booklet gcr bi(1)

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PERFORMANCE OF MALAYSIA IN THE GLOBAL

COMPETITIVENESS REPORT 2010-2011

INTRODUCTION

1. The Global Competitiveness Report 2010-2011 by the World

Economic Forum based in Geneva, Switzerland covers 139

countries (GCR2009-2010: 133 countries). Six new countries have

been included this year and they are Angola, Cape Verde, Rwanda,

Swaziland, the Islamic Republic of Iran and Lebanon. The Reportuses 30 percent statistical data (32 criteria) and 70 percent survey

data (79 criteria) from the Executive Opinion Survey. There were

110 executives from Malaysian companies who had responded to the

survey administered from February to April 2010. The report

examined factors enabling national economies to achieve

sustained economic growth and long term prosperity through its

12 pillars of competitiveness involving 111 indicators.

2. It then ranks countries into 3 stages of development based on

the level of GDP per capita at market exchange rates. The three

stages are Factor-driven (less than US$2,000), Efficiency-

driven (US$3,000- US$9,000) and Innovation-driven (greater than

US$17,000). Malaysia with a GDP per capita of US$6,897is placed

in the efficiency-driven stage of development, where the countrys

advantage comes from producing more advanced products and

services highly efficiently. Heavy investment in efficient

infrastructure, business-friendly government administration, strong


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investment incentives, improving skills, and better access to

investment capital allow major improvements in productivity.

HIGHLIGHTS

3. The Global Competitiveness Report (GCR) 2010-2011 will be

released to the public by the World Economic Forum (WEF) on 9th

September 2010. The top ten countries are Switzerland, Sweden,

Singapore, United States, Germany, Japan, Finland, Netherlands,

Denmark and Canada. Malaysia is ranked at 26th position, out of

139 countries (GCR2009-2010: 24th/133), while maintaining its score

of 4.88 (GCR2009-2010: 4.87) out of a maximum score of 7. In this

regard, two countries namely, Saudi Arabia, 21st (GCR 2009-2010:

ranked 28th) and Israel, 24th (GCR 2009-2010: 27th) have overtaken

Malaysia with higher index scores of 4.95 and 4.91 respectively,

thus placing Malaysia at the 26th position. The 25 countries that are

ahead of Malaysia are mainly developed countries with high GDP percapita and in the innovation stage of development.

4. It must be noted that Malaysias position has been on a

declining trend for three consecutive years from 21st position in

2008-2009 (134 countries) to 24th position in 2009-2010 (133

countries) and to 26th position in 2010-2011 (139 countries). Over

these years, it was recorded that the areas affecting Malaysias

performance are in the four main pillars of Higher Education and

Training, ranked 49th (GCR2009-2010: 41st), Institutions, ranked

42nd (GCR2009-2010: 43rd), Technological Readiness, ranked 40th

(GCR2009-2010: 37th) and Labour Market Efficiency, ranked 35th


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(GCR2009-2010: 31st). The performance of Malaysia in the 12 pillars

comprising of 111 criteria is as shown in Table 1.

Table 1: Performance of Malaysia in the Global Competitiveness

Report 2010-2011THE GLOBAL COMPETITIVENESS INDEX

Ranked 26th/139 (GCR 09-10:24th /133)Basic RequirementsRanked 33rd(GCR 09-10: 33rd)

Efficiency EnhancersRanked 24th

(GCR 09-10: 25th)

Innovation &Sophistication FactorsRanked 25th(GCR 09-10: 24th)

Pillar 1(21 criteria)InstitutionsRanked 42nd(GCR 09-10: 43rd)

Pillar 5(8 criteria)Higher Education &TrainingRanked 49th(GCR 09-10: 41st)

Pillar 11(9 criteria)Business SophisticationRanked 25th(GCR 09-10: 24th)

Pillar 2(9 criteria)InfrastructureRanked 30th(GCR 09-10: 26th)

Pillar 6(15 criteria)Goods MarketEfficiencyRanked 27th(GCR 09-10: 30th)

Pillar 12 (7 criteria)InnovationRanked 24th(GCR 09-10: 24th)

Pillar 3(6 criteria)MacroeconomicEnvironmentRanked 41st(GCR 09-10: 42nd)

Pillar 7(9 criteria)Labor Market EfficiencyRanked 35th(GCR 09-10: 31st)

Pillar 4(10 criteria)Health & PrimaryEducation

Ranked 34th(GCR 09-10: 34th)

Pillar 8(9 criteria)Financial MarketDevelopment

Ranked 7th(GCR 09-10: 6th)

Pillar 9 (6 criteria)TechnologicalReadinessRanked 40th(GCR 09-10: 37th)

