HIGHLIGHTS - MOSTI · Highlights 3 WEF’s Assessment of ... developed status by 2020. ... (97th),...
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Transcript of HIGHLIGHTS - MOSTI · Highlights 3 WEF’s Assessment of ... developed status by 2020. ... (97th),...
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Highlights 3
WEF’s Assessment of Malaysia’s Competitiveness Performance 4
Country and Regional Rankings 4
Malaysia’s Performance in the 12 Pillars 7
Measuring Competitiveness 9
Institutional Strength 12
World Class Infrastructure to Support Growth 15
Stimulating the Macroeconomic Environment 17
Striving for Quality Health and Primary Education 19
Strengthening Human Capital through Higher Education and Training 22
Promoting Growth and Sustainability through Goods Market Efficiency 24
Optimising Potential through Labour Market Efficiency 26
Financially Resilient 28
Speeding up Connectivity 30
Globalising Market 32
Enhancing Business Sophistication 35
Driving Innovation 37
Evolution of Malaysia’s Competitiveness Performance 39
Meeting Malaysia’s Competitiveness Challenges 40
Appendices
1. Global Competitiveness Index and Rankings 41
2. The Global Competitiveness Index and Rankings - Asia Pacific and ASEAN Countries 45
3. List of Economies at Each Stage of Development 46
4. Characteristics of Top 5 Competitive Economies in Global Competitiveness Report 2014-2015 47
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HIGHLIGHTS
PERFORMANCE OF MALAYSIA IN
THE GLOBAL COMPETITIVENESS REPORT 2014-2015
Malaysia advances 4 positions to be placed among Top 20 most competitive economies
globally.
I. The Global Competitiveness Report 2014-2015, released by the World Economic
Forum (WEF) on 3rd
September 2014, ranked Malaysia 20th out of 144 economies compared
to 24th position out of 148 countries the previous year. Malaysia continues its upward trend
making it among the top 20 most competitive economies for the first time since the current Global
Competitiveness Index (GCI) methodology was introduced in 2006.
II. Malaysia remains the highest ranked among developing Asian economies and
advances nine positions in the institutions pillar. Malaysia is placed second most
competitive economy among 24 countries in the transition stage from an efficiency-driven
to innovation stage of development (Table 1). With an increase in GDP per capita to
US$10,548 in 2013, Malaysia is on track to achieve its aspiration to become a high-income,
knowledge-based economy by the end of the decade. Driven by enhanced competitiveness
performance, Malaysia, ranked 20th, is ahead of developed economies such as Austria (21
st),
Australia (22nd
), France (23rd
), Ireland (25th) and Korea (26
th).
Table 1: Sub-Index Weights and Income Thresholds for Stages of Development
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WEF’s Assessment of Malaysia’s Competitiveness Performance
III. It is highlighted by WEF that Malaysia’s biggest improvement is in the Institutions pillar
advancing by nine positions. It ranks an outstanding 4th in the Financial Market development
pillar, reflecting its efforts to position itself as the leading center of global Islamic finance. It also
ranks 7th in the efficiency of its Goods and Services Market and a Business friendly institutional
framework (29th).
IV. The WEF further asserts that in a region plagued by corruption and red tape, Malaysia
stands out as one of the very few countries that have been relatively successful at tackling these
two issues as part of the economic and government transformation programs. Malaysia ranks an
impressive 4th for the burden of government regulation, and a satisfactory 26
th in the ethics and
corruption component of the index.
V. Further to this, Malaysia ranks 11th for the quality of its transport infrastructure, reflecting
a marked improvement in infrastructure and connectivity which bodes well towards achieving
developed status by 2020. The Malaysian private sector is highly sophisticated, ranked 15th and
innovative, ranked 21st. WEF further emphasises that amid the largely positive assessment, the
government budget deficit (102nd
); the low level of female participation in the workforce (119th);
and the comparatively low technological readiness (60th) are some of Malaysia’s major
competitiveness challenges.
Country and Regional Rankings
VI. The top 10 of the rankings continues to be dominated by
highly advanced western economies and several Asian tigers.
Overall the rankings at the top have remained rather stable. For
the sixth consecutive year, Switzerland leads the top 10, followed
by Singapore, United States, Finland, Germany, Japan, Hong
Kong, Netherlands, United Kingdom and Sweden (Table 2). The
leading economies possess a track record in developing, accessing
and utilising available talent as well as in making investments that
boost innovation. The smart and targeted investments in these countries have been possible due
to the coordinated approach based on strong collaboration between the public and private
sectors.
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Table 2: The Global Competitiveness Index 2014—2015 Top 30 Countries
Country
GCI 2014–2015 (n=144)
GCI 2013-2014 (n=148)
Rank Score Rank Score
Switzerland 1 5.70 1 5.67
Singapore 2 5.65 2 5.61
United States 3 5.54 5 5.48
Finland 4 5.50 3 5.54
Germany 5 5.49 4 5.51
Japan 6 5.47 9 5.40
Hong Kong SAR 7 5.46 7 5.47
Netherlands 8 5.45 8 5.42
United Kingdom 9 5.41 10 5.37
Sweden 10 5.41 6 5.48
Norway 11 5.35 11 5.33
United Arab Emirates 12 5.33 19 5.11
Denmark 13 5.29 15 5.18
Taiwan, China 14 5.25 12 5.29
Canada 15 5.24 14 5.20
Qatar 16 5.24 13 5.24
New Zealand 17 5.20 18 5.11
Belgium 18 5.18 17 5.13
Luxembourg 19 5.17 22 5.09
Malaysia 20 5.16 24 5.03
Austria 21 5.16 16 5.15
Australia 22 5.08 21 5.09
France 23 5.08 23 5.05
Saudi Arabia 24 5.06 20 5.10
Ireland 25 4.98 28 4.92
Korea, Rep. 26 4.96 25 5.01
Israel 27 4.95 27 4.94
People’s Republic of China 28 4.89 29 4.84
Estonia 29 4.71 32 4.65
Iceland 30 4.71 31 4.66
Figure 1: Malaysia and Top 10 Countries
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VII. In the Asia-Pacific region, Malaysia improves to 6th position from 7
th last year after
Singapore, Japan, Hong Kong, Taiwan and New Zealand. Malaysia is ahead of Australia (7th),
Republic of Korea (8th), China (9
th) and India (16
th).
VIII. Among ASEAN countries, Malaysia remains at 2nd position after Singapore and is
ahead of Thailand (3rd
), Indonesia (4th), Philippines (5
th), Vietnam (6
th), Lao PDR (7
th), Cambodia
(8th), and Myanmar (9
th).
Figure 2: Malaysia’s Competitiveness Performance in the Asia-Pacific Region
Figure 3: Malaysia’s Competitiveness Performance among ASEAN Countries
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IX. The five largest Southeast Asian economies (ASEAN-5) all features in the top half of the
rankings with Malaysia advancing four places, Thailand up six, Indonesia four, the Philippines
seven and Vietnam two places.
Malaysia’s Performance in the 12 Pillars
X. Of the 12 pillars, Malaysia records improvements in 7 pillars and achieves top ten position
in 2 pillars namely, Financial Market Development (4th) and Goods Market Efficiency (7
th). These
two pillars record improvements of two and three places respectively. The other pillars that
improved in rankings include:
Institutions advances nine places to 20th from 29
th;
Labour Market improves six places to 19th from 25
th;
Business Sophistication up by five places to15th from 20
th;
Infrastructure gains four places to 25th from 29
th; and
Innovation progresses by four places to 21st from 25
th.
