevention through values,<br />

principles, ethical aspects,<br />

scientific and experiential<br />

knowledge making way<br />

towards quality development,<br />

sustainability and equal<br />

opportunities.<br />

· Financial sector shining<br />

brightly with the<br />

implementation of the Foreign<br />

Account Tax Compliance Act<br />

(FACTA) agreement with<br />

the US has significantly<br />

strengthened the<br />

administrative and financial<br />

burdens of institutions in the<br />

country.<br />

· The Swiss has a strategy for<br />

attracting high-quality<br />

researchers to the country as<br />

it has the largest research<br />

center for natural and<br />

engineering sciences in the<br />

country. It creates a platform<br />

for innovative projects by<br />

evolving from an environment<br />

of global collaboration<br />

between companies and<br />

academics.<br />

· The Scientific co-operation<br />

between Eastern Europe<br />

and Switzerland promotes<br />

co-operation between<br />

research groups and<br />

institutions in Switzerland.<br />

The programme phase<br />

SCOPES <strong>2013</strong> -2016 has<br />

allocated a budget of 16<br />

million and includes Joint<br />

Research Projects (JRPs),<br />

Institutional Partnerships<br />

(IPs), Preparatory Grants<br />

(PGs), Volorisation Grants<br />

and Conference Grants<br />

(CGs).<br />

centre of Asia, Hong Kong is at<br />

the forefront of worldwide<br />

telecommunications markets.<br />

The country has a<br />

sophisticated ICT infrastructure<br />

-broadband network that covers<br />

virtually all commercial<br />

buildings and households.<br />

It has a business-friendly<br />

environment with no<br />

restrictions on technology<br />

imports and robust IP<br />

protection.<br />

· Hong Kong is also one of the<br />

world’s leading trade and<br />

logistics hub and has an<br />

excellent supply chain<br />

management system that<br />

incorporates the rapid use of<br />

developing technology to<br />

further create value for its<br />

trading and logistics industry.<br />

· The government of Hong Kong<br />

has identified that innovation<br />

and technology as well as<br />

testing and certification are the<br />

2 key categories that the<br />

country excels in. As such<br />

much support has been given<br />

to further promote these 2<br />

economic areas. A<br />

multi-prong approached is<br />

expected to breed results<br />

through a fostering of inter<br />

mainland and Hong Kong<br />

technology transfer and<br />

collaboration in science and<br />

technology.<br />

· Financially, the country is livid<br />

with remarkable IPO activity<br />

and has an expanding<br />

expertise in funds<br />

management.<br />

initiative to improve education<br />

standards of immigrant<br />

students by bringing up the<br />

academic performance level<br />

of these students. The<br />

initiatives benefit the society<br />

as it will regulate the flow of<br />

education.<br />

· Another education<br />

innovation is the availability<br />

of Mandarin as an optional<br />

primary and secondary school<br />

subject for future<br />

opportunities.<br />

· The Adult Education<br />

Initiative (AEI) is a 5-year<br />

program that represents the<br />

largest ever investment in<br />

adult education policies.<br />

The initiative will help<br />

unemployed people with<br />

complete or partial school<br />

qualifications to gain new<br />

skills and knowledge.<br />

· Even with a world class health<br />

system, Sweden still shows<br />

how there is room for<br />

improvement by investing in<br />

systems that will provide more<br />

opportunities for different<br />

healthcare providers and<br />

reduce waiting time.<br />

· The HSE National Clinical<br />

Programmes is a systematic<br />

approach in providing<br />

national strategic and<br />

coordinated approach to a<br />

wide range of clinical<br />

services. The aim is to<br />

moderernise the method and<br />

manner in which hospital<br />

services are provided across a<br />

wide range of clinical areas<br />

through the standardisation of<br />

access to, and delivery of high<br />

quality and safe and efficient<br />

hospital services.<br />

38


Appendix 6<br />

COMPETITIVENESS PERFORMANCE OF UNITED ARAB EMIRATES (UAE)<br />

Since the inclusion of United Arab Emirates (UAE) into the IMD’s World Competitiveness<br />