Pillar 10(2 criteria)Market SizeRanked 29th(GCR 09-10: 28th)

5. Among the countries in the innovation stage of development

that had slipped downwards include United States ranked 4th

(GCR2009-2010:2nd); Denmark 9th (GCR2009-2010:5th); Canada

10th (GCR2009-2010:9th); Taiwan 13th (GCR2009-2010:12th);


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Australia 16th (GCR2009-2010:15th); Korea 22nd (GCR2009-

2010:19th); and New Zealand 23rd (GCR2009-2010:20th). Countries

that have improved in their rankings include Qatar, 17 th (GCR2009-

2010: 22nd), Saudi Arabia, 21st (GCR2009-2010: 28th), Israel, 24th

(GCR2009-2010:27th), China, 27

th(GCR2009-2010: 29

th) and Brunei

Darussalam, 28th

(GCR2009-2010: 32nd

). The full listing of the 139

countries is attached in Appendix l.

6. Malaysia remains the most competitive country among the 29

countries in the Efficiency-driven stage of development. Among 22

Asia Pacific countries, Malaysia is ranked at 8th

position, ahead ofChina, Thailand, India, Indonesia, Philippines and Pakistan as

shown in Table 2. While, Malaysia is ranked at 2nd position among

out of 8 countries in ASEAN countries as shown in Table 3. The list

of economies by the different stages of development is as in

Appendix ll.


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Table 2: The Global Competitiveness Index 20102011Rankings for Asia-Pacific Countries

Country/Economy

GCI 20102011

Rank Score

Singapore 1 5.48

Japan 2 5.37

Hong Kong SAR 3 5.27

Taiwan, China 4 5.21

Australia 5 5.11

Korea, Rep. 6 4.93New Zealand 7 4.92

Malaysia 8 4.88

China 9 4.84

Brunei Darussalam 10 4.75

Thailand 11 4.51

Indonesia 12 4.43

India 13 4.33

Vietnam 14 4.27

Sri Lanka 15 4.25

Philippines 16 3.96

Mongolia 17 3.75

Bangladesh 18 3.64

Cambodia 19 3.63

Kyrgyz Republic 20 3.49

Pakistan 21 3.48

Nepal 22 3.34


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Table 3: The Global Competitiveness Index 20102011Rankings for ASEAN Countries

7. Malaysias ranking to 26th position is essentially the result of

unfavourable assessment particularly in terms of business costs

of terrorism, 103

rd

(GCR2009-2010: 97

th

) and reliability of policeservices, 50th (GCR2009-2010: 48th) which is perceived to impact

significantly on business costs. Business costs of crime and

violence as well as organized crime are lowly ranked at 93rd and

77th respectively. However there has been a slight improvement

in the rankings of these criteria by 2 positions (GCR2009-2010:

95th) for business costs of crime and violence and 6 positions for

organized crime (GCR2009-2010: 83rd).

8. The other factors that had affected Malaysias

competitiveness performance are technological readiness, health

Country/Economy

GCI 20102011

Rank Score

Singapore 1 5.48

Malaysia 2 4.88

Brunei Darussalam 3 4.75

Thailand 4 4.51

Indonesia 5 4.43

Vietnam 6 4.27Philippines 7 3.96

Cambodia 8 3.63


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and primary education as well as labour market efficiency. The

criteria which Malaysia is assessed unfavourably in terms of

technological readiness are internet users at 57.6 per 100

population, ranked 39th(GCR2010-2009: at 62.5 per 100 population,

ranked 22nd), broadband internet subscribers at 6.1 per 100

population, ranked 62nd(GCR2009-2010: at 4.8 per 100 population

ranked 55th) and FDI and technology transfer, ranked at 16th

(GCR2009-2010: 8th). The National Broadband Initiative (NBI) is

expected to contribute to developments in technological readiness.

9. In terms of health, areas of concern are business impact ofmalaria, 98th (GCR20092010: 86th), malaria incidence, 90th

(GCR2009 2010: 84th), business impact of HIV/AIDS 93rd,

(GCR2009-2010: 81st) and HIV/AIDS prevalence, 82nd (GCR2009-

2010: 78th). It is reported that the Malaria incidence in 71 countries

are considered as not endemic while Malaysia recorded 55.9 cases

per 100,000 population. In terms of tuberculosis incidence, 70

countries had less than 50 cases of TB while Malaysia had 102.4

cases.

10. In this regard, several measures have been undertaken by the

Health Ministry in particular to curb these re-emerging diseases.