Figure 4: Performance of the 12 Pillars
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XI. Among the contributing factors to the enhanced competitiveness
performance of these pillars include Legal rights index which measures the
extent of protection towards lenders and borrowers (1st), Low inflation rate
(1st), Agricultural policy costs (2
nd), Pay and productivity (2
nd), Ease of
access to loans (2nd
), Venture capital availability (2nd
), Government
procurement of advanced technology products (3rd
), Burden of
Government regulation (4th), Strength of investor protection (4
th), Buyer
sophistication (4th), Local supplier quantity (6
th), Control of international
distribution (7th), Effect of taxation on incentives to work (8
th),
Wastefulness of Government Spending (8th), Prevalence of trade barriers
(9th), Hiring and firing practices (9
th), Country capacity to retain talent (9
th), State of cluster
development (9th), Company spending on R&D (9
th), Efficacy of corporate boards (10
th), Effect of
taxation on incentives to invest (10th), and Number of procedures to start a business (10
th).
XII. While Health and Primary Education (33rd
), Higher Education and Training (46th) and
Market Size (26th) maintained their respective positions, Macroeconomic Environment fell by six
places to 44th and Technological Readiness loses ground by nine positions to 60
th.
XIII. Areas that posed challenges to Malaysia’s competitiveness
performance and need continuous improvements include, Women in labour
force (119th), Redundancy costs in weeks of salary (111
th), Government
budget balance (102nd
), General Government debt (97th), Mobile broadband
subscription (93rd
), Tuberculosis cases (86th), Business impact of
tuberculosis (84th), Business impact of HIV/AIDS (83
rd), Trade tariffs (81
st),
International internet bandwidth (81st), and Fixed broadband internet
subscriptions (69th).
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Measuring Competitiveness
XIV. The GCR 2014-2015 uses 30% statistical data (34 criteria) and 70% survey data (80
criteria) from the Executive Opinion Survey (EOS). The report examines factors enabling national
economies to achieve economic growth and long term prosperity through its 12 pillars of
competitiveness involving 114 indicators. The pillars are:
Institutions
Infrastructure
Macroeconomic Environment
Health and Primary Education
Higher Education and Training
Goods Market Efficiency
Labour Market Efficiency
Financial Market Development
Technological Readiness
Market Size
Business Sophistication
Innovation.
XV. The pillars are aggregated into a single index while measures for the 12 pillars are
reported separately. These details provide inputs for a particular country and allows them to chart
out areas for improvement. The GCI takes the stages of development into account by attributing
higher weightage to those pillars that are more relevant for an economy given its particular stage
of development. Although all 12 pillars matter to a certain extent for all countries, the relative
importance of each one depends on a country’s particular state of development.
XVI. To implement this concept, the pillars are organised into three sub-indexes, each critical to
a particular stage of development. The Basic Requirements sub-index groups those pillars most
critical for countries in the factor-driven stage. The Efficiency Enhancers sub-index includes
those pillars for countries in the efficiency-driven stage and the Innovation and Sophistication
factors sub-index includes the pillars critical to countries in the innovation-driven stage.
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The three sub-indexes are shown in Figure 5.
Figure 5: The Global Competitiveness Index Framework
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Institutional Strength
1.1 Malaysia surged to 20th position in the Institutions pillar, improving by nine places from the
previous year. All indicators under this pillar recorded significant improvements. Among the
indicators, four have achieved top 10 rankings, namely Burden of government regulation (4th),
Strength of investor protection (4th), Wastefulness of Government spending (8
th) and Efficacy of
corporate boards (10th). The indicators that progressed significantly are business costs of crime
and violence to 47th position, improving by 28 places (GCR 2013-2014: 75
th), business cost of
terrorism improved 20 places to be placed 65th (GCR 2013-2014: 85
th), diversion of public funds
achieved 26th
position, progressing by 16 places (GCR 2013–2014: 42nd
), and organised crime
improved by 12 places to achieve 51st
position
(GCR 2013-2014: 63rd
). The proactive
Government’s initiatives had resulted in these positive trends.
1.2 The Special Taskforce to Facilitate Business (PEMUDAH) continues to undertake public-
private sector engagement to institutionalise reforms that enhance the ease of doing business in
Malaysia. This is instrumental to Malaysia being ranked 4th globally (GCR 2013-2014: 8
th) on
Burden of government regulation. PEMUDAH strongly believes that reforms can be
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implemented successfully if relevant stakeholders are engaged to provide
the necessary inputs. Online public engagements are carried out by all
ministries and agencies to ensure that all regulatory reforms consider the
views and meet the needs of the public. PEMUDAH has also established an
initiative on Good Regulatory Practice (GRP).
1.3 Good Regulatory Practice (GRP) aims to ensure Government regulations become less
burdensome, more transparent and accountable. By improving policy implementation and
regulatory processes, productivity will be enhanced, non value-added procedures eliminated,
hence promoting efficiency. Among notable initiatives are strengthening the regulatory
framework for dealing with construction permits in Kuala Lumpur (OSC1 Submission), Regulatory
Impact Analysis (RIA), removing unnecessary licenses, automating, streamlining and integrating
processes through Business Licensing Electronic System (BLESS). Introduction of One-Stop
Service (OSS) to achieve better delivery systems and to start a business via the MyCoID portal
and Customer Centric Service Delivery (CCSD) have also made Government regulations less
burdensome.
1.4 Similarly, the presentation of the Auditor General’s (AG) Report at every Parliamentary
sitting, instead of only once annually had resulted in prudent financial management.
Wastefulness of Government spending improved to 8th
position from 21st
position previously and
strength of auditing and reporting standards also achieved a better ranking of 19th from rank 27
th.
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1.5 The Government is also committed to fight against all facets of corruption and business
crimes. The Malaysian Anti-Corruption Commission (MACC) has introduced the Corporate
Integrity Pledge (CIP), a crucial initiative that requires a company to make voluntary commitment
to uphold the anti-corruption principles and to work together towards creating a fair, transparent,
corruption free business environment. A total of 444 public and private organisations have signed
the Corporate Integrity Pledge (CIP). Insertion of the Corporate Liability provision into the MACC
Act 2009 is another attempt to make companies liable for bribes and violation by their employees.
1.6 Indicators that achieved top 10 positions in the Institutions pillar are:
Strength of investor protection, 4th (GCR 2013-2014: 4
th);
Burden of Government regulation, 4th (GCR 2013-2014: 8
th);
Wastefulness of Government spending, 8th (GCR 2013-2014: 21
st); and
Efficacy of corporate boards, 10th (GCR 2013-2014: 13
th).
Areas in Institutions that need continuous attention include:
Business cost of terrorism, 65th (GCR 2013-2014: 85
th);
Organised crime, 51st (GCR 2013-2014: 63
rd);
Business cost of crime and violence, 47th (GCR 2013-2014: 75
th); and
Irregular payments and bribes, 37th (GCR 2013-2014: 44
th).
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World Class Infrastructure to Support Growth
2.1 An efficient overall infrastructure traditionally becomes a landmark of a developed country.
It is fundamental in building a system that moves people and goods, enables access to
employment, education and entertainment, connects urban and rural areas. These are essential
elements of, not only economic growth, but of inclusiveness in sharing economic benefits.
