Competitiveness e-Bulletin August 2014.pub

AUGUST 2014
Prime Minister :
Malaysian Economy
on Right Track
The Prime Minister who is also the Finance Minister, giving his speech
at the Treasury’s Staff Excellence Awards Ceremony in Putrajaya.
Dato’ Seri Najib, who is also the Finance
Minister, said Malaysia has achieved several
economic successes which its people can be
proud of. “Our country’s economy has shown
promising growth, where the Gross Domestic
Product has increased by 6.25% in the first
quarter of this year. Our level of competitiveness
has also shown improvements, including rising
from the 12th place to the 6th position on the
World Bank Doing Business 2014 report; 12th
place in the IMD World Competitiveness Yearbook
2014 (from 15th place in 2013), and 15th place
on the A.T. Kearney’s Foreign Direct Investment
Confidence Index from 25th place last year,” said
the Prime Minister at the Treasury’s Staff
Excellence Awards Ceremony on 17th July 2014
at Putrajaya.
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PRODUCTIVITY GREW BY 2.3 PER CENT IN 2013
Malaysia needs a change in mindset to improve labour productivity as it
will boost economic activities and growth in all sectors, said International
Trade and Industry Minister, Dato’ Seri Mustapa Mohamed. “We cannot
be complacent. We need to focus on addressing challenges like
enhancing growth enablers for sustainable economic development,” he
said at the launch of the Productivity Report 2013/2014.
Labour productivity grew by 2.3%, lower than the 4.6% targeted in the
10th Malaysia Plan. “Education and innovation are two ways of
addressing this shortfall as we will need long-term measures to jump to a
higher level of competitiveness.” In terms of labour contribution, the
quality needs to be improved by strengthening policies and incentives to
firms to create modern jobs that will attract higher wages and increase
productivity through the application of technology.
“Undoubtedly,
strengthening these modern industries will boost demand for skilled
workers and enhance the contribution of labour to the country’s
economic growth,” Dato’ Seri Mustapa said.
The increase last year was led by the manufacturing sector and helped
gross domestic product (GDP) to expand by 4.7%. Manufacturing
recorded 5.4% growth, followed by services and construction (4.8% and
5.2%, respectively). Labour productivity in the agricultural sector,
however, declined by 3.5%. “We will need to zero in on those sectors
which we have failed to make the grade,” said Dato’ Seri Mustapa.
Dato’ Seri Mustapa Mohamed, Minister of International Trade and Industry, Tan Sri Azman Hashim and other VIPs reading the Productivity Report
2013/2014 after launching the report in Shah Alam.
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Malaysia In The World
MINDSET CHANGE VITAL TO BOOST
LABOUR PRODUCTIVITY
Malaysia’s Labour Productivity and GDP Growth, 2013
Labour Productivity - Malaysia and Selected Advanced Economy, 2013
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RAISING COMPETITIVENESS THROUGH
LABOUR PRODUCTIVITY
“Malaysia has come a long way
in its international
competitiveness performance,
but it can go further by raising
the quality of its human
capital. A high quality labour
force will enhance labour
productivity, employability of the
workforce and overall
economic growth,” said Dato’
Mohd Razali Hussain, Director
General of the Malaysia
Productivity Corporation.
Indicators for the Quality of a Country’s Workforce (World Competitiveness Yearbook, 2014) : Malaysia vs Selected Benchmark Economies
Indicators for Talent Competitiveness (Global Talent Competitiveness Index, 2013) : Malaysia vs Selected Benchmark Economies
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Malaysia In The World
BOOSTING PRODUCTIVITY :
BUILDING A QUALITY WORKFORCE
Malaysia’s performance in enhancing the quality of labour of
its workforce is influenced by various factors including labour
market flexibility, wage flexibility, skills, training and the
capacity to retain talent. In INSEAD’s
Global Talent
Competitiveness Index (GTCI) 2013, Malaysia was ranked
37th out of 103 countries. The country scored a wide
distribution of rankings across six pillars, namely, Enablers
(23rd); Labour and Vocational (26th); Growth (31st); Retain
(48th); Attract (50th); and Global Knowledge (56th). The GTCI
2013 reveals several opportunities for improvement
specifically in the following areas:
Labour Market Flexibility
Malaysia was placed 14th overall in terms of the ability of its
labour market to respond to changes in market conditions,
including changes in the demand for labour and the wage
rate. Malaysia must sustain its efforts to allow market forces
to determine wages and establish conditions of hiring and
firing with minimal government intervention
Skills and Training
Better skills and training enable workers to exploit their
talents and abilities and produces higher quality labour.
