Yang Berbahagia Tan Sri Azman Hashim
Chairman, Malaysia Productivity Corporation

Yang Berbahagia Dato’ Dr. Rebecca Fatima Sta Maria
Secretary-General, Ministry of International Trade and Industry,

Yang Berusaha Encik Mohd. Razali Hussain
Director-General, Malaysia Productivity Corporation.

Board Members of MPC,

Your Excellencies,

Ladies and Gentlemen,
Assalamualaikum and Good Morning. Salam 1 Malaysia

I am pleased to be here to launch the Productivity Report 2010/2011 and present the Productivity Awards to the 2010 winners. These two events today highlight the role of the Malaysia Productivity Corporation (MPC) in enhancing the country’s productivity and competitiveness towards achieving a high income economy by 2020.  The annual productivity report provides essential productivity data, benchmarks and best practices at the sectoral, national and international levels which will enable industries to formulate plans and strategies for further growth. 

This report is timely as it incorporates analysis and performance pertaining to innovation, productivity and competitiveness as encapsulated in the various national plans and programmes.  This report is also a result of successful collaborations and true synergy between MPC and partners from industry associations, academia, research institutions and public agencies in measuring and reporting Malaysia’s productivity performance. 

Ladies and Gentlemen,

Productivity is essential to transform Malaysia from a middle economy, driven by producing products and services efficiently, investments in infrastructure, business friendly government, strong investment incentives and focusing on skills development towards an advanced innovative economy characterized by high innovation, high productivity and high income.  This aspiration is indeed possible and I am proud to announce that Malaysia registered a productivity growth of 5.8% in 2010, higher than the projected 4.6% annual productivity growth.  While this productivity growth is contributed mainly by the Manufacturing sector which registered 9.4% growth and the Services Sector, 4.7%, the productivity performance is broad based across all economic sectors.

I would therefore like to congratulate all of you for this performance as this unprecedented productivity growth is attributable to the efforts of everyone; the industries, the government, the academia as well as the non-governmental organisations.  Productivity is indeed everyone’s business and collaboratively we can achieve greater heights in productivity enhancement.  This high productivity growth should be the catalyst for us to continue to forge ahead to ensure higher productivity levels.  While Malaysia’s productivity growth of 5.8% in 2010 is the highest among OECD countries and is higher than the OECD countries’ average of 2.8%,  Malaysia’s productivity level at USD13,577 needs to be boosted as productivity levels of these developed economies are between four to six times higher than Malaysia. 

While developed economies such as Japan, USA and United Kingdom continue to register high productivity levels of USD80,307; USD80,284 and USD59,276 respectively and lower growth between 1.8% to 4.1%, due to their matured economies; productivity in developing economies such as China, India and Thailand grew at 10%, 6.7% and 5.9% in line with their economic expansion and dynamism. Productivity levels in these countries range from USD2,736 in India to more than USD4,000 in China and Thailand.  Though Malaysia’s productivity level of USD13,577 is highest among these developing Asian economies, we cannot afford to be complacent as with high productivity growth, the ability to “catch up” with us is very real. 

In line with this, I would like to quote our Honorable Prime Minister who recently said,  “We must change in the next few years to raise productivity by 100%”.  Let us all rise up to this challenge and intensify our efforts to “unleash productivity-led growth and innovation” as spelt out in the Tenth Malaysia Plan.  To be able to achieve this and usher Malaysia into a new phase of economic development, it will be necessary to move away from the capital-driven growth towards productivity-driven growth by pushing entrepreneurship, innovation and creativity in developing indigenous technology, and laying the foundation for commercializing  scientific advances especially with the private sector and private investment as the key engines of growth. 

Ladies and Gentlemen,

Malaysia with its strategic location and business friendly environment will continue to be an attractive investment destination for FDIs.  However, the inflow of FDIs would be towards the production of high value added products and services to remain competitive.  Besides FDIs, Domestic Direct Investment (DDI) is also one of the major impetus towards economic expansion. I would like to quote an example of Taiwan and Sweden where, the tripartite partnership between local enterprises, the Government and the academia has enabled the establishment of a  strong domestic market in terms of product and service innovation, R&D commercialisation and branding to cater  the increase in demand from both the domestic and export markets.  It is my hope that our local SMEs  take this opportunity to benchmark themselves against the best practices of our Asian counterparts in enhancing  productivity and competitiveness. 

Ladies and Gentlemen,

As I mentioned earlier,  Malaysia’s productivity grew by 5.8% to RM51,591 in 2010 driven mainly by the manufacturing (9.4%) and services sectors (4.7%).  I am happy that the manufacturing sector which continues to be the backbone of our economy, recorded a much higher growth of 9.4% than the national growth of 5.8%.  I believe that the Manufacturing Sector had implemented many innovation and productivity initiatives such as human capabilities development, investments in technology, innovative marketing strategies and branding to ensure this growth and this is reflected in the improvements in the industrial production and strong demand from the domestic as well as export markets. 