2.2 Malaysia improves its infrastructure ranking by 4 places to be ranked 25th in the
Infrastructure pillar (GCR 2013-2014: 29th). Improvements are also recorded in most indicators
except Quality of electricity supply and Mobile phone subscriptions both of which declined by 3
places. Nevertheless, Quality of overall infrastructure improves to 20th from 25
th position, Quality
of roads to 19th from 23
rd, Quality of railroad infrastructure to 12
th from 18
th and Quality of port
infrastructure to 19th from 24
th position.
2.3 Malaysia’s transportation sector covers 98,721km of roadways, 1,821km of which are
expressways, 1,849km of railways, 7,200km of navigable waterways and 117 airports, 39 of
which are paved. The Urban Public Transport NKRA (UPT NKRA) plays an essential role in
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ensuring greater connectivity within the city and between the surrounding municipalities, making
it accessible, efficient and convenient for all. The Land Public Transport Commission (SPAD) is
given the responsibility to lead the transformation of Malaysia’s land public transport to become
the “Rakyat’s” mode of choice.
2.4 The Government had made investments in upgrading highways,
railroads, seaports and airports. One of the largest infrastructure projects in
the country is The Klang Valley Mass Rapid Transit (MRT) that involves the
construction of a railway network consisting of the Light Rail Transit (Kelana
Jaya and Ampang LRT Lines), KTM commuter, monorail, KLIA express and
KLIA Transit, which will form the backbone of the Klang Valley’s public
transport system. The project is expected to ease road congestion and to
provide an efficient and environmentally sustainable mode of public
transportation to the commuters to the city centre.
2.5 A considerable allocation of RM18 billion for the rural development
for the period 2010 to 2013 shows that the Government is serious and
committed in upgrading roads as well as the supply of water and electricity
in rural areas especially in Sabah and Sarawak. Domestic integration in
terms of suburb connectivity is critical to enable rural areas to leverage on
cities as gateways for rural produce and economic opportunities. The
newly introduced 21st Century Village Programme (21CV) will transform
rural areas into attractive places for people to live and work as well as to
nurture the villages to become a center of agriculture driven economy.
2.6 The newly built airport terminal, KLIA2, dedicated for low-cost carrier operations in
Sepang, was officially opened on 2nd
May 2014 and is objectively designed to accommodate
approximately 45 million passengers a year and to support the projected air travel growth for the
next 10 to 15 years. The KLIA2 will be a boost in making Malaysia the leading hub for budget
airlines and global aviation industry.
2.7 Overall, Malaysia’s quality of railroad, roads and ports are of reasonable standard
achieving ranks of between 12th to 19
th positions. There are, however, areas of concern in
infrastructure where more initiatives and emphasis are required:
Fixed telephone lines, 73rd
(GCR 2013-2014: 79th);
Quality of electricity supply, 39th (GCR 2013-2014: 37
th); and
Mobile telephone subscriptions, 30th (GCR 2013-2014: 27
th).
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Stimulating the Macroeconomic Environment
3.1 Although Malaysia’s performance for the macroeconomic environment in the GCR 2014-
2015 recorded a drop of six places to 44th position (GCR 2013-2014:38
th), it is, indeed,
encouraging that Malaysia recorded strong economic growth in the first two quarters of 2014,
achieving 6.2% in the first quarter and 6.4% in the second quarter. Much of the economy's
resilience was driven by private sector investment, which accounts for close to 60.9% of total
investment.
3.2 The emphasis of Malaysia’s National Transformation Policy (NTP), is designed to promote
balanced development throughout the country. It will ensure inclusiveness and sustainability and
take into account social aspects, including quality of life, affordable cost of living, public safety
and security, and social values. The continued momentum in private sector investment and job
creation had contributed to the increase in GDP per capita to US$10,548 in 2013.
3.3 Improvements were recorded in General Government debt to 97th position from 105
th
position previously and Government budget balance to 102nd
from 103rd
. The Government debt
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has also reduced to 53% of GDP compared with 55% of GDP
previously while household debt moderated to 10.3%. The public
finance reform initiative is targeted at supporting the Government's
goal of reducing its budget deficit to around 3% by 2015. Measures
such as subsidy rationalisation, Goods and Services Tax (GST) and
the review of Real Property Gains Tax (RPGT) are being
undertaken.
3.4 Malaysia’s inflation rate is among the lowest globally and is
jointly ranked 1st
together with 55 other countries. However, areas of concern in Macroeconomic
environment include:
Government budget balance,102nd
(GCR 2013-2014: 103rd
); and
General government debt, 97th (GCR 2013-2014: 105
th).
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Striving for Quality Health and Primary Education
4.1 Malaysia sustains its 33rd
position in the Health and Primary Education pillar. In the GCR
2014-2015, endemic and non-endemic countries have been segregated. In view of this, Malaria
cases and Business impact on Malaria have been re-ranked among 78 countries that are
endemic. Thus, Malaysia achieves 28th position for Malaria cases and 21
st position on Business
impact on Malaria. Other criteria that also improved are Quality of primary education to 17th
position from 33rd
, Tuberculosis cases moving to 86th from 90
th place, Business impact of HIV/
AIDS moving to 83rd
from 88th
and Life expectancy to 60th from 63
rd position.
4.2 The healthcare industry recorded strong growth over the last decade, driven primarily by
local consumption of healthcare products and services. The sector is expected to make
significant contributions to the Malaysian economy by 2020. Malaysia’s healthcare is also
recognised as the third best out of 24 countries in the 2014 Global Retirement Index, ahead of
Spain, Italy, Ireland, and New Zealand, among other countries as quoted in the American
publication, International Living. Malaysia's score of 95 out of possible 100 points indicates that
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medical expertise of Malaysian healthcare practitioners is "equal to or better than what it is in
most western countries”.
4.3 In an effort to improve the overall healthcare system, the concept of 1Care for 1Malaysia
was introduced. It is a restructured national health system that is responsive and provides choice
of quality healthcare, while ensuring universal coverage for healthcare needs of population based
on solidarity and equity. This Health Plan was formulated based on the understanding of the
needs, challenges, Government’s ability to finance, and ensure value for money. From this
concept, an effective, efficient, fair, responsive and high-tech system of healthcare will be made
accessible to all Malaysians.
4.4 To prevent the spread of HIV infection among intravenous drug users (IVDU), the Ministry
of Health has launched the Harm Reduction Programme which incorporates Methadone
Maintenance Therapy (MMT), Needle Syringe Exchange Programme (NSEP) and condom
usage. The harm reduction programmes are carried out with the assistance from NGOs to
strengthen community involvement and to increase acceptance among specific risk groups.
There are also policies established specifically for the general population who are at risk of
infection through the introduction of voluntary HIV testing at health clinics throughout the country.
This will encourage the group at risk to come forward for testing and to get appropriate
information and skills to protect themselves from being infected.
4.5 The implementation of initiatives and programmes under the
Malaysia Education Blueprint 2013-2025 will transform the entire
education system, lifting achievement for all students. This will enable the
students to develop skills for the 21st
century, and improve the dynamics of
teaching and learning process. While emphasis is given to a holistic
approach, the rate of enrollment in primary schools will also be increased
by establishing more preschools. Through this initiative, the Ministry of Education expects to
achieve 100% primary school enrollment by 2020.
