THE highly rated World Economic Forum’s Global Competitiveness Report 2016-2017 has reduced Malaysia’s ranking by seven places, from 18 out of 140 countries last year, to 25th place this year. As International Trade and Industry Minister Datuk Seri Mustapa Mohamad rightly responded, this is “disappointing”.
But to many analysts and keen observers, this drop in competitiveness is not surprising. In fact, we should wonder how we were ranked higher than Australia and Ireland, and even Israel, in the earlier assessments.
Now, we ponder as to whether this drop in the ranking can turn into a slide.
The least we can do is to take it as a warning. We cannot afford to dismiss this decline in competitiveness or even attempt to gloss over it. What is worrisome is the reaction of Malaysian Productivity Corporation director-general Datuk Mohd Razali Hussain, who stated that “Malaysia continues to lead the region despite losing some ground this year, following six years of improvement”.
We cannot be cavalier in the loss of competitiveness, can we? Instead, we should seriously ask ourselves what has gone wrong and what we can and should do to prevent any further slide. A declining trend can be disastrous.
The report has analysed 12 pillars for competitiveness, such as institutions, infrastructure, macroeconomic environment, health and primary education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size business sophistication and innovation. So, the WEC Report has a thorough basis for ranking and rating our competitiveness. We should not, therefore, downplay its findings as erroneous.
We declined in eight out of the 12 pillars. That is even more disappointing and disconcerting.
The areas that registered a decline include judicial independence, business cost of terrorism, business cost of crime and violence as well as organised crime, secondary and tertiary education enrolment, total tax rate, and female participation in the labour force.
But, strangely, these issues are not adequately discussed and debated in Parliament, media and public dialogues.
Are these issues not fundamental to our wellbeing, productivity and competitiveness?
As an aftermath of the disappointing WEF Report, the government could introduce a Report Card on Competitiveness to keep track of efforts to make improvements in competitiveness. We can develop a range and series of indices and indicators that will clearly show how well we are doing globally and not only within the country.
To learn from our mistakes and to arrest further decline in global competitiveness, the government has to explain to the public how it plans to improve competitiveness worldwide.
Some of the ways this can be done are:
COLLABORATE closely and effectively with the private sector;
PHASE out protectionism;
FIGHT corruption and cronyism willingly;
AVOID state capture by making institutions more independent;
ENCOURAGE a more open and free society, with greater protection of human freedoms and human rights; and,
REVISE and reform the economic model to face greater global competition on a sustainable basis for a better future.
All these pillars and more need to be strengthened in order for the nation to become more competitive.
The WEF Report may indeed be a blessing in disguise if we take it as a warning to do more to stop the decline in our global competitiveness.
I hope we take heed of this warning and act accordingly with stronger political will.
TAN SRI RAMON NAVARATNAM, Chairman, Centre of Public Policy Studies