Adapt fast to changes or risk losing competitiveness

  • Business
  • Thursday, 18 Aug 2016

KUALA LUMPUR: Malaysia risks losing its competitiveness to its upcoming neighbouring countries if it does not adapt fast enough to the changes sweeping across the world.

According to Malaysian Investment Development Authority (Mida), innovation should not only be confined to company level, but changes also need to be implemented at the Government level to maintain the country’s economic and trade performance.

“Innovation is not just about company – companies can come up with innovative ideas but if the Government does not understand the dynamics of changes that are going on in the world, and formulate new policies/regulatory requirements or even abolishing some existing ones in order to compete with other countries, we will lose out,” Mida deputy CEO Datuk Phang Ah Tong said.

“Vietnam (for instance) is very aggressive in changing the way of doing business, whereas Malaysia is still going around with all the ‘wayang kulit’... by the time we wake up and become convinced of the changes around us, it might be too late... we will lose all our competitiveness,” he said at a panel discussion on Public Private Partnerships here yesterday.

It was highlighted during the discussion that Thailand had already overtaken Malaysia to become the second-largest exporter in Asean after Singapore since last year, while neighbouring countries such as Indonesia and Vietnam were catching up.

Phang noted that while Malaysia was competent in “producing technology” as a manufacturing nation, the country continued to lag in terms of “product technology” where innovation is involved.

Sharing the same sentiment, Malaysia External Trade Development Corp (Matrade) head of strategic planning division Wan Latiff Wan Musa said: “Innovation is the way forward ... small and medium-sized enterprises (SMEs) need support to undertake innovation. If we do not catch up with innovative process, we will lag behind our regional competitors.”

According to Wan Latiff, the country needs to reduce its dependence on multinational corporations (MNCs) for electrical and electronics (E&E) exports to ensure trade sustainability.

At present, E&E accounts for about 35% of Malaysia’s total exports. Of that, more than 90% of Malaysia’s E&E exports are by MNCs.

“We need to diversify to homegrown companies to help us reduce our reliance on MNCs,” he said, adding that SMEs would play an increasingly important role.

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