These include increasing awareness about the diseases, conducting

mandatory evaluations of all HIV cases and performing TB evaluation

at government clinics and hospitals. The ministry also has required

evaluations for at-risk populations in prisons and rehabilitation centers,

as well as for foreign workers. In addition, the ministry has

implemented a system to identify patients who do not return to seek


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follow-up treatment. The setting-up of 1Malaysia clinics would make

basic health services more accessible to the public.

11. Another area of perceived weakness is pertaining to

primary education enrollment rate at 96.1% ranked at 47 th

position (GCR2009-2010: 97.5%, ranked 28th), secondary school

enrollment rate at 68.2% ranked at 99th position (GCR2009-2010:

69.1%, ranked 98th) as compared to top performing countries such

as Japan, New Zealand, United Kingdom and Canada who had

achieved close to 100% enrollment in primary education. However,

the overall quality of education in Malaysia had improved, such asthe quality of maths and science education ranked 31st

(GCR2009-2010: 34th), internet access in schools, 36th (GCR2009-

2010: 40th), local availability of specialized research and training

services, ranked 25th(GCR2009-2010: 26th) and quality of primary

education, ranked 30th(GCR2009-2010: 31st).

12. Malaysias labour market efficiency is another area that needs

to be enhanced. This is reflected in the following criteria which

include female participation in the labour force as a percentage of

male participation at 0.58 is ranked 111th (GCR2009-2010: 0.57,

ranked 107th), redundancy costs in weeks of wages at 75 weeks is

ranked at 100th (GCR2009-2010: 75 weeks, ranked 96th). In

addition, hiring and firing practices in Malaysia is perceived to be

impeded by restrictive regulations at a rank of 50 th (GCR2009-2010:

46th). However, areas in labour market efficiency that recorded

improvement are flexibility of wage determination at 44th

(GCR2009-2010: 54th), pay and productivity at 6th (GCR2009-2010:


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9th) as well as cooperation in labour-employer relations at 16th

(GCR2009-2010: 19th).

13. In OECD countries, the concept of flexicurity which is

combining flexible regulation, safety nets and active social policies

have been emplaced. Germany, Japan and Korea provide aids to

vulnerable workers and initiated the temporary unpaid leave. Among

the other reforms introduced to reduce employment rigidity include

eliminating requirements relating to redundancies, making working

hours more flexible, easing restrictions on fixed term contract and

reducing dismissal costs. With regard to female participation in thelabour force, Norway was the first country in the world to have a

comprehensive legislation on equality in a separate Gender Equality

Act. Norway has been championing women participation and equality

initiatives in politics and public administration.

14. The report also highlighted a number of competitive

advantages. Malaysia scored highest in the Legal Rights Index,

together with Hong Kong SAR and Singapore. Malaysia also scored

high on the Strength of Investor Protection, where we are ranked

4th after New Zealand, Singapore and Hong Kong SAR. Malaysia is

assessed to have a well-developed financial market development

with ease of financing through local equity, ranked 11th

(GCR2009-2010: 15th) and ease of access to loan, 10th (GCR2009-

2010: 13th). Venture capital availability, soundness of banks,

transparent regulation of security exchanges have also contributed

to financial market development in Malaysia.


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15. Malaysia has performed well in business sophistication (25th)

and innovation (24th), which augurs well for the future. These include

criteria such as state of cluster development is widespread, ranked

15th (GCR2009-2010: 17th), control of international distribution,

17th (GCR2009-2010: 31st), willingness to delegate authority, 17th

(GCR2009-2010: 20th), value chain breadth, 20th (GCR2009-2010:

22nd), government procurement of advanced technology

products, 8th (GCR2009-2010: 9th) and company spending on R&D,

16th (GCR2009-2010: 19th).

RECOMMENDATIONS

16. It is recommended by the World Economic Forum that for

Malaysia to improve its competitiveness further, Malaysia needs

to improve its higher education system. Specifically on

increasing enrollment rates at the secondary and tertiary levels

has to be increased. There is also a need to further encourage

greater technological adoption. Malaysia has to prepare its

conversion into an innovation-driven country where companies

compete through innovation, producing new value added and

different goods using the most sophisticated production

processes.

17. Malaysia has taken proactive measures to enhance its

competitiveness such as the New Economic Model (NEM) which

emphasises on achieving high income, the Government

Transformation Programme (GTP) to enhance government

efficiency, and the implementation of initiatives under the Tenth

Malaysia Plan. Entry Point Projects (EPP) in the areas of


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healthcare and education would augur well for the Malaysian

healthcare and education services. A notable initiative in line

with the KRA to reduce crime is that the police had stepped up

measures by deploying more personnel in crime prone areas to

create police visibility and make their presence felt to deter

crimes and violence. It is imperative that the implementation of

these programmes and initiatives are expedited so that results can

be felt in the near future.

