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Malaysia: Maintaining economic staying power in Asean
KUALA LUMPUR: With regional competition becoming more intense, Malaysia aims to step up and draw closer to maintaining its position as the most competitive economy in the Asean region after Singapore.
Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed acknowledged that the country has “a lot of catching up” to do with Singapore and its regional peers, given that Malaysia’s growth rate of 4.3% last year was lower than its neighbouring countries.
“Singapore has consistently been ranked in the top-tier of economic-related rankings. To maintain our position as the most competitive economy in Asean after Singapore, we have to buck up and get our act together, ” he said in his keynote address entitled “Current Challenges Facing the Malaysian Economy” at the 2020 Malaysian Banking and Finance high-level meeting and virtual conference.
Notably, in the IMD World Competitiveness Ranking 2020, Malaysia ranked 27th out of 63 countries, declining five notches from the 22nd spot in 2019.
In the WEF Global Competitiveness Index, the country ranked 27th out of 141 countries in 2019 compared to 25th in 2018.
In the World Bank Ease of Doing Business report 2020, Malaysia ranked 12th out of 190 countries, moving up three notches compared to the year earlier.
Meanwhile, Mustapa noted that Malaysia could learn and observe the success factors of Singapore to improve its ranking by having a “stable government, high-quality education, a dedication to meritocracy, business-friendly policies, a focus on innovation, excellent soft and hard infrastructure as well as a focus on high-end manufacturing and finance”.
The underlying issue of competitiveness, which had posed a challenge to the country even before the Covid-19 pandemic, is being addressed by solving red tape and regulatory issues, the mismatch between labour demand and supply, as well as accelerating technology adoption among firms.
“According to the World Bank, businesses in Malaysia need to take 17 days to deal with procedures related to starting a business. This is compared to only 1.5 days in Singapore and Hong Kong and eight days in South Korea. “The low percentage of a skilled workforce and our high reliance on low-skilled foreign workers is contracting the Malaysian economy’s ability to compete effectively.
“Less than a third of our workers are in the skilled category. This has barely improved in the past 10 years, ” cited Mustapa.
Recall that the government had recently announced the MyMudah initiative to assist businesses that have been burdened by red tape and bureaucracy, especially those impacted by Covid-19.
To address the mismatch between labour demand and supply, the government has also upgraded the national employment services portal, MYFutureJobs, which provides job-matching services to job-seekers.
The minister said the government would ramp up its digital agenda by accelerating technology adoption and automation, especially for small and medium enterprises (SMEs) to increase efficiency and productivity, and also to help reduce the reliance on low-skilled workers.
Source: https://www.thestar.com.my/business/business-news/2020/07/24/maintaining-economic-staying-power-in-asean