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Malaysia 19th most competitive economy

PETALING JAYA: Malaysia’s ranking in the World Competitiveness Yearbook (WCY) 2016 fell to 19th out of 61 economies from 14th spot last year, part of Asia’s general decline in ranking due to the fall in commodity prices, a strong dollar and the deterioration of balance sheets in the private and public sectors.

Malaysia Productivity Corp director-general Datuk Mohd Razali Hussain said despite the decline, Malaysia remains in the top 20 most competitive economies.

“Going forward, the prospect is there in terms of improving competitiveness because commodity prices and the appreciation of the US dollar are two areas why our level has dropped. Most of these indicators are quoted in US dollars,” he told a media briefing after announcing Malaysia’s performance here yesterday.

He said the target is for Malaysia to be ranked in top 10 in all reports by 2020.

“We’re positive with the general awareness about productivity and innovation as well as the three reports that we’ve been tracking (WCY, World Economic Forum Global Competitiveness Report and the World Bank Doing Business). We’ve been making progress,” said Razali.

He added that the 1Malaysia Development Bhd (1MDB) controversy revolves around perception, which can be affected not just by 1MDB but also other issues.

“Whatever issues that transpired in 2015 affect the perception of the respondents. We should not just think of 1MDB being the prime factor for all these perceptions. Apart from 1MDB, the respondents also have the perception that the exchange rate does not support the competitiveness of enterprises,” said Razali.

WCY 2016 is based on an analysis of over 340 criteria derived from economic performance, government efficiency, business efficiency and infrastructure. It is released by the Institute for Management Development, Lausanne, Switzerland.

Overall, aside from China, Hong Kong and Singapore, Asia’s competitiveness has declined markedly since the publication of last year’s ranking. Malaysia, at 19th position, was overtaken by Ireland, Netherlands, New Zealand, Australia and the UK.

The ranking makes clear that current economic growth is by no means a guarantee of future competitiveness, and that the common pattern among all of the countries in the top 20 is focused on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.

Among 31 countries with gross domestic product per capital of less than US$20,000 (RM82,000), Malaysia remained in first position while in the category of populations over 20 million, Malaysia is ranked seventh among 28 countries. Within the Asia Pacific, Malaysia is ranked sixth and remained second in Asean.

Razali said the most important area for improvement is related to the Economic Transformation Programme and the Government Transformation Programme – bureaucracy.

“There needs to be more focus on the bureaucracy side, as it is related to other areas like infrastructure and business efficiency. The work that we’re doing under Pemudah (Special Task Force to Facilitate Business) is showing results but we need to do a lot more,” he added.

In WCY 2016, Malaysia’s ranking in bureaucracy declined to 18th from 7th last year.

Other areas for improvement include adjusted consumer price inflation (absolute values). It rose from 0% to 1.1%, which led to a decline in Malaysia’s ranking to 37th position from third in the previous year. This affected the overall ranking of the indicator on prices to seventh position from third in 2015. Malaysia’s inflation rate for 2015 was at 2.1%.

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