4.6 The current initiatives undertaken to improve quality of education had contributed to a
more positive perception towards Quality of primary education, advancing to 17th position from
33rd
previously. To further enhance the performance in the Health and Primary Education pillar,
more emphasis need to be given to the following indicators:
Primary education enrollment, 60th (GCR 2013-2014: 55
th);
Life expectancy, 60th (GCR 2013-2014: 63
rd); and
Infant mortality, 45th
(GCR 2013-2014: 37th).
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Strengthening Human Capital through Higher Education and Training
5.1 Malaysia maintains its 46th position in the Higher Education and Training Pillar (GCR 2013-
2014:46th). This performance was largely influenced by perception based indicators that include
Extent of staff training ranked 4th, Quality of education system ranked 10
th, Availability of research
and training services ranked 13th
as well as Quality of math and science education ranked 16th.
5.2 The emphasis of Malaysia’s Human Capital development is on long life learning where
opportunities are given to upscale the skills of the workforce via multi-tasking as well as instilling
knowledge for a well rounded workforce. This effort requires greater awareness on the
importance of technical and vocational education that are highly demanded by the industries.
5.3 The vocational education transformation under the Malaysia Education Blueprint 2015-
2025, will equip students with skills and qualification that are required and recognised by the
industry as well as prepare them to become entrepreneurs. Vocational education transformation,
thus, increases opportunity for students at the upper secondary level to enter vocational
pathways.
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5.4 The transformation of vocational education received an overwhelming response from the
students. Out of more than 100,000 applications received in 2013, the Vocational Colleges could
only offer places for 19,404 post-PMR students. As such, the Ministry has taken the initiative to
collaborate with other public and private institutions. To ensure the programmes offered meet the
needs of industries, the Ministry of Education signed 118 Memorandums of
Understanding with industry partners in 2013.
5.5 In the year 2013, the Ministry appropriated a fundamental research fund worth RM400
million to conduct research activities in various fields at all
institutions of higher learning. The fundamental research fund
includes five major grants namely Fundamental Research
Grant Scheme (FRGS), Exploratory Research Grant Scheme
(ERGS), Long Term Research Grant Scheme (LRGS),
Prototype Development Research Grant Scheme (PRGS) and
Geran Sanjungan Penyelidikan KPM (GSP-KPM). The ranking
for Availability of research and training services surged to 13th
position from 20th position previously.
5.6 The perception towards Extent of staff training and Quality of the education system are
generally positive, achieving commendable rankings of 4th and 10
th, respectively. However, areas
of concern in Higher Education and Training remain as follows:
Secondary education enrollment (gross %), 108th (GCR 2013-2014: 105
th); and
Tertiary education enrollment (gross %), 72nd
(GCR 2013-2014: 62nd
).
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Promoting Growth and Sustainability through Goods Market Efficiency
6.1 Malaysia improves its ranking to top 7 from top 10 previously in the Goods Market
Efficiency pillar. This exemplary performance is essential as countries with efficient goods market
are well positioned to produce the right mix of goods and services. Improvements are registered
in perceptions towards Prevalence of trade barriers, Prevalence of foreign ownership, Extent of
market dominance, Effectiveness of anti-monopoly policy, Business impact of rules on FDI, as
well as Effect of taxation on incentives to invest.
6.2 To further enhance goods market efficiency, PEMUDAH, continues to undertake initiatives
such as business process re-engineering in various licensing processes and procedures,
implementation of web-based e-payment facilities for online payments nationwide, and fine-
tuning the one-stop center approval processes. In addition, at the Federal level, 717 business
licences have been re-engineered and simplified into 448 business licences to improve the
business environment.
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6.3 There are only three procedures to start a business
in Malaysia and this has contributed to Malaysia being
ranked top 10 globally in Number of procedures to start a
business. The Malaysian Corporate Identity Number
(MyCoID), a unique company incorporation number for registering and dealing with relevant
Government agencies and to start a business had been implemented. MyCoID helps to save
time, reduce bureaucracy red tape and improve process efficiency.
6.4 Indicators that achieved top 10 positions in Goods Market Efficiency pillar are:
Agricultural policy costs, 2nd
(GCR 2013-2014: 2nd
);
Buyer sophistication, 4th
(GCR 2013-2014: 11th);
Prevalence of trade barriers, 9th (GCR 2013-2014: 30
th);
Effect of taxation on incentives to invest, 10th (GCR 2013-2014: 12
th); and
Number procedures to start a business, 10th (GCR 2013-2014: 10
th).
Areas in the Goods Market Efficiency pillar that need continuous attention include:
Trade tariffs (% duty), 81st (GCR 2013-2014: 68
th); and
Intensity of local competition, 34th (GCR 2013-2014: 32
nd).
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Optimising Potential through Labour Market Efficiency
7.1 Malaysia advances by 6 places in the Labour Market Efficiency pillar to 19th position from
25th position in the previous year. Among the criteria that had contributed to this ranking and
attained top 10 positions are Pay and productivity (2nd
), Effect of taxation on incentives to work
(8th), Country capacity to attract talent (9
th), and Hiring and firing practices (9
th). Reliance on
professional management also improved to 15th position from 21
st last year.
7.2 Malaysia’s labour market is supported by an effective performance-
oriented wage package through the Productivity-Linked Wage System
(PLWS) which ensures performance is prioritised without compromising on
wages earned. The Minimum Wage Order has also been implemented and in
addition to this, the Minimum Wages Order 2012 for SME employers with
foreign employees was introduced on 1st January 2014. This is to ensure that
basic needs of employees are met and to create the necessary
environment for industries to move-up their value chain by increasing the
productivity of their employees through the use of technology and other innovations.
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7.3 To attract talent, the HR Network by Talent
Corporation Malaysia was set up to address the talent
needs of leading employers in driving Malaysia’s economic
transformation. The network focuses on four areas
that are critical to the national talent agenda, diversity and
inclusiveness, human resource capability, leadership
development and graduate employability. At the same
time, the country’s capacity to retain talent has been made
more appealing with the Returning Expert Programme
(REP), which facilitates the return of Malaysian
professionals from abroad to overcome the shortage of
professionals and technical experts in the country, towards
creating a world-class workforce in Malaysia. From 16th
April 2014, REP eligibility criteria were revised to create a
more holistic set of criteria which takes into account total work experience, income level and the
availability of critical skills that are in high demand.
7.4 Although Women in labour force moved up by 2 places to 119th position, initiatives to
encourage women participation in the labour force need to be further intensified. The female
labour force participation rate in Malaysia was 52.4% in 2013, which means, for every 100
women, 52 were in the labour force. At the same time, for the 2013-2014 intake into public higher
learning institutions, 68% of the new students were female, while the labour force survey carried
out by the Department of Statistics indicated that women managers make up only 3.2% and
women professionals comprise 14.8%.
7.5 Improvements in overall ranking for Labour Market Efficiency to 19th
position is attributed to
the following criteria:
Pay and productivity, 2nd
(GCR 2013-2014: 2nd
);
Effect of taxation on incentives to work, 8th
(GCR 2013-2014: 10th); and
Hiring and firing practices, 9th (GCR 2013-2014: 26
th).
To further increase the efficiency of the Labour Market, Women in Labour force and Redundancy
costs needs to be further addressed:
Women in labour force, 119th (GCR 2013-2014: 121
st); and
Redundancy costs, 111th (GCR 2013-2014: 110
th).
