KUALA LUMPUR: Malaysia was among the Asian economies which dropped in its competitiveness rankings due to the challenging external environment last year.
Malaysia slipped to 24th from 19th position in the latest World Competitiveness Yearbook (WCY) 2017 compiled by The Institute for Management Development (IMD) in Lausanne, Switzerland.
It was ranked as the second most competitive economy within Asean as well as among 32 economies with GDP per capita less than USD20,000.
The assessment on the 63 economies was based on four competitiveness factors – economic performance, government efficiency, business efficiency and infrastructure.
Commenting on the country’s performance, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the challenging environment in 2016 affected the competitiveness of smaller economies, and Malaysia was not spared from this reality.
“The geopolitical uncertainties, China’s economic slowdown and sharp movements in commodity prices have affected sentiment towards Malaysia and partly contributed to the decline in our ranking,” he said, in response to the latest rankings, in a statement. In the area of economic performance, the main weakness was the exchange rate largely due to ringgit volatility and GDP per capita.
“Our strengths are gasoline prices, long-term unemployment and unemployment rate, which signalled the success of our fiscal consolidation efforts and long-term economic policies.”
The consumption tax rate and collected total tax revenue – due to the Goods and Services Tax (GST) – were among the government policies which boosted the competitiveness level where the government efficiency was measured.
For the business efficiency factor which measures the extent to which the national environment encourages enterprises to perform in an innovative, profitable and responsible manner, Malaysia’s strengths are on the use of big data and analytics and the stock market capitalisation.
“Malaysia is one of the few countries which have a structured Big Data Analytics (BDA) roadmap and we need to continuously increase the adoption of BDA across all sectors in the economy.”
In the area of infrastructure which measures the extent to which basic, technological, scientific and human resources meet the needs of business, Malaysia was found to be strong in high-tech exports, investment in telecommunications, and public-private partnerships.
However, the country is still behind in total health expenditure, medical assistance, and renewable energies.
Despite the drop in ranking, among the indicators in which Malaysia has shown significant improvements in terms of value are mobile broadband subscribers, internet bandwidth speed, labour productivity, number of patents, youth unemployment, and cost-of-living index.
Meanwhile in the new, separate Digital Competitiveness Ranking, Malaysia ranks 24 with the top five positions occupied by Singapore, Sweden, US, Finland and Denmark.
Mustapa added that the recently-launched Digital Free Trade Zone (DFTZ), once completed, will position Malaysia among the leading countries in the global e-commerce market.
On the outlook for the rankings, he said Malaysia would need to step up on efforts to improve the investment environment to increase trade, regulatory burden and strengthen its technological capabilities.
The IMD World Competitiveness Centre, a research group at IMD business school, compiles using 261 indicators, which are 143 hard data such as national employment, GDP growth and trade statistics, and 118 data from an Executive Opinion Survey.