18. MPC and ISIS as Partner Institutes to WEF will continue to

communicate and advocate to the Malaysian public and private

sectors on the different issues to ensure Malaysias overall

competitiveness. Proactive engagement with the stakeholders will

be further intensified through seminars, conferences, media releases,

publications as well as through the work and programmes of MPCs

12 consultative panels to ensure information on competitiveness reach

the public at large and the business community in particular those

involved in the Executive Opinion Survey. Malaysias engagement

with the World Bank, the World Economic Forum and the Institute

for Management Development need to be continuously undertaken

to share best practices of better performing economies for Malaysia to

benchmark. These engagements would also provide information on

the latest developments in Malaysia.

19. Malaysias innovation institutional structure and intellectual

property regime has to be strengthened as they are critical

innovation enablers. The setting-up of the National Innovation Council

will provide the impetus for Malaysias transformation into an


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Appendix I

Global Competitiveness Index 2010-2011 Rankings and2009-2010 Comparisons

Country/Economy GCI 20102011 GCI 2009-2010

Rank Score Rank ScoreSwitzerland 1 5.63 1 5.60Sweden 2 5.56 4 5.51Singapore 3 5.48 3 5.55United States 4 5.43 2 5.59Germany 5 5.39 7 5.37Japan 6 5.37 8 5.37Finland 7 5.37 6 5.43Netherlands 8 5.33 10 5.32

Denmark 9 5.32 5 5.46Canada 10 5.30 9 5.33Hong Kong SAR 11 5.27 11 5.22United Kingdom 12 5.25 13 5.19Taiwan, China 13 5.21 12 5.20Norway 14 5.14 14 5.17France 15 5.13 16 5.13Australia 16 5.11 15 5.15

Qatar 17 5.10 22 4.95Austria 18 5.09 17 5.13Belgium 19 5.07 18 5.09

Luxembourg 20 5.05 21 4.96Saudi Arabia 21 4.95 28 4.75Korea, Rep. 22 4.93 19 5.00New Zealand 23 4.92 20 4.98Israel 24 4.91 27 4.80United Arab Emirates 25 4.89 23 4.92

Malaysia 26 4.88 24 4.87China 27 4.84 29 4.74

Brunei Darussalam 28 4.75 32 4.64Ireland 29 4.74 25 4.84Chile 30 4.69 30 4.70

Iceland 31 4.68 26 4.80Tunisia 32 4.65 40 4.50Estonia 33 4.61 35 4.56Oman 34 4.61 41 4.49

Kuwait 35 4.59 39 4.53Czech Republic 36 4.57 31 4.67Bahrain 37 4.54 38 4.54Thailand 38 4.51 36 4.56Poland 39 4.51 46 4.33


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Rank Score Rank ScoreCyprus 40 4.50 34 4.57

Puerto Rico 41 4.49 42 4.48

Spain 42 4.49 33 4.59Barbados 43 4.45 44 4.35Indonesia 44 4.43 54 4.26Slovenia 45 4.42 37 4.55Portugal 46 4.38 43 4.40Lithuania 47 4.38 53 4.30

Italy 48 4.37 48 4.31Montenegro 49 4.36 62 4.16Malta 50 4.34 52 4.30India 51 4.33 49 4.30Hungary 52 4.33 58 4.22Panama 53 4.33 59 4.21South Africa 54 4.32 45 4.34

Mauritius 55 4.32 57 4.22Costa Rica 56 4.31 55 4.25

Azerbaijan 57 4.29 51 4.30Brazil 58 4.28 56 4.23Vietnam 59 4.27 75 4.03Slovak Republic 60 4.25 47 4.31Turkey 61 4.25 61 4.16

Sri Lanka 62 4.25 79 4.01Russian Federation 63 4.24 63 4.15Uruguay 64 4.23 65 4.10

Jordan 65 4.21 50 4.30Mexico 66 4.19 60 4.19

Romania 67 4.16 64 4.11Colombia 68 4.14 69 4.05Iran, Islamic Rep.* 69 4.14 - -Latvia 70 4.14 68 4.06Bulgaria 71 4.13 76 4.02Kazakhstan 72 4.12 67 4.08Peru 73 4.11 78 4.01

Namibia 74 4.09 74 4.03Morocco 75 4.08 73 4.03

Botswana 76 4.05 66 4.08Croatia 77 4.04 72 4.03Guatemala 78 4.04 80 3.96Macedonia, FYR 79 4.02 84 3.95Rwanda* 80 4.00 - -