Malaysia has become a major exporter of consumer and industrial products and is poised to make the next technological leap to more innovative and higher value added, cutting edge technology industries.  I give you the assurance that the Government through its Government and Economic Transformation programmes will continue to facilitate the private sector initiatives.

Ladies and Gentlemen,

The expansion of the services sector is crucial for the country’s development and is the largest contributor to GDP.  In 2010, productivity of the services sector grew by 4.7% contributed mainly by communication services (6.6%), followed by real estate and business services (5.9%), transport and storage services (5.7%) and utilities (5.6%). These sectors had invested heavily in physical capital, human capital development and embracing rapid changing technologies which are crucial to productivity enhancement.   

The impressive growth in communication services was attributed to the higher demands in computer and telecommunication services from other sectors such as Islamic finance and distance learning education. This was further facilitated by Government initiatives in infrastructure networks and broadband development, grants and tax exemptions. 

The favourable performance of transport and storage services was supported by the positive growth of economy where export increased by 36.4% and import rose by 45.5%. The improvement in international trade contributed tremendously to the growth of container handling and complemented by improved facilities at local ports, was able to accommodate larger ships and consignments.

The construction sector recorded a productivity growth of 4.6% in 2010.  The implementation of the ETP had boosted the volume of construction projects by 30% to 50% for the next decade and this augurs well for the construction sector. This substantial increase in the volume of high quality construction works is an opportunity for the construction sector to efficiently use technology, manpower, resources and new methods of construction that will lead to a quantum leap in productivity.

The agriculture sector is of utmost importance in terms of  providing rural employment, uplifting rural incomes and ensuring national food security. In 2010, the sector recorded a productivity growth of 1.8%, partly attributed to the higher production of major commodities such as crude palm oil (CPO), coupled with the favourable performance of the non-plantation sub-sector comprising fishing, livestock and other food crops.  Several measures were also undertaken to modernize and commercialise the agriculture sector which include the implementation of High Impact projects such as the Aquaculture Industrial Zones and Permanent Food Production Parks.

To achieve Vision 2020 through the 1Malaysia philosophy of “People First, Performance Now", the Government launched Government Transformation Programme (GTP) in 2010.  Six National Key Results Areas (NKRAs) were identified under the GTP namely, reducing crime, fighting corruption, improving student outcome, raising living standards of low-income households, improving rural basic infrastructure and improving urban public transport.  In line with this, the Government has intensified initiatives to raise productivity and efficiency of the public sector, leading to a productivity growth of 3.2%. 

Ladies and Gentlemen,

Going forward, productivity has to continue to feature prominently in Malaysia’s economic development to ensure sustainable  growth  and better quality of life for all Malaysians.  It is therefore imperative that everyone come on board to contribute to this national effort especially at the firm level.  To ensure that productivity enhancement is an on-going process, MPC confers the Productivity Award on an annual basis to firms that has achieved organizational excellence in productivity management. 

The Productivity Awards give recognition to organizations that have transformed themselves through value creation and innovation.  Firms are assessed based on both  quantitative and qualitative criteria to ensure that firm level productivity performance is gauged both in terms of factual productivity data and ratios as well as the successful implementation of productivity initiatives that generate higher value creation. 
A total of 33 organizations had participated in the Productivity Award in 2010 and the  productivity best practices of the winners will be disseminated for others to compare and emulate.  I strongly encourage you to come on board with MPC in this year’s  Productivity Award and I would like to see more companies participating in this award in the near future.  I can assure you that MPC will continuously provide the assistance and guidance necessary to enable you to participate in this award and at the same time achieve higher levels of productivity. 

I would like to take this opportunity to congratulate all the Productivity Award Winners for their dedication in ensuring productivity excellence in their respective organisations and to all who have participated in this award, I believe that you are in your own way winners too as the experience in the Productivity Award would have provided you with invaluable insights into opportunities for improvement which will augur well in your productivity journey. 

Ladies and Gentlemen,

Besides the launching of the Productivity Report 2010/2011 and announcement of Productivity Award winners, we will also be witnessing the signing of Memorandum of Understanding (MoU) between the Department of Statistics Malaysia (DOSM) and MPC.  This is another example of innovation and smart partnership in promoting higher value creation, productivity and competitiveness for the country.  This strategic collaboration is expected to contribute to the formulation of productivity and TFP measures.  I would also like to record my sincere appreciation to all of you for your continuous support and I wish all of you success in your productivity improvement and innovation efforts. 

On this note, I  officially launch  the PRODUCTIVITY REPORT 2010/2011.

Thank you.