What should we as a nation do to remain competitive in the face of competition from China and India? First, let us put our own house in order first.

We need a high quality education system for an educated workforce that is easily trainable. We must build the necessary infrastructure to produce an educated workforce not only educated but also creative. We do not want just 'yes men' but people who are of critical mind and creative.

Let's remove barriers that were designed to protect and pamper local businesses and industries. Trade barriers only encourage monopoly pricing of goods with a consequence - economic loss. Pampered businesses become uncompetitive in the global market and they would continue asking for protection until doomsday if we let them. The common people would suffer from high prices and loss of economic benefit.

We should simplify our tax system. A low tax rate for businesses, eg, 20 percent like in Ireland or Hong Kong would encourage business investment. Higher investment rates would have positive flow on the economy.

In most Western countries, the citizens carry the burden of taxes, because their citizens enjoy the benefit of their taxes in the form of efficient governments, defence and education. A high corporate tax is meaningless when multinationals (as most large companies are, even those domiciled in Malaysia) can evade taxes by inflating intercompany invoices. Ever wonder why multinational companies report most of their profits in the country with the lowest tax rate?

Encourage R&D spending. I do not know the rules for R&D in Malaysia, but if companies were allowed to offset their R&D spending in the year it occurs instead of capitalising it and spending it over the life of the project, it would make a difference to their ability to compete in the marketplace.

We should remove barrier to capital movement into and out of the country. Multinational companies that invest in a country would like to know that they can take their investments elsewhere if they need to. The existence of capital barriers is just like a big sign saying 'Don't invest here'. Therefore a free floating the ringgit is desirable.

Transparency in governance and the way we run the government is vital. For goodness sake, set the rules and stick to them. No favouritism and bending of the rules. In this regard, we must treat everyone in the same manner and equally.

There should be transparency and equality in our justice system. Make the rule of law available to everybody with a swift and fair justice system. Reduce backlog in civil and criminal cases. If swift and fair justice is easily available from village level up to the corporate towers, businesses and investors would be assured. We have a good background in following the English legal system.

But please, get rid of repressive laws that were enacted to silence the communists. Laws that deny a group or person a fair trial and justice do not give a good image to the country. Look at Zimbabwe, is that a good example?

Once we have put our house in order, then we can move on and improve our competitiveness. And let's also increase our savings rate to an optimum level. High savings rate would provide capital for business expansion.

Economist Robert Solow calculates that optimal savings rate is about 50 percent of income. We may not be able to achieve that soon, but moving towards this target is desirable given our current inflationary pressures.

And we shouldn't forget to manage our resources carefully - water, air, land and the forests. When pricing resources, due consideration must be given to the needs of future generations, the other species (flora and fauna).

Our recent experience with droughts and the haze bring home the point that even the air we breathe and water for drinking are scarce resources. When giving out licences to extract resources, be it for water, fishery, land or minerals, we must not deplete our environment in the process.

Subsidising and underpricing these resources only encourage wastage. A more effective way would be pricing these goods at market value, but subsidising those who cannot afford them by giving them money to buy these goods.

The same system could be used for petrol and diesel. Sell petrol and diesel at world market prices and give income top-ups directly to the poor straight into their account.

And we must increase our talent pool. Western countries have realised lately that human capital in the form of talented and hard working individuals - is a form of wealth. That's why the US, Canada, Australia and New Zealand are encouraging immigration of people from around the world. These countries set up a points system, whereby the most desirable and demanded skills are allowed in.

We also need to attract talented migrants into the country and revamp our 'state of siege, keep them out' immigration policies. We should encourage diversity, because diversity brings different viewpoint and ideas. This, and all the above, is where our future competitive edge lies.