Egypt 81 4.00 70 4.04El Salvador 82 3.99 77 4.02Greece 83 3.99 71 4.04Trinidad and Tobago 84 3.97 86 3.91


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Rank Score Rank ScorePhilippines 85 3.96 87 3.90

Algeria 86 3.96 83 3.95

Argentina 87 3.95 85 3.91Albania 88 3.94 96 3.72Ukraine 89 3.90 82 3.95Gambia, The 90 3.90 81 3.96Honduras 91 3.89 89 3.86Lebanon* 92 3.89 - -

Georgia 93 3.86 90 3.81Moldova* 94 3.86 - -Jamaica 95 3.85 91 3.81Serbia 96 3.84 93 3.77Syria 97 3.78 94 3.76Armenia 98 3.76 97 3.71Mongolia 99 3.75 117 3.43

Libya 100 3.74 88 3.90Dominican Republic 101 3.72 95 3.75

Bosnia andHerzegovina

102 3.70 109 3.53

Benin 103 3.69 103 3.56Senegal 104 3.67 92 3.78Ecuador 105 3.65 105 3.56

Kenya 106 3.65 98 3.67Bangladesh 107 3.64 106 3.55Bolivia 108 3.64 120 3.42

Cambodia 109 3.63 110 3.51Guyana 110 3.62 104 3.56Cameroon 111 3.58 111 3.50Nicaragua 112 3.57 115 3.44

Tanzania 113 3.56 100 3.59Ghana 114 3.56 114 3.45Zambia 115 3.55 112 3.50Tajikistan 116 3.53 122 3.38Cape Verde* 117 3.51 - -Uganda 118 3.51 108 3.53Ethiopia 119 3.51 118 3.43

Paraguay 120 3.49 124 3.35Kyrgyz Republic 121 3.49 123 3.36Venezuela 122 3.48 113 3.48Pakistan 123 3.48 101 3.58Madagascar 124 3.46 121 3.42Malawi 125 3.45 119 3.42Swaziland* 126 3.40 - -Nigeria 127 3.38 99 3.65Lesotho 128 3.36 107 3.54


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Rank Score Rank ScoreCte dIvoire 129 3.35 116 3.43

Nepal 130 3.34 125 3.34

Mozambique 131 3.32 129 3.22Mali 132 3.28 130 3.22Timor-Leste 133 3.23 126 3.26Burkina Faso 134 3.20 128 3.23Mauritania 135 3.14 127 3.25Zimbabwe 136 3.03 132 2.77

Burundi 137 2.96 133 2.58Angola* 138 2.93 - -Chad 139 2.73 131 2.87

Note:*New entrants


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Appendix IIList of countries/ economies at each stage of development

Stage 1Transition from 1 to

2Stage 2

Transition from 2 to3

Stage 3

Bangladesh Algeria Albania Bahrain AustraliaBenin Angola Argentina Barbados AustriaBolivia Armenia Bosnia and Hervegovina Chile Belgium

Burkina Faso Azerbaijan Brazil Croatia CanadaBurundi Bostwana Bulgaria Estonia CyprusKemboja Brunei Darussalam Cape Verde Hungary Czech RepublicCameroon Egypt China Latvia DenmarkChad Georgia Colombia Lithuania FinlandCte d'Ivoire Guatemala Costa Rica Oman FranceEthiopia Guyana Dominican Republic Poland GermanGambia Indonesia Ecuador Puerto Rico GreekGhana Iran Islamic Rep. El Salvador Slovak Republic Hong Kong SARHonduras Jamaica Jordan Taiwan, China IcelandIndia Kazakhstan Lebanon Trinidad and Tobago IrelandKenya Kuwait Macedonia, FYR Uruguay IsraelKyrgyz Republic Libya Malaysia Italy

Lesotho Morocco Mauritius JapanMadagascar Paraguay Mexico Korea Rep.Malawi Qatar Montenegro LuxembourgMali Saudi Arabia Namibia MaltaMauritania Sri Lanka Panama NetherlandsMoldova Swaziland Peru New ZealandMongolia Syria Romania NorwayMozambique Ukraine Russian Federation PortugalNepal Venezuela Serbia SingaporeNicaragua South Africa SloveniaNigeria Thailand SpainPakistan Tunisia SwedenPhilippines Turkey SwitzerlandRwanda United Arab Emirates

Senegal United KingdomTajikistan United StatesTanzaniaTimor-LesteUgandaVietnamZambiaZimbabwe

Income Threshold For Establishing Stages of Development

Stage of Development GDP per Capita (in US$)

Stage 1: Factor Driven 17,000

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