In his two-hour budget speech on Friday, Mahathir did stress that “the nation needs to increase its competitiveness and productivity to become a global player in the international marketplace” in the light of greater challenges of a borderless world, but this is nothing new as it has been an annual refrain of every budget speech going back to the past two decades he had been Prime Minister.
What is new and should be the focus of national debate and concern is the sharp and unchecked fall in Malaysia’s competitiveness in the past few years, and the 2002 Budget was rather remiss in not publicly acknowledging this serious phenomenon and to devise an urgent strategy to enhance and restore Malaysia’s competitiveness.
The government has completely ignored the Global Competitiveness Report 2001, where Malaysia’s ranking among 75 countries fell by another five places in the past year to 30th position as compared to 25th place in 2000 after being in the 16th position in 1999 - or an alarming plunge of 14 places in three years!
Malaysia’s competitiveness not only continues to lag behind Singapore (4th placing in 2001 Global Competitiveness Report), Taiwan (7th), Hong Kong (13th), Japan (21st), but has fallen behind at least five countries, namely South Korea (23rd in 2001 and 29th in 2000), Spain (22nd in 2001 and 27th in 2000), Italy (26th in 2001 and 30th in 2000), Chile (27th in 2001 and 28th in 2000) and Hungary (28th in 2001 and 26th in 2000).
The Global Competitiveness Report 2001, prepared by Harvard University Professors Jeffrey Sachs and Michael Porter and the World Economic Forum, combines existing economic data of about 75 countries with the results of a survey of 4,600 business executives about economic factors for which there is no reliable data - efficiency of government institutions, the strength of local supplier networks and the nature of competitiveness practices.
Malaysia’s sharp decline in international competitiveness in the recent years has been mirrored in a rival survey in April, namely the World Competitiveness Yearbook (WCY) 2001 prepared by the Swiss-based business school International Institute for Management Develoment (IMD) of Lausanne where Malaysia’s ranking fell four places from 25th in 2000 to the 29th spot or a sharp decline of 12 places in five years from 1997 to 2001.
The WCY competitiveness ranking for Malaysia in the past five years
were as follows:
1997 - 17
1998 - 20
1999 - 27
2000 - 25
2001 - 29
The precipitous fall of the Malaysian competitiveness ranking whether in the annual World Competitiveness Yearbook or Global Competitivenss Report serves as an international benchmark of the unreadiness of the Malaysian economy to face the challenges of globalisation, liberalisation and information and communications technology (ICT) and an adverse report card on the Seventh Malaysia Plan and the Second Outline Perspective Plan as well as on the economic management and leadership of the government.
When releasing the WCY scoreboard in April this year, the Director
of the IMD World Competitiveness Project, Professor Stephane Garelli said
that factors holding down Malaysia’s competitiveness were “concerns”
about the government’s economic policies and the imprisonment of former
Minister, Datuk Seri Anwar Ibrahim as well as worries over the eventual change in government leadership.
The Global Competitiveness Report 2001 survey was mostly completed before the September 11 terrorist attacks on the United States, which according to preliminary United Nations estimates, will knock US$350 billion out of the RM35 trillion world economy, or trim world growth this year by a full percentage point to 1.4 per cent from a previously forecast 2.4 per cent and accelerate the world economy’s journey into recession.
Malaysia’s competitiveness has further deteriorated since the September 11 terrorist attacks, especially with international media reports giving the impression that Malaysia is a nest-bed of Islamic militancy and terrorism, such as arrests of Kumpulan Militant Malaysia (KMM) members both before and after September 11; the statement by US Secretary of State Colin Powell that Osama bin Laden and the al Qaeda network had been bolstering Islamic insurgencies in Malaysia, Indonesia and the Philippines; the New York Times report that United States would conduct overt and covert operations in Malaysia against al-Qaeda cells in these countries ; the declaration by the Prime Minister that Malaysia is an Islamic state; PAS’ announcement of jihad over US airstrikes in Afghanistan and the burning of the American flag; and the round-the-clock CNN report that Malaysia has become a hub of “bio-terrorism” as a result of the first case of international transmission of the deadly anthrax bacteria by mail from Malaysia to the Microsoft office in Reno, Nevada although it had subsequently been proved to be baseless.
The time has come for the government to bite the bullet, stop glossing over the economic crisis of competitiveness faced by Malaysia as reflected by the 14-place plunge in the Global Competitiveness Report 2001 in three years or the 12-place plunge in the World Competitiveness Yearbook in five years, and put in place a National Competitiveness Strategy to regain Malaysia’s international competitive edge in the increasingly more difficult global environment.
A centrepiece of the National Competitiveness Strategy should be the establishment of a National Competitiveness Council entrusted with the challenge to restore and enhance Malaysia’s international competitiveness and to devise strategies to be adopted by the authorities and by the private sector to enhance competitiveness.
The National Competitivenss Council should be required to publish an Annual Competitiveness Report and a Competitiveness Challenge Report to report to the nation on key competitiveness issues for the Malaysian economy together with recommendations on policy actions required to restore and enhance Malaysia’s international competitiveness.