Booklet WCY 29 Mei 2013 1 - MPC
Booklet WCY 29 Mei 2013 1 - MPC
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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