2015 was significant for Malaysia as it was the final year of the 10th Malaysia Plan (10MP: 2011-2015). Productivity and innovation have been identified in the Plan as the important factors for economic growth. The global economic challenges have made productivity growth and innovation as their keys to ensure the Nation’s prosperity and people’s well-being. The approach in enhancing productivity of the country has targeted public sector, industries and enterprises to come together in strategic and innovative collaboration to tackle mainly on implementation issues. MPC will continue its role in facilitating the agenda of unlocking the potential of productivity as laid out in the 11th Malaysia Plan (11MP: 2016-2020). The forthcoming Malaysia Productivity Blueprint will provide guided implementation and accelerate productivity improvements at national, industry and enterprise levels.
Elevating Malaysia’s Competitiveness to a Higher Level
Competitiveness has been defined as the goal of institutions, policies and factors in determining the level of productivity of a country. The level of productivity, in turn sets the level of prosperity that can be earned by an economy. Based on world competitiveness reports, Malaysia in 2015 had advanced by two positions to become the 18th most competitive economy in the world out of 140 economies in the Global Competitiveness Report (GCR) 2015-2016 (GCR 2014-2015: 20/144), published by the World Economic Forum (WEF). Meanwhile, the World Competitiveness Yearbook (WCY) 2015 by International Institute for Management Development (IMD) had recognized Malaysia as the 14th most competitive economy among 61 economies (WCY 2014: 12/60).
The competitiveness study at state levels entered its second edition with the publication of Malaysia Competitiveness Report (MCR) 2014-2015. This study enables State Governments to identify their respective strengths and opportunities for improvement as well as becoming a source of reference for stakeholders to develop strategy towards economic competitiveness and prosperity.
Leading Review of Business Regulations
Advocating for Good Regulatory Practice (GRP) supports Malaysia’s broader public governance reforms that encourage stronger evidence-based decision making, more inclusive and user-centred delivery as well as greater coordination inside of Government. During the 10MP, MPC was given the mandate to lead a comprehensive review pertaining to business regulations and to implement improvement processes and procedures towards greater productivity and competitiveness with emphasis on the National Key Economic Area (NKEA).
Studies using the Reducing Unnecessary Regulatory Burden (RURB) methodology and framework have yielded the intended results of total compliance cost savings of RM4 million in 2015. In addition, MPC had received a total of 54 proposals for review of regulations from ministries and agencies where 28 of these proposals were identified to go through the Regulatory Impact Analysis (RIA) process. The Modernising Business Licencing programme was another strategic initiative to increase efficiency of the public delivery system and ease of doing business towards providing a more conducive and competitive business environment in the country. The initiative was conducted and monitored by MPC as part of a national project that integrates registration and licensing. The outcome of this project led to the publication of Licensing Standard Manual which had been proposed for implementation by all local authorities in the country.
Learning Through Sharing
Knowledge on productivity is deemed to be an important input towards achieving mission, vision and objectives of MPC. In 2015, six productivity knowledge research and benchmarking analysis in the form of industry studies were produced. In addition, 10 series of Competitiveness Champion Programme were held throughout the country to disseminate information related to the country’s competitiveness performance, improvement initiatives undertaken by the Government as well as current economic development and challenges.
Information on best practices were sourced from visits to benchmark organisations and documented for industry reference. In 2015, a total of 33 articles were published as best practices extracted from the implementation of Lean Management and Innovative and Creative Circle (ICC) projects. Similar sharings of best practices were also carried out through other platforms such as Business Excellence CEO Forum, Team Excellence Convention and Lean Creanova.
The National Oversight Productivity Council (NOPC) was established under the National SME Development Plan in 2015, with MPC as the Secretariat to monitor projects under the four strategic partnership models by various implementing agencies and to measure their impact on productivity using the Productivity Gain Measurement (PGM) tool. In general, the impact of these intervention projects is measured in terms of cost reduction through elimination of wastage, increase in total production as well as increase in sales and profit. PGM also identifies further opportunities for improvement and best-in-class companies on the implementation of productivity and innovation initiatives. The Council is also to ensure the benefits from these projects will have an impact on productivity at sectoral and national levels.
Until the end of December 2015, a total of 298 projects were successfully matched through the Public-Private Research Network (PPRN), 150 organisations were audited by SIRIM-Fraunhofer Partnership and 30 projects had been duly completed through AIM-Steinbeis Malaysia Foundation. The fourth platform, PlatCOM Ventures had accepted 37 organisations, 23 intellectual property transfers which led to the commercialization of two innovations.
