Launching of the
Annual Productivity Report 2009 and the Productivity Award 2009 Presentation
at
Grand Dorsett Hotel, Subang Jaya
11^th May 2010, at 10.00 am


 

Yang Berbahagia Tan Sri Azman Hashim
Chairman, Malaysia Productivity Corporation (MPC)

Board Members of MPC

Yang Berusaha Encik Mohd Razali Hussain
Director General of MPC

Ladies and Gentlemen,

Assalamualaikum, Salam 1 Malaysia
 

I am pleased to be here this morning to launch the Productivity Report 2009 and present the Productivity Awards. The annual productivity report provides essential productivity data and information at the sectoral, national and international levels. This data will enable benchmarking and formulation of plans and strategies to enhance productivity and growth.

This Productivity Report was prepared in consultation with the public and private sectors as well as the academia. Their views and opinions on productivity enhancement and cost rationalisation in the context of the current economic scenario have been incorporated in the report.

The Productivity Awards, on the other hand, give recognition to organisations that have transformed themselves through productivity and innovation initiatives.  The Productivity Report and Awards are two key deliverables of the MPC in striving to raise national productivity levels.

Ladies and Gentlemen,

Towards the end of 2008, the world faced a crisis of global proportions. In 2009, almost all countries registered contractions in GDP and productivity growths. Among OECD countries, Germany was the most affected country with productivity contraction of 4.8%; Finland by 4.0%; Japan and the United Kingdom by 3.6% and 2.7% respectively.  Malaysia saw productivity contraction of 1.8% to a productivity level of RM48,614.  Among our most affected industries were resource-based manufacturing such as chemicals and chemical products, food and beverages and rubber products. However, non-resource-based industries such as medical devices and textiles performed well with productivity growths of 12.4% and 2.6%. 

Our small and medium-sized manufacturing industries fared relatively well despite the difficult economic climate. In 2009, SMI productivity was marginally lower than the national average at RM48,428 . Yet we saw modest productivity growth in several industries including food products and beverages (1.7%), textiles (1.1 %) and plastic products (1.0 %) and wearing apparel (0.8 %).

The construction and services sectors also recorded commendable productivity growth of 5.0% and 1.7% respectively. The construction sector’s productivity was driven by intensified utilisation of Integrated Building Systems (IBS) and the implementation of projects under the government’s stimulus packages and the Ninth Malaysia Plan.  As for the services, the finance and transport sectors saw highest productivity growth rates of 3.3% and 2.4% respectively. The financial sector benefited from the liberalisation of 27 services sub-sectors while the transport sector gained from an increase in air transport volume. 

Against the backdrop of a challenging external environment, the Malaysian economy showed its resilience by recovering strongly by the fourth quarter of 2009. GDP growth for the quarter was 4.5% accompanied by productivity growth of 2.3%. This performance was driven by strong productivity growth in the manufacturing and services sectors.  

This year, we expect productivity levels to rise by between 3.5% to 4.0%. To achieve this, we require concerted efforts by all sectors of the economy. This is particularly pertinent in the context of the recently released New Economic Model. Malaysia’s aspiration is to become an advanced economy by 2020. This can only be possible if national productivity levels rise accordingly. 

Ladies and Gentlemen,

Allow me to analyse our productivity achievements against that of selected Asian and OECD countries. At present  Malaysia’s productivity level of USD12,793 is the highest in emerging Asia. Thailand has a productivity level about one-third of Malaysia’s level or USD4,596; China stands at USD3,734; Philippines at USD3,192; Indonesia at USD2,471; and  India at USD2,051.  However, our rate of productivity growth has lagged behind many of these countries. For the period between 2006 and 2009, Malaysia’s productivity growth was 2.2% compared to 2.4% during the 8MP years.  Over the same period, China registered productivity growth of 8.6%, India (4.5%), Indonesia (3.8%), and Thailand (3.0%).

From this data, it is evident that we have to double our effort to match the achievements of neighbouring countries. No doubt, they start from a lower base but if we allow our productivity growth rates to decline, it would be a matter of time before we are overtaken by others. Furthermore, our efforts must be in line with our aspirations. We must benchmark ourselves against the OECD countries if we are to achieve our goal of becoming a high income nation. Consider the productivity levels of some of the newer OECD countries. South Korea’s productivity level is 2.5x Malaysia’s level at USD32,059,  Taiwan’s level is USD39,218 while Ireland’s is USD65,767.

Ladies and Gentlemen,

To raise productivity levels, innovation must be part and parcel of our growth strategy. We don’t have to reinvent the wheel as we can learn from the experience of some of the most innovative countries. Switzerland is ranked by the Institute of Management Development (IMD) as the most competitive economies in the world.  Switzerland’s scientific research institutions are among the world’s best. There exists strong collaboration between the academic and business sectors which ensures that to channel research into commercialisation of products and processes. This is reinforced by strong intellectual property rights protection.  Switzerland’s public institutions are rated among the most effective and transparent in the world, ensuring a level playing field and enhancing business confidence.  Closer to home, Singapore is the highest ranked economy in Asia.  Singapore’s competitiveness is propped up by a strong focus on education, providing highly skilled individuals to the workforce.

From these examples, we can derive the key determinants to long term productivity growth:  we must invest in high quality physical capital and world class infrastructure; we must produce and retain highly skilled human capital and we must have a high rate of innovation and technology utilisation. Every Malaysian must take it as his or her responsibility to strive towards greater productivity, creativity and innovation.

Ladies and Gentlemen,

Productivity of the public sector is equally important to generate economic growth.  In 2009, productivity of the public sector grew by 1.1% to a level of RM32,440.  Recent developments to enhance the efficiency of the public sector include the implementation of benchmarking and key performance indicators for assessing the performance of public sector employees.  There is still a lot of room to optimise public sector resources, in particular the sector’s 1.2 million employees.  The challenge is to ensure a service-oriented workforce equipped with appropriate skills, professionalism and innovative mindset.

On our part, the MPC has been serving the industry for more than 40 years through training programmes, systems development, development of productivity databases and benchmarking.  Over the years, MPC’s scope has expanded to include area specific partnerships with the Institute of Management Development (IMD) and the World Economic Forum (WEF). However, we realise that much as we exhort others to innovate, we too need to ensure that we remain responsive to industry needs. Thus, we have embarked on an organisational restructuring exercise to ensure more customer-focused delivery and efficiency. Productivity enhancement must be an on-going process, not least at the MPC.

Finally, I would like to congratulate all winners of the Productivity Awards.  This year, we saw entries by 27 organisations, including 14 SMEs. The award winners demonstrated excellence in quantitative and qualitative productivity enhancements. I believe the experience has been invaluable for all participants and I welcome others to participate in future challenges.

I conclude by urging all Malaysians to support us in our endeavours to raise our economy to the next level so that we can all enjoy the fruits of a thriving nation.

Thank you.