yearbook in 2011, UAE’s competitiveness ranking has improved by leaps and bounds from 28 th<br />

to 16 th position in 2012 and to the top 8 th position in the <strong>WCY</strong> <strong>2013</strong>. UAE recorded<br />

improvements in all the 4 competitiveness input factors. At sub-factor level, improvements were<br />

recorded in 17 sub-factors while fiscal policy, finance and scientific infrastructure recorded<br />

declines. UAE is the top performer for government efficiency.<br />

UAE’s Competitiveness Ranking in 20 Sub-Factors<br />

World Competitiveness Yearbook<br />

<strong>2013</strong><br />

(n=60)<br />

2012<br />

(n=59)<br />

2011<br />

(n=59)<br />

Overall Scoreboard 8 16 28<br />

Economic Performance 4 11 21<br />

Domestic Economy 8 13 32<br />

International Trade 7 9 9<br />

International Investment 23 32 35<br />

Employment 5 15 27<br />

Prices 3 11 21<br />

Government Efficiency 1 3 4<br />

Public Finance 2 7 5<br />

Fiscal Policy 2 1 1<br />

Institutional Framework 14 17 26<br />

Business Legislation 6 14 24<br />

Societal Framework 8 15 36<br />

Business Efficiency 9 19 46<br />

Productivity & Efficiency 10 15 56<br />

Labour Market 10 31 42<br />

Finance 31 30 42<br />

Management Practices 6 21 46<br />

Attitudes and Values 1 8 34<br />

Infrastructure 34 37 39<br />

Basic Infrastructure 13 19 23<br />

Technological Infrastructure 24 <strong>29</strong> <strong>29</strong><br />

Scientific Infrastructure 48 41 53<br />

Health and Environment 34 40 38<br />

Education 41 43 44<br />

n = number of economies<br />

Among strategies adopted by the government to<br />

enhance competitiveness are:<br />

· Devising effective regulations and integrated<br />

policies;<br />

· Delivering high-quality, customer-centric, and<br />

integrated government services;<br />

· Investment in human resource capabilities;<br />

· Enhance transparency and accountable<br />

governance mechanisms;<br />

· Scaling up innovations;<br />

· Measurement and analysis<br />

39


THE METHODOLOGY OF COMPUTING THE RANKINGS OF<br />

<strong>WCY</strong> <strong>2013</strong><br />

Appendix 7<br />

Below are the steps in computing the rankings for World Competitiveness:<br />

· The national environment is divided into four main factors namely, Economic Performance,<br />

Government Efficiency, Business Efficiency and Infrastructure. In turn, each of these factors<br />

is divided into 5 sub-factors which highlight every facet of the areas analysed. Altogether,<br />

the <strong>WCY</strong> features 20 such sub-factors.<br />

· These 20 sub-factors comprise of 246 criteria and 87 background information, each of the<br />

333 criteria is ranked, although each sub-factor does not necessarily have the same number<br />

of criteria (for example, it takes more criteria to assess Education than to evaluate Prices).<br />

Each sub-factor, independently of the number of criteria it contains, has the same weight in<br />

the overall consolidation of results that is 5% (20x5 =100).<br />

· Criteria can be hard data, which analyse competitiveness as it can be measured (e.g. GDP)<br />

or soft data, which analyse competitiveness as it can be perceived (e.g. Availability of competent<br />

managers). Hard data criteria represent a weight of 2/3 in the overall ranking whereas<br />

the survey data represent a weight of 1/3. In addition, some criteria are for background<br />

information only, which means that they are not used in calculating the overall competitiveness<br />

ranking (e.g. Population under 20).<br />

· Finally, aggregating the results of the 20 sub-factors makes the total consolidation, which<br />

leads to the overall ranking of the <strong>WCY</strong>.<br />

FOR FURTHER INFORMATION, PLEASE VISIT www.imd.org/wcy13<br />

40


Appendix 8<br />

IMD RELEASES ITS 25 TH ANNIVERSARY WORLD COMPETITIVENESS RANKINGS<br />

Competitiveness and austerity: the divorce?<br />

The good performance of the US (1), Switzerland (2), Hong Kong (3), Sweden (4) and even<br />