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Financially Resilient
8.1 Malaysia further improves its ranking in the Financial Market Development Pillar to 4th
position from 6th position previously. Malaysia’s financial market development has consistently
been ranked among the top 10 performers globally over the past few years. It also achieved top
ten rankings in the Legal Rights Index (1st), Venture capital availability (2
nd), Ease of access to
loans (2nd
) and Financing through local equity market (8th). Apart from this, Affordability of
financial services moved up three places to 12th position, and Soundness of banks advanced 5
places to 35th position.
8.2 Financial institutions in Malaysia also
continued to demonstrate a high degree of
resilience throughout 2013. Among significant
developments during 2013 were the
implementation of the Financial Services Act
2013 and Islamic Financial Services Act 2013, which together with the Central Bank of Malaysia
29
Act 2009, takes the legislative framework for financial stability in Malaysia to a new frontier. This
reflects a financial system that is more dynamic, interconnected and inclusive.
8.3 Malaysia is also a world Islamic finance marketplace particularly for extended maturity
structures and multicurrency sukuk issuance. The
year 2014 also witnessed the inaugural issuance
of short-term sukuk by the International Islamic
Liquidity Management Corporation (IILM) which
represents an important and significant global
breakthrough. This provides Islamic financial
institutions, including those in Malaysia, with a unique and dedicated instrument to manage their
liquidity requirements for preserving financial stability. Islamic finance also continues to have a
role in micro-financing and micro-takaful solutions, hence creating new opportunities for micro
enterprises in Malaysia.
8.4 The Financial Market pillar exhibits improvements across all indicators and emerges as
benchmark country in several indicators:
Legal rights index, 1st (GCR 2013-2014: 1
st);
Ease of access to loans, 2nd
(GCR 2013-2014: 5th);
Venture capital availability, 2nd
(GCR 2013-2014: 7th); and
Financing through local equity market, 8th (GCR 2013-2014: 9
th)
30
Speeding up Connectivity
9.1 Technological Readiness records a decline of 9 places to 60th
position from 51st position in
2013-2014. Nevertheless, FDI and technology transfer improved to 8th position (GCR 2013-2014:
13th). At the same time, improvements are recorded in Availability of latest technology ranked 33
rd
(GCR 2013-2014: 37th) and Firm level technology absorption ranked 24
th (GCR 2013-2014: 33
rd).
Among the criteria which recorded decline are Individuals using internet (41st), Fixed broadband
internet subscriptions (69th), International internet bandwidth (81
st) and Mobile broadband
subscriptions/100 populations (93rd
).
9.2 The Government is formulating strategies to revitalise ICT in the country and has
envisioned Cyberjaya to be a global technology hub with a new blueprint comprising a new
Cyberjaya City Centre development. The new niche areas will complement the current clusters of
information technology, shared services and outsourcing as well as creative multimedia in the
hub. This initiative will elevate Cyberjaya to a global scale and will attract more foreign direct
investments into the country, to help strengthen local technology firms and to create a high-value
workforce.
31
9.3 To stimulate growth in Malaysia’s Digital
landscape, Digital Malaysia 354 Roadmap (DM354
Roadmap) has been designed to transform the nation
into a digital economy. The DM354 Roadmap will allow
development of Malaysia’s talents into a strong pool of
data scientists who are highly proficient knowledge
workers in various economic sectors and industries, with
IT competencies at the core. Ultimately, the Roadmap
will increase internet accessibility with relevant adoption
on digital content and wider usage of digital technology
by the Government, businesses and communities to
improve productivity and enhance quality of life.
9.4 The positive effect on Technological Readiness is attributed to the FDI and technology
transfer criteria, attaining 8th
position (GCR 2013-2014: 13th). However, initiatives on the following
indicators need to be intensified:
Mobile broadband subscriptions/100 population, 93rd
(GCR 2013-2014: 79th);
International internet bandwidth (kb/s per user), 81st (GCR 2013-2014: 77
th); and
Fixed broadband internet subscriptions/100 population, 69th (GCR 2013-2014: 66
th).
32
Globalising Markets
10.1 The size of the market affects productivity since large markets allow firms to exploit
economies of scale. In an era of globalisation, international markets have become a substitute for
domestic markets. Malaysia’s performance in the Market Size pillar remains at 26th position
supported by export as a percentage of GDP which is ranked 15th. In 2013, Malaysia’s export
grew by 2.4% or RM17.2 billion to reach RM719.8 billion. With better global growth expected in
2014, trade is projected to grow by 5-6% and exports at 3-4%.
10.2 The Government will continue to assist exporters by reducing trade barriers and
enhancing trade facilitation through Free Trade Agreements (FTAs). Exporters can take
advantage of Malaysia’s extensive network of FTAs to sharpen their competitive edge. Through
the FTAs, exporters can benefit from tariff concessions, thereby making their exports more price-
competitive. Exporters will also enjoy preferential access, faster market entry, and investment
and intellectual property. Currently, Malaysia has signed FTAs with Japan, Pakistan, New
Zealand, India, Chile and Australia. FTAs currently provide preferential access for 63.5% of
Malaysia’s trade including with ASEAN, China and Japan.
33
10.3 To strengthen regional trade, the setting up of the
ASEAN Economic Community (AEC) shall be the goal of
regional economic integration by 2015. AEC envisages key
characteristics such as a single market and production base, a
highly competitive economic region, a region of equitable
economic development, and a region fully integrated into the
global economy. The AEC will transform ASEAN into a region
with free movement of goods, services, investment, skilled
labour, and freer flow of capital. With this integration, a highly
competitive economic region with equitable economic development will exist.
10.4 The performance of the four criteria in the Market Size pillar remain unchanged as follows:
Exports as percentage of GDP, 15th;
Foreign market size index, 20th;
Domestic market size index, 29th; and
GDP (PPP$ Billions), 29th.
34
35
Enhancing Business Sophistication
11.1 Sophisticated business practices are vital for higher efficiency in the production of goods
and services. In this context, business sophistication in Malaysia had improved as indicated in
the enhanced ranking to 15th position from 20
th previously. All the indicators in this pillar improved
and is testimony to Business Sophistication in Malaysia. Extent of marketing, ranked 17th and
local supplier quantity, ranked 6th are among the criteria in Business Sophistication that made the
greatest strides, improving by 13 and 11 places respectively.
11.2 Enhanced business processes and new growth strategies through cutting-edge technology
and innovation are some of the factors that contribute to business sophistication. Enterprise
innovation should factor in, technological and non-technological innovations as well as
management processes such as lean management, green productivity, material cost savings,
establishing standards and innovative HR practices to secure long-term growth and profitability.
11.3 In order to provide clear and specific goals and strategic directions to propel the business
36
and industry to attain faster and sustainable growth that is aligned with the
National Development Agenda of achieving developed status, The National
Franchise Development Blueprint (NFDB) was launched to develop an
industry that advocates making franchise accessible and creating more
business opportunities. NFDB also aims to expand the focus from
traditional sectors such as food and beverages, clothing, health and beauty
to new sectors such as education, green products and services, medical tourism, as well as
Sharia compliant products and services.
