Its disheartening to see Malaysia drop from the 22nd spot in IMD World Competitiveness Ranking to 27t between 2019 and 2020, a staggering 5 spots down the order within a year. The repercussions however can be severe if long term policy’s are not in place and more importantly need to be followed through, regardless of the government of the day. IDEAS the non-government organisation has called on the government to respond to the fall immediately before we spiral further downwards.
CEO, Tricia Yeoh said, “The drop in ranking is significant since the report clearly stated that we are doing worse in infrastructure, government efficiency, and business efficiency. Competitiveness is particularly important because it ensures that productive resources are allocated to their best possible use. The efficient use of resources is the way forward if we want to fully recover from the pandemic. This is, therefore, a concerning decline in Malaysia’s economic environment, and we should leverage the recovery phase that we are undergoing now as an opportunity to strengthen our competitiveness in the long run.”
According to the IMD World Competitiveness Ranking 2020 Malaysia country profile, Malaysia’s worst component relatively is business legislation, ranked at 49th place in the world. “There is a lot of room for improvement when it comes to business legislation. Part of the measurement that IMD uses for business legislation is the involvement of State-Owned Enterprise (SOEs) in the economy. Our multiple studies have concluded that the Malaysian economy is heavily influenced by SOEs or Government-Linked Companies (GLCs). The heavy involvement of GLCs in the economy raises serious questions over competition”, she said.
The level of Malaysia’s competitiveness will be a major factor in ensuring that the economy fully recovers from the 2020 recession. Tricia warned that we should recognise that the pandemic is far from over and there is more work to be done. She said, “If we wish to fully recover from the 2020 recession, it is crucial for us to start thinking about the long-term policy priorities that could improve our competitiveness. For instance, our previous research on regulatory compliance costs showed that some business regulations impose significant costs to Small and Medium Enterprises – with SMEs being some of the hardest hit by the pandemic. Now is the time to reduce their burdens by identifying cumbersome regulations that hamper their ability to operate efficiently.”
Tricia added that improving education policy is also equally important to ensure Malaysia’s competitiveness is on par with first world countries. The IMD World Competitiveness Ranking takes into account the education quality of a country.
-Commentary from IDEAS