Japan (24) – while the euro zone stagnates – calls austerity into question<br />

(Plus a historical perspective on winners and losers over time)<br />

LAUSANNE, SWITZERLAND (May 30, <strong>2013</strong>): IMD, a top-ranked global business school based<br />

in Switzerland, today announced its 25 th anniversary world competitiveness rankings. In<br />

addition to ranking 60 economies for <strong>2013</strong>, the IMD World Competitiveness Center also looks at<br />

the winners and losers since its creation.<br />

Professor Stephane Garelli, director of the IMD World Competitiveness Center, said: "While the<br />

euro zone remains stalled, the robust comeback of the US to the top of the competitiveness<br />

rankings, and better news from Japan, have revived the austerity debate. Structural reforms are<br />

unavoidable, but growth remains a prerequisite for competitiveness. In addition, the harshness<br />

of austerity measures too often antagonizes the population. In the end, countries need to<br />

preserve social cohesion to deliver prosperity."<br />

Highlights of the <strong>2013</strong> ranking<br />

The US has regained the No. 1 spot in <strong>2013</strong>, thanks to a rebounding financial sector, an<br />

abundance of technological innovation and successful companies. China (21) and Japan (24)<br />

are also increasing their competitiveness. In the case of Japan, Abenomics seems to be having<br />

an initial impact on the dynamism of the economy.<br />

In Europe, the most competitive nations include Switzerland (2), Sweden (4) and Germany<br />

(9), whose success relies upon export-oriented manufacturing, diversified economies, strong<br />

small and medium enterprises (SMEs) and fiscal discipline. Like last year, the rest of Europe is<br />

heavily constrained by austerity programs that are delaying recovery and calling into question<br />

the timeliness of the measures proposed.<br />

The BRICS economies have enjoyed mixed fortunes. China (21) and Russia (42) rose in the<br />

rankings, while India (40), Brazil (51) and South Africa (53) all fell. Emerging economies in<br />

general remain highly dependent on the global economic recovery, which seems to be delayed.<br />

In Latin America, Mexico (32) has seen a small revival in its competitiveness that now needs to<br />

be confirmed over time and by the continuous implementation of structural reforms.<br />

A 25 th anniversary perspective on World Competitiveness<br />

In 1989, the IMD World Competitiveness Yearbook had a split ranking. The most competitive<br />

advanced economies were Japan, Switzerland and the Netherlands. Among emerging<br />

markets, Singapore, Hong Kong and Malaysia led the way. Globalization had not yet kicked<br />

in. China, Russia and several other nations (some of which did not exist back then) were not<br />

included.<br />

41


By 1997, the world of competitiveness had become increasingly global, and IMD first produced<br />

a unified ranking including both advanced and emerging economies. Here are the countries that<br />

have risen and fallen the most since then:<br />

Winners since 1997 (+ 5 or more ranks):<br />

China, Germany, Israel, Korea, Mexico, Poland,<br />

Sweden, Switzerland, Taiwan.<br />

Losers since 1997 (- 5 or more ranks)<br />

Argenna, Brazil, Chile, Finland, France, Greece,<br />

Hungary, Iceland, Ireland, Italy, Japan, Luxembourg,<br />

Netherlands, New Zealand, Philippines, Portugal,<br />

South Africa, Spain, United Kingdom and<br />

Venezuela.<br />

Winners:<br />

The US, Singapore and Canada, although not in the “winners” list, have very stable and<br />

enduring competitiveness models that rely on long-term advantages such as technology,<br />

education and advanced infrastructure. In Europe, Switzerland, Sweden and Germany share<br />

the same recipe for success: exports, manufacturing, diversification, competitive SMEs and<br />

budget discipline. In Asia, China’s success has had a pull effect on the region’s<br />

competitiveness, prompting many Asian economies to redirect their exports from the US and<br />