Malaysia was ranked an impressive 7th overall for its efforts
at ensuring that its workforce has access to suitable training
and upskilling opportunities. The country must continue to
nurture a new generation of well-educated workers who are
able to perform complex tasks and adapt rapidly to changing
environments.
Higher Skills and Competencies
A higher percentage of professionals and knowledge workers
with tertiary education will lead to a higher skilled workforce
and competencies. Malaysia ranked 57th for its proportion of
educated workers, and must intensify its efforts to ensure
that all Malaysians have access to quality education
opportunities.
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Capacity to Attract and Retain Talent
The availability of labour and vocational skills as well as global
knowledge skills are crucial elements to do well in today’s
talent economy. Malaysia came in 18th place for its efforts to
foster and develop locally available talent. The country must
continue to make its labour market more flexible and promote
geographical mobility in order to attract and retain talent it
needs.
Wage Flexibility
A key element of labour market flexibility is the ability for
wages to adjust to bring about equilibrium between demand
and supply. This includes the relationship of pay and
productivity, whereby more productive workers get higher
wages. Malaysia’s minimum wage order has not impaired the
country’s wage flexibility so far, and it was ranked 2nd overall
for its ability to maintain a high coefficient between pay and
productivity.
Lifelong Learning
Lifelong education has a positive impact on employees’ job
performance and competitive mindset. Malaysia was ranked
12th for its ability to promote and facilitate continued
education opportunities. The country must sustain its drive
towards cultivating a culture of lifelong learning among the
rakyat so as to improve the country’s overall competitiveness.
Workforce Development System
To enhance competitiveness through the quality of its labour,
Malaysia has established a workforce development system
with institutionalized arrangements for funding, standards
and delivery through a large network of public institutions and
a vibrant private sector. However, the system must improve
its effectiveness and efficiency by offering more
comprehensive solutions to the challenges faced by the
country and its business community.
Collaborate To Compete
THE COMPETITIVENESS CHALLENGE :
THE CASE OF MALAYSIA
“Competitive environments are important to create more added value for
enterprises, create more jobs, attract more investments and talents and
create more revenue. It is a self-fulfilling cycle as the higher ranking will
continue to ensure better investment and better opportunities and thus
making the factors more conducive towards maintaining a better ranking.
The rankings are useful because they allow nations to benchmark
themselves globally and, most importantly, make better decisions towards
determining their strategies and setting their goals and targets. It also helps
investors and governments look at the crucial numbers when making
important decisions. The report suggests that other countries learn from
success stories such as Malaysia,” said
Professor Arturo Bris,
Director, World Competititveness Center (WCC), IMD Switzerland.
Institute of Management Development (IMD), Lausanne Switzerland
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Malaysia In The World
MEETING THE CHALLENGES TOWARDS A
COMPETITIVE NATION
The survey, said Professor Bris also found that Malaysia,
despite many plans and strategies being put in place, the
desired outcomes were not forthcoming. “The execution part
of the plans is not in place, which is one of the ineffectiveness
in the system detected.” However, one plus point for the
country is the high level of collaboration between the
government and the private sector. “Leaders can sit down
and discuss plans and goals and this is how planning can
become a success story,” he added.
Ins titut e o f M an agem ent
Development (IMD), World
Competitiveness Center (WCC)
Director, Professor Arturo Bris
based in Lausanne Switzerland,
described
Malaysia’s
performance as a success story
as it had secured a spot in the
top 15 nations, ahead
of
developed countries such as UK,
Australia, Japan, China and
Korea. Professor Bris said
Malaysia was ‘doing great’ in
terms
of
competitiveness,
adding that it had the potential of
making to the top ten in the next
five years. “It is the next country
ranked after Singapore in South
East Asia and has been performing extremely well. Malaysia has
many strengths and is highly
ranked in several areas,” he said
on the sidelines of the
Productivity & Competitiveness
Conference 2014 organised by
the Malaysia Productivity
Corporation (MPC).
The ranking was released in the
World Competitiveness Yearbook,
an annual report on the
competitiveness of nations
published by WCC. The Center
analyses and ranks the ability of
nations to create and maintain
an environment that sustains
competitiveness of enterprises.
The ranking
is derived from
statistical data as well as
perception on qualitative data
obtained from feedback of the
private sector. It has been doing
so for the past 20 years.
