Kuala Lumpur, 8 January 2021 – IDEAS calls for the government to respond to the fall in Malaysia’s ranking in IMD World Competitiveness Ranking 2020, where it has dropped five spots from a 22nd place in 2019 to the 27th place in 2020.
In response, IDEAS CEO, Tricia Yeoh said, “The drop in ranking is significant since the report clearly stated that we are doing worse in infrastructure, government efficiency, and business efficiency. Competitiveness is particularly important because it ensures that productive resources are allocated to their best possible use. The efficient use of resources is the way forward if we want to fully recover from the pandemic. This is, therefore, a concerning decline in Malaysia’s economic environment, and we should leverage the recovery phase that we are undergoing now as an opportunity to strengthen our competitiveness in the long run.”
According to the IMD World Competitiveness Ranking 2020 Malaysia country profile, Malaysia’s worst component relatively is business legislation, ranked at 49th place in the world. “There is a lot of room for improvement when it comes to business legislation. Part of the measurement that IMD uses for business legislation is the involvement of State-Owned Enterprise (SOEs) in the economy. Our multiple studies have concluded that the Malaysian economy is heavily influenced by SOEs or Government-Linked Companies (GLCs). The heavy involvement of GLCs in the economy raises serious questions over competition”, she said.
The level of Malaysia’s competitiveness will be a major factor in ensuring that the economy fully recovers from the 2020 recession. Tricia warned that we should recognise that the pandemic is far from over and there is more work to be done. She said, “If we wish to fully recover from the 2020 recession, it is crucial for us to start thinking about the long-term policy priorities that could improve our competitiveness. For instance, our previous research on regulatory compliance costs showed that some business regulations impose significant costs to Small and Medium Enterprises – with SMEs being some of the hardest hit by the pandemic. Now is the time to reduce their burdens by identifying cumbersome regulations that hamper their ability to operate efficiently.”
Tricia added that improving education policy is also equally important to ensure Malaysia’s competitiveness is on par with first world countries. The IMD World Competitiveness Ranking takes into account the education quality of a country. She added, “There is clear evidence that there is a gap in educational policy in Malaysia, and the problems are particularly stark for certain vulnerable groups. For example, the Orang Asli have a high dropout rate and low academic performance even with existing mitigation policies in place. To address this and other challenges in our education system, we need comprehensive reform to address the underlying causes rather than the symptoms.”
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