The highly-rated World Economic Forum’s (WEF) Global Competitiveness Report 2016-2017 has reduced Malaysia’s ranking drastically by seven places, from 18 out of 140 countries last year, down to 25th place this year. As Trade and Industry Minister Mustapa Mohamed rightly responded - this is “disappointing”.
But to many analysts and keen observers, this drop in competitiveness is not surprising. In fact we could wonder how we were ranked higher than Australia and Ireland and even Israel, in the earlier assessments. Now we ponder as to whether this serious drop in the ranking can turn into a slide?
The least we can do now is to take this drop in competitiveness as a real warning that we have to take heed of very acutely. We cannot afford to simply dismiss this decline in competitiveness casually or even attempt to gloss over it.
What is thus worrisome is the reaction from the director-general of the Malaysian Productivity Corporation, Mohd Razali Hussain. He stated that :Malaysia continues to lead the region despite losing some ground this year, following six years of improvement.” We cannot be cavalier or complacent in the loss of competitiveness, can we?
Instead we should seriously ask ourselves - what went wrong and how and what we can and should do, to prevent any further slide from happening? Any declining trend can be disastrous.
The Competitiveness Report has carefully analysed 12 Pillars for Competitiveness - such as institutions, infrastructure, macro-economic 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 WEF Report has a thorough basis for ranking and rating our competitiveness. We should not therefore downplay its findings as erroneous.
And we declined in eight out of the above 12 Pillars. That is sadly even more disappointing and disconcerting. The areas of decline in competitiveness and where there is a crying need for improvement are the following - judicial independence, business cost of terrorism, business cost of crime and violence as well as organised crime, secondary and tertiary education enrollment, total tax rate female participation in the labour force, etc.
But strangely these issues are not adequately discussed and debated in Parliament as well as the press and in public dialogues.
How come? Are these issues not fundamental to our future well-being, productivity and competitiveness?
Need for Government Report Card on Competitiveness
Arising from this disappointing World Economic Forum Report, the government could introduce a Report Card on Competitiveness, to keep track of our efforts to make improvements in our competitiveness and to improve and even excel. We could develop a whole range and series of Indices and Indicators which will clearly show how well we are doing in comparison to world-wide competitors and not only within our own country.
Recommendations
In order that we learn from our mistakes and to arrest any further decline or slide in our global competitiveness, the government has to explain to the Malaysian public how it plans to improve our competitiveness world-wide? It is encouraging that the international trade minister has frankly stated that - “Hopefully we will help improve our ranking in the coming Report.”
But YB, that ambitious goal is only possible if we -
1. Collaborate more closely and effectively with the private sector.
2. Phase out protectionism.
3. Fight corruption and cronyism more willingly.
4. Avoid state capture by making our institutions much more independent - like the Malaysian Anti-Corruption Commission (MACC), the Election Commission and the Judiciary, etc.
5. Encouraging a more open and free society, with the greater protection of human freedoms and human rights.
6. Revise and reform our economic model to face greater global competition on a sustainable basis for a better future.
All these Pillars and more need to be strengthened to become a more competitive nation which can hold its head high as we used to do more confidently in the past.
This WEF Report could 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 a stronger political will.
We also hope that the Budget 2017 will take into account the findings of the WEC Report on Competitiveness, as well as some of the above ideas and those from others, to make the Budget 2017 really meaningful.
RAMON NAVARATNAM is chairperson of Asli/Centre of Public Policy Studies.