11.4 Enhanced performance in all the criteria had contributed to better performance in the
Business Sophistication pillar as shown below:
Local supplier quantity, 6th (GCR 2013-2014: 17
th);
Control of international distribution, 7th (GCR 2013-2014: 11
th);
State of cluster development, 9th (GCR 2013-2014: 14
th);
Willingness to delegate authority, 10th (GCR 2013-2014: 13
th);
Value chain breadth, 11th (GCR 2013-2014: 17
th);
Extent of marketing, 17th (GCR 2013-2014: 30
th);
Production process sophistication, 23rd
(GCR 2013-2014: 26th);
Local supplier quality, 24th (GCR 2013-2014: 31
st); and
Nature of competitive advantages, 26th (GCR 2013-2014: 27
th).
37
Driving Innovation
12.1 Innovation remains as the key driver to enhance Malaysia’s competitiveness and to ensure
that it achieves its target of a high income nation. Malaysia’s ranking in Innovation has advanced
to 21st position from 25
th position last year, with major improvements in perception towards
Availability of scientists and engineers, Company spending on R&D as well as Quality of scientific
research institutions. Government procurement of technology products which is ranked 3rd
is
perceived to be among the best in the world. The number of applications filed under the Patent
Cooperation Treaty (PCT) per million population for Malaysia stood at 12.6 (GCR 2013-2014:
12.1). However, this criteria is ranked 32nd
indicating that more patents need to be filed.
12.2 To boost the innovation potential and technology commercialisation of small and medium-
sized enterprises (SMEs), a platform via PlatCom Ventures Sdn Bhd was launched by the Prime
Minister recently. PlatCom Venture is a wholly-owned subsidiary of
Malaysia Innovation Agency (AIM) and formed in collaboration with
SME Corporation Malaysia. It is a collaboration and amalgamation of
two national initiatives, the Innovation Business Opportunities (IBO), which is an AIM initiative,
38
and the High Impact Programme 2, Technology Commercialisation Platform (HIP2-TCP) under
the SME Masterplan 2012-2020. The PlatCom programme would link all facilities to ensure they
were seamless for SMEs to move from one stage to another process as well as to link it with
early stage financing, and is designed to remove market and financing barriers to innovation.
12.3 To increase the participation of micro-businesses and individuals in innovative activities
the InnoFund was established as a grant scheme to fund the development or improvement of
new or existing innovative products, processes or services. The fund is categorised into
Enterprise Innofund (EIF) and Community InnoFund (CIF). These funds are aimed at improving
societal well-being of the community to create economic value and encourage technological
innovation for commercialisation.
12.4 To accelerate innovation, the MSC Malaysia Innovation Voucher was designed to increase
collaboration between Malaysia's public and private Institutions of Higher Learning (IHL) and
Research Institutions (RI) with MSC Malaysia status companies, so as to tap into each other’s
capabilities and strengths. This serves to create a cultural shift in the business community's
approach to innovation as companies can tap into experts/talents residing outside the company.
The innovation voucher is a financial incentive of RM10,000 awarded to qualified MSC Malaysia
status companies to support collaborative R&D projects from the approved collaborators. These
collaborative R&D activities would then facilitate the transfer of know-how from the collaborators
to the MSC Malaysia status companies and vice versa. In turn, this will lead to the production of
innovative prototypes, quality products and potential Intellectual Property (IP) creation.
12.5 Perception towards innovation in Malaysia has generally improved as follows:
Government procurement of advanced technology products, 3rd
(GCR 2013-2014: 4th);
Company spending on R&D, 9th
(GCR 2013-2014: 17th); and
Availability of scientists and engineers, 9th (GCR 2013-2014: 19
th).
39
Evolution of Malaysia’s Competitiveness Performance
Figure 6: Evolution of Malaysia’s Competitiveness Performance by Rank
Figure 6 shows the evolution of Malaysia’s competitiveness performance in the 12 pillars from
GCR 2011-2012 to GCR 2014-2015. To further enhance national competitiveness and move
Malaysia into the innovation stage of development, more emphasis is needed in Macroeconomic
Environment (pillar 3), Higher Education & Training (pillar 5) and Technological Readiness
(pillar 9).
Best Average Worst
40
Meeting Malaysia’s Competitiveness Challenges
Despite the improved performance of Malaysia in this report, continued efforts need to be
implemented, particularly in structural reforms, technological readiness and innovation, as well as
collaboration between the private and public sectors to achieve sustainable and comprehensive
economic development. Among the measures to enhance Malaysia’s competitiveness includes:
(i) a national campaign to enhance productivity, innovation and competitiveness through
integrated and comprehensive initiatives involving all parties;
(ii) intensify cooperation with relevant ministries and agencies in identifying effective
strategies that can improve Malaysia’s performance in the various areas of concerns. This would
include using the indicators in the Global Competitiveness Report and other similar reports as
baseline information for competitiveness strategy formulation;
(iii) strengthen strategic relationships with international organisations such as the WEF, IMD,
OECD, INSEAD, IMF, UNESCO and others to ensure that the recommendations and issues
raised are attended to. Additionally, cooperation between Partner Institutes, particularly within the
Asian region also needs to be strengthened; and
(iv) continue to address the issue of perception among the business community and the public
at large through various channels that include MPC’s Competitiveness Champion Programs,
public consultations and publications. These initiatives carried out in collaboration with various
ministries, agencies and the private sector over the years had been successful in providing a
more accurate assessment of Malaysia’s competitiveness performance.
