Thursday, June 5, 2014

Improving Business Competitiveness

pilihanraya kini     2:55 PM    

THE BIG DEAL: Better rankings signify that reforms instituted in Malaysia are reaping results

IN the past three years, Malaysia has been chalking up encouraging results in global competitiveness rankings. On June 2, AT Kearney's Washington DC office with the White House jointly released findings of the FDI Confidence Index 2014, pointing out Malaysia's jump to the 15th position from the previous 25th. Signifying a leap in investor confidence within a 12-month period, the Index demonstrates investors' confidence in Malaysia's capacity to build competitiveness and move up the value chain into high technology and skill-intensive segments.

In the recently announced IMD World Competitiveness Yearbook 2014, Malaysia climbed three notches to 12th position. Effectively, we are now in the top 20 percentile in the world to provide a competitive business environment for private sector to thrive.

Earlier, the World Bank placed us 6th in its Doing Business Report 2014, rendering Malaysia one of the top destinations in the world offering ease of doing business. We have ably overtaken developed economies such as Norway, Australia and the United Kingdom.

Why are these global achievements so important for a country and why do we relentlessly pursue the move up the ranking ladder?

Essentially, these are indicators that reforms instituted in Malaysia are reaping the right results. It signifies the international community's recognition of the strength of our economic fundamentals, the commitment of the government to pursue structural reforms and its assurance of our political stability.

Ranking one-upmanship puts us in good stead to compete with regional counterparts. Singapore, Indonesia and Taiwan are but some examples of markets nipping at our heels in the global race for long-term, credible investments and global partnerships that build competitive strengths.

Top companies are increasingly attracted to our shores and this fits well with our drive to become a regional hub in strategic areas. Large-scale, innovative multinationals go a long way to create high-value, high-paying jobs for Malaysians, as well as allow for local companies to leverage on the exchange of knowledge.

The proof of the pudding is in the eating. Approved pipeline investment has been on the rise year on year. In 2011, approved investment was at RM154.6 billion; in 2012, RM167.8 billion and last year, RM216.5 billion. Since 2010, these results have surpassed the government's annual investment target of RM148 billion under the 10th Malaysia Plan.

Whilst pipeline investment offers us an insight into what is in store for the economy, the true test of investment lies in realised numbers. In the past few years, realised investments have also been rising year on year. In 2010, total investment hit RM179.8 billion (55 per cent private investment); in 2011 RM197.2 billion (57 per cent private investment); in 2012, RM241.7 billion (58 per cent private investment) and last year, RM264.6 billion (61 per cent private investment).

Why are we so strongly encouraged by these achievements and why must we keep pursuing the global competitiveness agenda?

In 2010, the government said we wanted to transform Malaysia to become a high-income economy by 2020. Our true north target is to achieve gross national income per capita of US$15,000 (RM48,000) by attracting US$444 billion in investments and creating 3.3 million jobs by 2020. Under the Economic Transformation Programme, the government has implemented transformative actions to become more efficient in how we relate to and deal with the private sector. Difficult processes have been simplified. Unnecessary licences and roadblocks removed.

Efforts across ministries and agencies to deliberately improve investing conditions in Malaysia have hit all the right markers. Pemudah, for example, was established in 2007 to address specific areas to improve the ease of doing business in Malaysia as identified by the World Bank and they have done well.

Even as we take pride as a nation in international recognition, we should not for a moment be complacent. In our drive towards high income, the rankings indicate we are on the right track in building a competitive business environment, and provide encouragement to keep at it.

By subjecting ourselves to the rigours and scrutiny of global organisations, our eyes are on the ball to continuously fine-tune structural integrity in pursuit of a sustainable and an inclusive economic agenda.


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