The report stated that Malaysia
needed to continuously strive for
long- t er m comp etit iv eness
sustainability to achieve a high
income economy status by 2020.
The challenges facing the
country include enhancing growth
e na bler s fo r su st ain a ble
economic development;
harnessing talent to achieve
higher productivity growth;
intensifying efforts to reduce
unnecessary regulatory burdens
and restrictions; curbing higher
inflation as a result of subsidy
rationalisation and strengthening
technological capabilities to
e n h an c e v a l ue cr e a t io n.
Professor Bris said Malaysia
needed to innovate and come up
with a new economic model to
make prosperity more
sustainable. He said the country
should find its niche or spark in
the developing services sector in
a creative way in order for it to be
a major competitor in the world
economy.
RESILIENCE
– A vector of competitiveness
Economic Performance - Domes tic Economy
Resilience of the economy
Resilience of the economy to economic cycles is strong
2014
1 Swit zerland
7.56
2 Malaysia
7.26
3 Germany
7.17
4 USA
6.63
5 Indonesia
6.59
6 Taiwan
6.42
7 Japan
6.30
8 China Mainla nd
6.25
9 Thailand
5.86
Sources
IMD WCY Executive Opinion Survey based on an index from 0 to 10
© IMD WORLD COMPETITIVENESS ONLINE 1995-2014 (Updated: May 2014)
© IMD World Competitiveness Yearbook 2014 (ranks out of 60 countries – scale 0-10)
© IMD 2007-2014
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COMPETITIVENESS REPORTS RELEASED: JUNE-JULY 2014
The sixth edition of Cities of Opportunity continues an investigation
that began in 2007 in an effort to help the World’s great cities
understand what policies and approaches work best for people and
economies in a rapidly urbanising world. This year, Pricewaterhouse
Coopers (PwC), looks at a group of 30 cities that embody the energy,
opportunity and hope that draws new people every day to city life and
make urbanisation one of the most powerful megatrends of our time.
Kuala Lumpur ranks 17th out of 30 cities surveyed and is the 8th
most cost effective city. London takes top spot and is the only city to
achieve first in three indicators; technology readiness, city gateway
and economic clout. New York comes in second, shows continuing
superior consistency across most categories while Singapore, ranks
third and dominates in transportation and infrastructure.
The Business Environment Rankings Model measures the quality or
attractiveness of the business environment in the 82 countries
covered by the Economist Intelligence Unit’s country forecast
reports. It is designed to reflect the main criteria used by
companies to formulate their global business strategies, and is
based not only on historical conditions but also on expectations
about conditions prevailing over the next five years. This allows EIU
to utilize the regularity, depth and detail of its forecasting work to
generate a unique set of forward looking business environment
rankings on a regional and global basis.
Malaysia’s global position as moved up five spots to be in the top 20
list. This is a positive indication of our economic liberalization
efforts and a testimony to the ongoing success of the Government
and Economic Transformation Programmes.
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Malaysia In The World
MALAYSIA IN GLOBAL PEACE AND INNOVATION
The Global Peace Index (GPI) 2014 is the eighth edition produced by
the Institute for Economic Peace with offices in Sydney and New York,
which ranks nations according to their level of peace. The report
comprised 22 qualitative and quantitative indicators which gauge
three broad themes; the level of safety and security in society, the
extent of domestic or international conflict, and the degree of
militarization.
Malaysia is ranked among 33rd among 162 countries globally and is
the second most peaceful country after Singapore in the ASEAN
region. The three most peaceful countries are Iceland, Denmark and
Austria. Japan (8th) and Bhutan (16th) are the only two Asian countries that made it to the top 20 GPI 2014.
The Global Innovation Index 2014 ranks 143 countries across the
world in terms of their innovation capabilities, co-published by
Cornell University, INSEAD and the World Intellectual Property
Organisation. The theme, Human Factor in Innovation, explores the
role of human capital in the innovation process and underlying the
growing interest that firms and governments have shown in
identifying and energizing creative individuals and teams. Overall,
Malaysia ranks 33rd out of 143 countries, improving in Human
Capital & Research and Market Sophistication.
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MALAYSIA IN THE WORLD
JANUARY - JULY 2014
For more information on MPC’s competitiveness publications,
please go to www.mpc.gov.my
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Malaysia In The World
CALLING ALL JOURNALISTS
JOURNALISM COMPETITION 2014
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Follow our :
www.mpc.gov.my
1800 88 1140
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