41
Appendix 1
The Global Competitiveness Index and Rankings
Country / Economy GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Switzerland 1 5.70 1 5.67
Singapore 2 5.65 2 5.61
United States 3 5.54 5 5.48
Finland 4 5.50 3 5.54
Germany 5 5.49 4 5.51
Japan 6 5.47 9 5.40
Hong Kong SAR 7 5.46 7 5.47
Netherlands 8 5.45 8 5.42
United Kingdom 9 5.41 10 5.37
Sweden 10 5.41 6 5.48
Norway 11 5.35 11 5.33
United Arab Emirates 12 5.33 19 5.11
Denmark 13 5.29 15 5.18
Taiwan, China 14 5.25 12 5.29
Canada 15 5.24 14 5.20
Qatar 16 5.24 13 5.24
New Zealand 17 5.20 18 5.11
Belgium 18 5.18 17 5.13
Luxembourg 19 5.17 22 5.09
Malaysia 20 5.16 24 5.03
Austria 21 5.16 16 5.15
Australia 22 5.08 21 5.09
France 23 5.08 23 5.05
Saudi Arabia 24 5.06 20 5.10
Ireland 25 4.98 28 4.92
Korea, Rep. 26 4.96 25 5.01
Israel 27 4.95 27 4.94
China 28 4.89 29 4.84
Estonia 29 4.71 32 4.65
Iceland 30 4.71 31 4.66
Thailand 31 4.66 37 4.54
Puerto Rico 32 4.64 30 4.67
Chile 33 4.60 34 4.61
Indonesia 34 4.57 38 4.53
Spain 35 4.55 35 4.57
42
Country / Economy GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Portugal 36 4.54 51 4.40
Czech Republic 37 4.53 46 4.43
Azerbaijan 38 4.53 39 4.51
Mauritius 39 4.52 45 4.45
Kuwait 40 4.51 36 4.56
Lithuania 41 4.51 48 4.41
Latvia 42 4.50 52 4.40
Poland 43 4.48 42 4.46
Bahrain 44 4.48 43 4.45
Turkey 45 4.46 44 4.45
Oman 46 4.46 33 4.64
Malta 47 4.45 41 4.50
Panama 48 4.43 40 4.50
Italy 49 4.42 49 4.41
Kazakhstan 50 4.42 50 4.41
Costa Rica 51 4.42 54 4.35
Philippines 52 4.40 59 4.29
Russian Federation 53 4.37 64 4.25
Bulgaria 54 4.37 57 4.31
Barbados 55 4.36 47 4.42
South Africa 56 4.35 53 4.37
Brazil 57 4.34 56 4.33
Cyprus 58 4.31 58 4.30
Romania 59 4.30 76 4.13
Hungary 60 4.28 63 4.25
Mexico 61 4.27 55 4.34
Rwanda 62 4.27 66 4.21
Macedonia FYR, 63 4.26 73 4.14
Jordan 64 4.25 68 4.20
Peru 65 4.24 61 4.25
Colombia 66 4.23 69 4.19
Montenegro 67 4.23 67 4.20
Vietnam 68 4.23 70 4.18
Georgia 69 4.22 72 4.15
Slovenia 70 4.22 62 4.25
India 71 4.21 60 4.28
Morocco 72 4.21 77 4.11
Sri Lanka 73 4.19 65 4.22
The Global Competitiveness Index and Rankings (Cont’d)
43
* Re-instated
The Global Competitiveness Index and Rankings (Cont’d)
Country / Economy GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Botswana 74 4.15 74 4.13
Slovak Republic 75 4.15 78 4.10
Ukraine 76 4.14 84 4.05
Croatia 77 4.13 75 4.13
Guatemala 78 4.10 86 4.04
Algeria 79 4.08 100 3.79
Uruguay 80 4.04 85 4.05
Greece 81 4.04 91 3.93
Moldova 82 4.03 89 3.94
Iran, Islamic Rep. 83 4.03 82 4.07
El Salvador 84 4.01 97 3.84
Armenia 85 4.01 79 4.10
Jamaica 86 3.98 94 3.86
Tunisia 87 3.96 83 4.06
Namibia 88 3.96 90 3.93
Trinidad and Tobago 89 3.95 92 3.91
Kenya 90 3.93 96 3.85
Tajikistan* 91 3.93 n/a n/a
Seychelles 92 3.91 80 4.10
Lao PDR 93 3.91 81 4.08
Serbia 94 3.90 101 3.77
Cambodia 95 3.89 88 4.01
Zambia 96 3.86 93 3.86
Albania 97 3.84 95 3.85
Mongolia 98 3.83 107 3.75
Nicaragua 99 3.82 99 3.84
Honduras 100 3.82 111 3.70
Dominican Republic 101 3.82 105 3.76
Nepal 102 3.81 117 3.66
Bhutan 103 3.80 109 3.73
Argentina 104 3.79 104 3.76
Bolivia 105 3.77 98 3.84
Gabon 106 3.74 112 3.70
Lesotho 107 3.73 123 3.52
Kyrgyz Republic 108 3.73 121 3.57
Bangladesh 109 3.72 110 3.71
Suriname 110 3.71 106 3.75
Ghana 111 3.71 114 3.69
44
Country / Economy GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Senegal 112 3.70 113 3.70
Lebanon 113 3.68 103 3.77
Cape Verde 114 3.68 122 3.53
Côte d'Ivoire 115 3.67 126 3.50
Cameroon 116 3.66 115 3.68
Guyana 117 3.65 102 3.77
Ethiopia 118 3.60 127 3.50
Egypt 119 3.60 118 3.63
Paraguay 120 3.59 119 3.61
Tanzania 121 3.57 125 3.50
Uganda 122 3.56 129 3.45
Swaziland 123 3.55 124 3.52
Zimbabwe 124 3.54 131 3.44
Gambia, The 125 3.53 116 3.67
Libya 126 3.48 108 3.73
Nigeria 127 3.44 120 3.57
Mali 128 3.43 135 3.33
Pakistan 129 3.42 133 3.41
Madagascar 130 3.41 132 3.42
Venezuela 131 3.32 134 3.35
Malawi 132 3.25 136 3.32
Mozambique 133 3.24 137 3.30
Myanmar 134 3.24 139 3.23
Burkina Faso 135 3.21 140 3.21
Timor-Leste 136 3.17 138 3.25
Haiti 137 3.14 143 3.11
Sierra Leone 138 3.10 144 3.01
Burundi 139 3.09 146 2.92
Angola 140 3.04 142 3.15
Mauritania 141 3.00 141 3.19
Yemen 142 2.96 145 2.98
Chad 143 2.85 148 2.85
Guinea 144 2.79 147 2.91
The Global Competitiveness Index and Rankings (Cont’d)
45
Country/Economy GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Singapore 1 5.65 1 5.61
Malaysia 2 5.16 2 5.03
Thailand 3 4.66 4 4.54
Indonesia 4 4.57 5 4.53
Philippines 5 4.4 6 4.29
Vietnam 6 4.23 7 4.18
Lao PDR 7 3.91 8 4.08
Cambodia 8 3.89 9 4.01
Myanmar 9 3.24 10 3.23
Brunei - - 3 4.95
The Global Competitiveness Index - ASEAN Countries
Country GCI 2014-2015 GCI 2013-2014
Rank Score Rank Score
Singapore 1 5.65 1 5.61 Japan 2 5.47 3 5.40 Hong Kong SAR 3 5.46 2 5.47 Taiwan, China 4 5.25 4 5.29 New Zealand 5 5.20 5 5.11 Malaysia 6 5.16 7 5.03 Australia 7 5.08 6 5.09 Korea, Rep. 8 4.96 8 5.01 China 9 4.89 10 4.84 Thailand 10 4.66 11 4.54 Indonesia 11 4.57 12 4.53 Azerbaijan 12 4.53 13 4.51 Kazakhstan 13 4.42 14 4.41 Philippines 14 4.4 15 4.29 Vietnam 15 4.23 18 4.18 India 16 4.21 16 4.28 Sri Lanka 17 4.19 17 4.22 Tajikistan* 18 3.93 - - Lao PDR 19 3.91 19 4.08 Cambodia 20 3.89 20 4.01 Mongolia 21 3.83 21 3.75 Nepal 22 3.81 24 3.66 Bhutan 23 3.8 22 3.73 Kyrgyz Republic 24 3.73 25 3.57 Bangladesh 25 3.72 23 3.71 Pakistan 26 3.42 26 3.41 Myanmar 27 3.24 28 3.23 Timor Leste 28 3.17 27 3.25 Brunei - - 9 4.95
The Global Competitiveness Index and Rankings - Asia Pacific Countries
* Re-instated
Appendix 2
46
Stage 1 Transition from
Stage 2 Transition from
Stage 3 1 to 2 2 to 3
(37 economies) (16 economies) (30 economies) (24 economies) (37 economies)
Bangladesh Algeria Albania Argentina Australia
Burkina Faso Angola Armenia Bahrain Austria
Burundi Azerbaijan Bulgaria Barbados Belgium
Cambodia Bhutan Cape Verde Brazil Canada
Cameroon Bolivia China Chile Cyprus
Chad Botswana Colombia Costa Rica Czech Republic
Côte d'Ivoire Gabon Dominican Republic Croatia Denmark
Ethiopia Honduras Egypt Hungary Estonia
Gambia, The Iran, Islamic Rep. El Salvador Kazakhstan Finland
Ghana Kuwait Georgia Latvia France
Guinea Libya Guatemala Lebanon Germany
Haiti Moldova Guyana Lithuania Greece
India Mongolia Indonesia Malaysia Hong Kong SAR
Kenya Philippines Jamaica Mauritius Iceland
Kyrgyz Republic Saudi Arabia Jordan Mexico Ireland
Lao PDR Venezuela Macedonia, FYR Oman Israel
Lesotho Montenegro Panama Italy
Madagascar Morocco Poland Japan
Malawi Namibia Russian Federation Korea, Rep.
