Malaysia slips in economic competitiveness

By Yow Hong Chieh
May 18, 2011 | The Malaysian Insider

KUALA LUMPUR, May 18 — Malaysia fell six slots from 10th to 16th in a closely-watched international ranking of economic competitiveness despite recent government assurances that it was winning the fight against graft while improving accountability and transparency.

The Institute of Management Development (IMD) 2011 World Competitive Rankings released yesterday also saw Singapore knocked off its perch by this year’s joint leaders Hong Kong and the United States.

Even as the US regained the top spot after losing it for the first time in decades to Singapore last year, Malaysia is now only two places above the spot it occupied two years ago after dropping the most in ranking out of the top 20 countries.

Other countries in the top 10 were Sweden, Switzerland, Taiwan, Canada, Qatar, Australia and Germany. Taiwan, which rose two spots to place sixth this year, was the only other Asian nation in the top 10.

IMD World Competitiveness Centre director Prof Stéphane Garelli said this year’s competitiveness was “more national” and was characterised by re-industrialisation, exports, and a more critical look at delocalisation.

“This trend is triggered by the rise in commodity and transport prices and higher labour costs in emerging economies. National champions are favoured everywhere and borders re-surface again,” he said in a statement on the IMD website.

Malaysia’s drop this year comes despite the Performance Management and Delivery Unit’s (Pemandu) assurance that the government is on track to tackle corruption as well as improve accountability and transparency.

Pemandu has been quick to quote better scores in two other corruption tests — the Political and Economic Risk Consultancy’s (PERC) Asian Intelligence Newsletter and the World Economic Forum’s (WEF) Global Competitiveness Report — as a measure of the government’s success in fighting graft.

But opposition lawmakers were quick to accuse the Najib administration of “picking and choosing” favourable surveys for ignoring Malaysia’s lower score in last year’s Transparency International (TI) Corruption Perception Index (CPI).

Malaysia’s CPI score in 2010 was trimmed slightly from 4.5 the year before to 4.4 out of 10, with 10 being the least corrupt, putting the country on par with Namibia and Turkey.

TI explained that the score reflected concerns that the Najib administration lacked the political will to weed out corruption and stressed that steps must be taken to tackle problems with implementation.

Despite government efforts to fight corruption, the Malaysian Anti-Corruption Agency’s (MACC) inability to prosecute “big fish”, lack of progress in the Port Klang Free Zone (PKFZ) fiasco, inaction by the Attorney-General’s Chambers in the “Lingam tapes” case, and contracts without open tender have continued to haunt public perception.