Malaysia’s vastly improved global rankings show economy on right track
SUSTAINED economic reform is essential. If there's one lesson we can take away from the economic turmoil in the West, it's that the failure to change will drive prosperity away.
After decades of uninterrupted growth, Western nations are losing their edge in a cut-throat global environment which has seen Asia and Latin America emerge as alternative economic powerhouses.
The fact that eurozone leaders were contemplating seeking assistance from China and Brazil last weekend to bail out Greece speaks volumes on how the balance of economic power has shifted eastwards and the failure of the developed nations to reform their economies.
Malaysia, on the other hand, is seeing a rise in investor confidence.
This is in part due to the bold economic reforms we have undertaken since 2009, including liberalisation.
The proof is the fact that both the World Economic Forum (WEF) and theWorld Bank have recently highlighted Malaysia's vastly improved economic competitiveness.
The WEF's Global Competitiveness Report ranked Malaysia the 21st most competitive among 142 countries surveyed, overtaking countries like South Korea (24th) and New Zealand (25th).
Separately, the World Bank's Doing Business Report placed Malaysia 18th out of 183 countries in terms of “ease of doing business”, ahead of economic powerhouses like Germany (19th), Japan (20th) and Taiwan (25th).
Of course, the question then arises: what do these rankings actually mean?
Aren't there better measures of economic success, such as gross domestic product, income distribution or employment levels?
Surely the countries Malaysia is beating in the rankings are doing better than us in these areas?
These are valid concerns but I would argue that international rankings like the WEF's and the World Bank reports are an equally good, if not better, barometer of a country's economic health.
First, improvements in competitiveness and ease of doing business rankings show that a country is on the right track to achieve economic success, particularly in uncertain times.
Second, the rankings also confirm that Malaysia's economic reforms are being received positively by the global market.
More importantly, competitiveness indices also demonstrate an economy's growth potential.
They are not so much static measurements of how an economy is doing at a particular point in time like GDP numbers are.
Conversely, the rankings track the ability of a country to create wealth, sustain progress and its resilience to global economic uncertainty.
For example, a nation which is endowed with natural resources such as oil, coal and gold may well have a higher GDP, but it is not necessarily competitive if these goods are not used efficiently and do not add value to its economy.
Malaysia's good performance in the international rankings are therefore a clear sign that the economy is on the right track and that we should be re-doubling our efforts.
Indeed, the Government's initiatives such as revamping the government's delivery services, increasing transparency and lowering the cost of doing business are beginning to have positive effects.
This is no time to gloat, however. Competitiveness, after all, only means one's potential to achieve economic success, and is worthless if unrealised.
Furthermore, an economy's well-being rests on the efforts of all sectors.
Governments can assist in facilitating conditions to create wealth, but are less able to directly engage in its actual creation. This is the role of the private sector.
The Government of Malaysia is doing its utmost to make “doing business” in the country easier.
The private sector must do its part by creating jobs and wealth, as well as making Malaysia a preferred FDI destination.
Indeed, increasing the private sectors' role in the economy is the underpinning philosophy of the Economic Transformation Programme(ETP).
Furthermore, Malaysians cannot forget that this is the age of the knowledge-based economy. Innovation and creativity are now key economic drivers.
China and Indonesia's economic might, as well as the inevitable resource depletion, means that we cannot remain a manufacturing cum oil-producing economy forever.
Moreover, the countries that consistently top the competitiveness rankings like Switzerland, Singapore and Sweden have continuously demonstrated the ability to innovate and use high technology to create better goods and services.
One way we could do this is by encouraging collaboration between academia and industry to not only facilitate research and development but also make its outcomes marketable.
The setting-up of the Innovation Agency in the Prime Minister's office will be a big help in this regard.
Of course, none of this will be easy and it is obvious that Malaysia has a lot of work to do if we are to ensure our future prosperity.
Still, our rankings show that the country is heading in the right direction and not drifting away as some think.
Malaysia's best days are ahead of it, but only if its people work together to realise its potential and continue the process of transformation that has already begun.
The writer is the International Trade and Industry Minister
