Competitiveness decline, a warning we should heed

Tan Sri Ramon Navaratnamby Ramon Navaratnam

The highly-rated World Economic Forum`s (WEF) Global Competitiveness Report (GCR) 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 the Minister of Trade and Industry Mustapa Mohamad rightly responded – this is “disappointing”.

But to many analysts and keen observers, this drop in competitiveness is not surprising. In fact, we 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 (MPC) Mohd Razali Hussien. 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 has gone wrong and how and what we can and should do, to prevent any further slide from happening? Any declining trend can be disastrous.

The GCR 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 has a thorough basis for ranking and rating our competitiveness. We should, therefore, not down play 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 competitveness 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 in the media and in public dialogue.

Why is that? Are these issues not fundamental to our future well being, productivity and competitiveness?

Need for Government Report Card on Competitiveness

Arising from this disappointing WEF 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 worldwide competitors and not only within our own country.

In order that we learn from our mistakes and to arrest any further decline or slide in our global competitivess, the Government has to explain to the Malaysian public how it plans to improve our competitiveness worldwide.

It is encouraging that Mustapa 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 more independent, like the Malaysian Anti-Corruption Commission (MACC), the Election Commission (EC) and the Judiciary, etc.,
5. Encourage a more open and free society, with greater protection of human freedom 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 stronger political will.

I also hope that Budget 2017 will take into account the findings of the WEF Report on Competitiveness, as well as some of the above ideas and those from others, to make Budget 2017 really meaningful.

Tan Sri Ramon Navaratnam is the Chairman, Asli Centre for Public Policy Studies

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Malaysia down seven spots in global competitiveness