Europe to other emerging markets. Mexico and Poland are seeing a revival in competitiveness<br />

that will need to be confirmed over time.<br />

Losers:<br />

Europe has lost ground and accounts for more than half of the “losers” since 1997. The UK and<br />

France in particular are losing their dominant position and competitive clout, while The<br />

Netherlands, Luxembourg and Finland need to adapt their competitiveness models to a<br />

changing environment. In Southern Europe Italy, Spain, Portugal and Greece are all lagging<br />

behind. They did not diversify their industry enough or control public spending and are now<br />

facing austerity programs. The fate of Ireland and Iceland shows that competitiveness needs to<br />

be sustainable, and that uncontrolled fast expansion can also lead to disaster. Latin America<br />

has been disappointing, with larger economies such as Chile, Brazil, Argentina and<br />

Venezuela all losing ground and being challenged by the emerging competitiveness of Asian<br />

nations.<br />

Professor Garelli added: “Generalizations are, however, misleading. True, Europe’s<br />

competitiveness is declining, but Switzerland, Sweden, Germany and Norway are shining<br />

successes. Latin America is disappointing, but there are great global companies all over that<br />

region. Brazil, Russia, India, China and South Africa are immensely different in their<br />

competitiveness strategies and performance, but the BRICS remain lands of opportunities.”<br />

“In the end, the golden rules of competitiveness are simple: manufacture, diversify, export,<br />

invest in infrastructure, educate, support SMEs, enforce fiscal discipline, and above all maintain<br />

social cohesion,” concluded Professor Garelli.<br />

The IMD World Competitiveness Center is a part of IMD<br />

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Appendix 9<br />

The Inter-Agency Planning Group (IAPG) on Competitiveness Data is led by the Malaysia<br />

Productivity Corporation to:<br />

(i) Coordinate and collaborate efforts in ensuring competitiveness data is current and<br />

reflective of the actual situation in Malaysia;<br />

(ii) Provide and validate data required by IMD; and<br />

(ii) Engage with International Data Providers so as to ensure Malaysia’s competitiveness<br />

data is well represented.<br />

The IAPG members from:<br />

Department of Statistics Malaysia (DOSM)<br />

Central Bank of Malaysia (BNM)<br />

Ministry of Finance (MOF)<br />

Bursa Malaysia<br />

Ministry of Education (MOE)<br />

Ministry of Higher Education (MOHE)<br />

Malaysian Communications and Multimedia Commission (MCMC)<br />

Inland Revenue Board of Malaysia (IRB)<br />

Malaysia Science and Technology Information Centre (MASTIC)<br />

Ministry of Domestic Trade, Co-operative and Consumerism (MDTCC)<br />

Energy Commission (ST)<br />

Public Works Department (JKR)<br />

Ministry of Human Resources (MOHR)<br />

Department of Immigration (DOI)<br />

Employees Provident Fund (EPF)<br />

National Water Services Commission (SPAN)<br />

National Property Information Centre (NAPIC)<br />

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For further information on the<br />

World Competitiveness Yearbook <strong>2013</strong><br />

(<strong>WCY</strong> <strong>2013</strong>), please contact:<br />

Global Competitiveness Department (GCD)<br />

Malaysia Productivity Corporation (<strong>MPC</strong>)<br />

A-06-01, Level 6, Block A PJ8<br />

23, Jalan Barat, Seksyen 8<br />

46050 Petaling Jaya,<br />

Selangor Darul Ehsan,<br />

Malaysia.<br />

Tel: 603-7960 0173<br />

Fax: 603-7960 0206<br />

Email: GlobalCompetitiveness@mpc.gov.my<br />

1800 88 1140<br />

www.mpc.gov.my<br />

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