WHAT HAS GONE WRONG WITH MALAYSIA’S COMPETITIVENESS?

If we were on the right track to the vision of a developed nation, our competitiveness would not have been sliding continuously.

According to the World Competitiveness Yearbook 2017 by Lausanne-based International Institute for Management Development (IMD), Malaysia’s ranking has been falling for a third consecutive year.

The fall has been eye-popping: We used to be at an enviable 12th position in 2014, down to 14th the following year and further down to 19th last year and 24th this year. This shows that indeed our competitiveness has remained largely stagnant.

With our off-track government policies, coupled with political turmoil, it is within anticipation that our global competitiveness is heading the other way, with the ringgit devaluation serving as a perfect gauge.

IMD evaluates 63 countries and territories based on four major factors, 20 year time-series and 346 criteria. Among the four factors, Malaysia has performed badly in infrastructure (32nd) and government efficiency (25th).

The government implemented a number of major infrastructural projects in the 1990s, including an extensive network of expressways and LRT. However, many of our roads today are potholed, our sewage system clogged, street surveillance cameras unable to work, among others. All these point to the fact that our infrastructure has been severely dated and poorly maintained.

On the contrary, many other countries begin to catch up with us, with brand new subways, high speed trains, etc.

We used to be among the earliest regional countries to develop our Internet economy. But today, our Internet speed remains sluggish, and we need China to help us develop our e-commerce sector now. We have been far outpaced by many countries, and our infrastructure may not cope with the rapid changes.

As a matter of fact, the above two factors are not the only ones that erode our competitiveness. We have a host of other negative factors such as race-based policies, poor education, over-dependence on unskilled foreign laborers, low productivity and misallocation of national resources, among others.

For example, according to the annual competitiveness report 2016/17 by the Malaysia Productivity Corporation, the country’s labor productivity increased by only 3.5% last year, 0.2 of a percentage point below the target of 3.7%, and far outshone by China (6.6%), Indonesia (4.6%) and the Philippines (4.4%).

Against such a backdrop, our MTUC has sought to increase the minimum wage from RM1,000 to RM1,500 per month.

It is perfectly alright to raise the minimum wage if our productivity is up to the mark. Significantly higher wages on the back of lackluster productivity will only push up the operating costs of companies, forcing them to suffer enormous losses, lay off workers or simply wind up in the end.

Raising employees’ salaries without corresponding improvement in productivity will only create an unrealistic high-income dream.

In another instance, our neighbor Singapore, third in the global competitiveness ranking, tops in its digital competitiveness. Unfortunately, Utusan Malaysia accused the city-state of sidelining the Malays in the name of meritocracy, arguing that meritocracy was “open to manipulation”.

Singapore has been able to attract some of the world’s best brains thanks to the government’s color-blind policies. As for us, almost six decades after Independence we are still stuck deep in the quagmire of racism today.

We can’t go far with excessive protectionism. This is a very straightforward logic that our politicians don’t seem to see.

In the meantime, misallocation of resources has been dangerously serious. Even as Bank Negara has warned of oversupply in highrise condominiums and shopping malls, the government is still hugely passionate about mega real estate projects, including MRCB-EPF joint venture to develop the RM21 billion Bukit Jalil project.

The country’s resources should have been utilized to groom our talented young people and develop our own soft power. Nevertheless, the government has done exactly the opposite, cutting back on scholarships and education allocations. It is not hard to imagine where our competitiveness will head to in the future.

I personally feel that policies, or rather mispolicies, are not the only things that kill our competitiveness. Retrogressive politicking is another. Owing to a lack of accountability, our politicians only care about window-dressing works so long as these are good enough to see them through the election.

To arrest the continued drop in our competitiveness, it is imperative that the government set up a task force to fix the problems. But again, this is not going to help us if we don’t pick up a lesson or two from our past mistakes.

– Mysinchew

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