18 is not the magic number


  • Business News
  • Saturday, 03 Oct 2015

We should know more about the Global Competitiveness Report than Malaysia’s rank

Every time Malaysia fares well in a reputable international ranking exercise, it’s bound to make the news here. That’s only natural – and necessary even. People would often overlook such achievements unless pride and promotion combine to highlight them.

And it’s not just about asserting a country’s bragging rights and marketing its strengths. Publicising national accomplishments is a way to inspire, motivate and assure the citizenry.

When Malaysia moved up two spots to occupy the No.18 slot in the Global Competitiveness Index 2015-2016, released on Wednesday by the World Economic Forum (WEF), the International Trade and Industry Ministry (Miti) promptly issued a media statement pointing out that this is the country’s best performance in the index since 2005.

“In the context of the current challenging global environment, this upgrade is welcome news for Malaysia.

This ranking is also an endorsement of the progress we have made in enhancing efficiency and competitiveness through the Government Transformation Programme and Economic Transformation Programme, says the minister, Datuk Seri Mustapa Mohamed.

The index is the most prominent component of the Global Competitiveness Report, which the Switzerland-based WEF says is an annual assessment of the factors driving productivity and prosperity in 140 countries.

The Miti statement declares that Malaysia is now the 18th most competitive economy in the world.

There’s nothing wrong with that, but knowing the context of the title surely doesn’t hurt. The 400-page report is the product of several months of gathering and analysing feedback and data; it’s a terrible waste if all we get out of this is a number.

Here’s a look at some other key aspects of the report and index:

>How the index is built

The WEF defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of a country”.

It adds, “We focus on productivity because growth models suggest that, in the long run, productivity is the most fundamental factor explaining the level of prosperity of a country and hence its citizens.”

The index brings together country-level data for 114 indicators that come under 12 categories. These 12 so-called pillars of competitiveness “collectively make up a comprehensive picture of a country’s competitiveness”.

They 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, and innovation.

About two-thirds of the data used in the index is derived from the Executive Opinion Survey. According to the WEF, between February and June this year, more than 14,000 business leaders in 140 economies were surveyed on topics related to national competitiveness.

The rest of the data comes from international sources’ statistics. Examples include Internet bandwith, broadband subscriptions, imports and exports as a percentage of GDP, trade tariffs, government budget balance and inflation.

>More about the survey

“Key to this study, the Executive Opinion Survey is the longest-running and most extensive survey of its kind, capturing the opinions of business leaders around the world on a broad range of topics for which data sources are scarce or, frequently, nonexistent on a global scale,” says the WEF.

It relies on 160 partner institutes worldwide, which are “instrumental in carrying out the Executive Opinion Survey... and in imparting the results of the report at the national level”. The Malaysian partner institute is the Malaysia Productivity Corp.

Malaysia had 96 respondents in the 2014 survey and 101 in this year’s.

Here are a few of the survey questions:

– In your country, to what extent can police services be relied upon to enforce law and order?

– In your country, how common is illegal diversion of public funds to companies, individuals, or groups?

– In your country, to what extent do government officials show favouritism to well-connected firms and individuals when deciding upon policies and contracts?

– In your country, how do you rate the corporate ethics of companies (ethical behaviour in interactions with public officials, politicians, and other firms)?

– In your country, to what extent do regulators ensure the stability of the financial market?

> What the report highlights about Malaysia.

“Up for the fourth consecutive edition, Malaysia (18th, up two) consolidates its position among the world’s top 20 most competitive economies and remains the highest ranked among the developing Asian economies. It ranks in the top 50 of each of the 12 pillars, performing most strongly in goods market efficiency (6th) and financial market development (9th, although down five this year).

“The country improves in most pillars, notably by 13 places in technological readiness (47th), which nonetheless remains its weakest feature.

Small gains in macroeconomic stability (35th, up nine) are mainly the result of a reduced budget deficit (3.7% of GDP), the lowest in six years, although the country has not managed to balance its budget in almost 20 years.

“Amid the good general assessment, the index points to specific areas for improvement, including the low participation rate of women in the labour force. The ratio — 59 women for every 100 men — is one of the lowest (118th) outside the Arab world.”

> Best and worst indicators

Of the 114 indicators, Malaysia’s best rank is No.2 (out of 140 economies) for ease of access to loans and venture capital availability. Both indicators are under the pillar of financial market development.

The worst three indicators for Malaysia are women in labour force (118th position), redundancy costs (107th) and secondary education enrolment (100th).

Executive editor Errol Oh is again inserting remarks at the end of his column. His wife says it shows a different side of him. But he doesn’t see it.

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