Organisational Assessment and Performance Excellence
Organisational performance excellence is measured using several principle-based tools such as Malaysia Business Excellence Framework (MBEF), Quality Environment (QE) and Lean Management. In 2015, MPC had organised 12 business excellence capacity building courses for practitioners, assessors and consultants involving 276 participants from public and private sectors. Linked closely with the capacity building initiative, a total of 64 organisations have used MBEF as the assessment tool to evaluate their respective performance and to identify opportunities for improvement towards organisational sustainability. At the same time, a record of 656 organisations had been certified with QE while 7 public universities were audited on behalf of the Ministry of Higher Education to evaluate their readiness to be accorded with autonomy status.
At the same time, MPC continues to assess the achievement of innovation projects by various organisations through presentation at the National Team Excellence Convention during Annual Productivity and Innovation Conference and Exposition (APIC) 2015. A total of 218 circles from 158 organisations took part in the national convention and a total cost savings of RM195 million was recorded. Further to that, MPC had also coordinated for the national top performance teams to participate in several international conventions in 2015. At the International Convention on Quality Control Circles (ICQCC) in Gyeongnam, Korea, out of 33 teams from Malaysia, 13 were awarded gold, 12 silver and 8 bronze. And, at the International Exposition on Team Excellence (IETEX) in Singapore, out of 15 teams representing Malaysia, 6 teams were awarded 3 stars and 9 teams were awarded 2 stars. Among the teams that received the 3 stars awards, two were presented with platinum and gold Top Teams Awards. In addition, 3 teams were accepted to present their projects at the ASQ International Team Excellence Award (ITEA) in Nashville, Tennessee. At the same event, Mr. Azman Shah Mohamed Noor from Sime Darby Berhad was also awarded with the Edwards Medal for his outstanding leadership in the practical use of modern methods of quality control.
System Development and Capacity Building
Enterprise productivity enhancement is executed through framework-based system development and hands-on capacity building programmes. The Enterprise Innovation Intervention Programme (EIIP) is the implementation framework used to steer organisations towards raising their efficiency, knowledge and skills development, system design and strategic implementation for higher productivity, innovation and competitiveness. A total of 108 EIIP programmes were undertaken surpassing the target of 75 programmes set in the beginning of 2015. As for capacity building programmes, a total of 405 courses were conducted, recording a total of 7,601 participants from 830 organisations.
In 2015, MPC had accumulated a total income of RM52,067,990 of which RM38,479,836 from the Federal Government Grants and RM13,588,154 from internal income. Generally, internal income was generated from various core activities such as fees from training and system development, certification, convention, research and rental of hostels and halls. Out of the total amount of grant received from the Federal Government, RM3,310,171 were used for Good Regulatory Practice (GRP) programmes which included Reducing Unnecessary Regulatory Burden (RURB), Modernising Business Licencing and Regulatory Impact Analysis (RIA). MPC’s expenditure in 2015 was RM52,797,688, compared to RM58,169,578 in 2014. The reduction of 9% in the expenditure was due to various budget recalibration measures on our overall activities in compliance with the guidelines issued by the Government.
Strategic Collaboration for Strong Productivity Performance
MPC is involved in public-private sector collaboration in the form of The Special Task Force to Facilitate Business (PEMUDAH) where MPC is the main Secretariat. Collaborations via working groups, task forces and focus groups comprising members from multiple agencies and associations were established to improve Malaysia’s competitiveness and, in particular, ensuring a productive business environment.
PEMUDAH is also tasked to lead the effort to improve Malaysia’s ranking in the World Bank Doing Business Report. In the Doing Business 2016 Report, Malaysia was ranked at 18th out of 189 economies, placing Malaysia among the top 10% economy for ease of doing business. PEMUDAH will continue its collaboration with the World Bank International Finance Corporation (IFC) to study targeted areas which require improvement so as to ensure that Malaysia is enterprise-friendly on doing business.
International collaborations with MPC strategic partners such as International Institute for Management Development (IMD), Organisation for Economic Co-operation and Development (OECD), World Bank and Asian Productivity Organisation (APO) are leveraged upon by MPC personnel and associates for knowledge and skill transfer productivity improvement tools and technique. MPC was selected to host the ASEAN-OECD Good Regulatory Practice (GRP) Conference in March 2015, with the objective of strengthening regional economic integration.
MPC relies heavily on its human resource capabilities and support from associates comprising productivity practitioners, consultants and assessors in ensuring the four objectives of MPC are achieved in tandem with the national aspiration. I would like to thank the MPC Board of Directors, Chairmen and Members of Consultative Panels, Taskforces, MPC management team and all staff for their dedication, commitment and hard work. I would also like to put on record the contribution of all partners collaborating with MPC in the quest for higher productivity throughout 2015. The guidance and support from the Ministry of International Trade and Industry are invaluable and we look forward to serve the interest of all key stakeholders for many years to come.
Tan Sri Azman Hashim
Malaysia Productivity Corporation