Mali Paraguay Seychelles Luxembourg
Mauritania Peru Suriname Malta
Mozambique Romania Turkey Netherlands
Myanmar Serbia United Arab Emirates New Zealand
Nepal South Africa Uruguay Norway
Nicaragua Sri Lanka Portugal
Nigeria Swaziland Puerto Rico
Pakistan Thailand Qatar
Rwanda Timor-Leste Singapore
Senegal Tunisia Slovak Republic
Sierra Leone Ukraine Slovenia
Tajikistan Spain
Tanzania Sweden
Uganda Switzerland
Vietnam Taiwan, China
Yemen Trinidad and Tobago
Zambia United Kingdom
Zimbabwe United States
List of Economies at Each Stage of Development
Appendix 3
47
Appendix 4
Characteristics of Top 5 Competitive Economies in Global Competitiveness Report 2014-2015
SWIT ERLAND
Switzerland tops the Global Competitiveness Index again this year, keeping its 1st place for six years in a
row. Its performance is stable since last year and remarkably consistent across the board: the country ranks
in the top 10 of eight pillars. Switzerland's top-notch academic institutions, high spending on R&D and
strong cooperation between the academic and business worlds contribute to making it a top innovator.
Switzerland boasts the highest number of Patent Cooperation Treaty applications per capita in the world.
The sophistication of companies that operate at the highest end of the value chain constitutes another
notable strength (2nd). Productivity is further enhanced by an excellent education system and a business
sector that offers excellent on-the-job training opportunities. The labour market balances employee
protection with flexibility and the country's business needs (1st). Public institutions are among the most
effective and transparent in the world (7th), ensuring a level playing field and enhancing business
confidence. Competitiveness is also buttressed by excellent infrastructure and connectivity (5th) and highly
developed financial markets (11th). Finally, Switzerland's macroeconomic environment is among the most
stable in the world (12th) at a time when many European countries continue to struggle in this area.
ear 2014 2013
Rank 1 1
SINGAPORE Singapore ranks 2nd overall for the fourth consecutive year, owing to an outstanding and stable performance
across all the dimensions of the GCI. Again this year, Singapore is the only economy to feature in the top 3
in seven out of the 12 pillars; it also appears in the top 10 of two other pillars and places 2nd in the labour
market efficiency and financial market development pillars. Furthermore, the city-state boasts one of the
world’s best institutional frameworks (3rd), even though it loses the top spot to New Zealand in that category
of the Index. Singapore possesses world-class infrastructure (2nd), with excellent roads, ports, and air
transport facilities. Its economy can also rely on a sound macroeconomic environment and fiscal
management (15th) - its budget surplus amounted to 6.9% of GDP in 2013. Singapore’s competitiveness is
further enhanced by its strong focus on education, which has translated into a steady improvement of its
ranking in the higher education and training pillar, where it comes in 2nd, behind Finland. Singapore’s private
sector is also fairly sophisticated (19th) and becoming more innovative (9th), although room for improvement
exists in both areas, especially as these are the keys to Singapore's future prosperity.
ear 2014 2013
Rank 2 2
UNITED STATES
The United States goes up in the rankings for a second year in a row and regains the 3rd position on the
back of improvements in a number of areas, including some aspects of the institutional framework (up from
35th to 30t h), and more positive perceptions regarding business sophistication (from 6th to 4th) and innovation
(from 7th to 5th). As it recovers from the features that make its economy extremely productive. US
companies are highly sophisticated and innovative, and they are supported by an excellent university
system that collaborates admirably with the business sector in R&D. Combined with flexible labour markets
and the scale opportunities afforded by the sheer size of its domestic economy —the largest in the world by
far—these qualities make the United States very competitive. On the other hand, some weaknesses in
particular areas remain to be addressed. The business community continues to be rather critical, with trust
in politicians still somewhat weak (48th), concerns about favoritism of government officials (47th) and a
general perception that the government spends its resources relatively wastefully (73rd). The
macroeconomic environment remains the country’s greatest area of weakness (13th), although the fiscal
deficit continues to narrow and public debt is slightly lower for the first time since the crisis.
ear 2014 2013
Rank 3 5
FINLAND Finland continues to exhibit a strong performance across all the analyzed dimensions, despite its drop of
one place to 4th position. This decline is mainly driven by slight deteriorations of its macroeconomic
conditions (43rd), which has led some rating agencies to downgrade the outlook of this Nordic economy.
More precisely, Finland suffers from higher, though still manageable, deficit and public debt level, and its
savings rate has slightly decreased. Nevertheless, the country continues to boast well-functioning and
highly transparent public institutions (1st), at the very top in many of the indicators included in this category,
and high-quality infrastructure (19th). The functioning of its products market is also good (18th), financial
development is very high (5th), and the country manages to use its existing talent efficiently (7th) despite
some persistent rigidities in its labour market, most notably in terms of wage determination (143rd), which
regarded as one of the most problematic factors for doing business. It biggest competitiveness strength lies
in its capacity to innovate, where the country leads the world rankings (1st). Very high public and private
investments in R&D (3rd), with very strong linkages between universities and industry (1st) coupled with an
excellent education and training system (1st) and one of the highest levels of technologies readiness (11th)
drive this outstanding result.
ear 2014 2013
Rank 4 3
GERMAN
Germany drops one place to 5th position this year. The small drop is the result of some concerns about
institutions and infrastructure and is only partially balanced out by improvements in the country’s
macroeconomic environment and financial development. Overall, Germany weathered the global economic
crisis of recent years quite well thanks at least partly to its main competitiveness strengths, which include
highly sophisticated business (3rd) and an innovation ecosystem that is conducive to high levels of R&D
innovation (6th). Companies spend heavily on R&D (5th) and can rely on an institutional framework, including
collaboration with universities (10th) and research labs (8th), to support their innovation efforts. Innovation is
also supported because companies, which are predominantly medium-sized, often operate in niche markets
and are located in close geographical proximity to each other (3rd on cluster development). This fosters the
exchange of learning among businesses and facilities the development of new goods and services. High-
quality infrastructure (7th) and excellent on-the-job training (6th) complement these strengths. The top-notch
German on-the-job training system ensures that technical skills for companies are widely available and that
skills match the needs of businesses.
ear 2014 2013
Rank 5 4
48
For further information on the
Global Competitiveness Report 2014-2015
(GCR 2014-2015), please contact:
Global Competitiveness Department (GCD)
Malaysia Productivity Corporation (MPC)
A-06-01 Tingkat 6, Blok A PJ8,
No.23 Jalan Barat,
Seksyen 8
46050 Petaling Jaya,
Selangor Darul Ehsan,
Malaysia.
Tel: 603-7960 0173
Fax: 603-7960 0206
Email: [email protected]
1800 88 1140
www.mpc.gov.my
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