Competition is rife in the world. Individuals compete, businesses compete, and countries compete.
Many studies have shown that competition drives excellence. Economists view competition as an effective instrument for fair trade.
In contrast, without competition, businesses can become monopolistic, which leads to injustice. The rise of business cartels is another sign of unhealthy competition.
We have witnessed many instances of an unhealthy business environment in the world. Here at home, people attribute high food prices to a form of cartelism.
Many countries create national watchdogs to oversee and manage the rise of unfair competition. They monitor and evaluate business merger attempts to ensure healthy competition is maintained. We have our own competition commission as the watchdog.
At the international level, the establishment of the World Trade Organisation (WTO) was also aimed at promoting fair and healthy competition in global trade.
Malaysia’s 34th position in the 2024 World Competitiveness Ranking marks its poorest performance in years. This was the subject of a recent discourse aimed at finding solutions. Many of our top economists were there to offer ideas.
Neighbouring Singapore regained its first rank, while Thailand and Indonesia overtook Malaysia. The meeting was informed that Malaysia’s drop from the 27th position in 2023 was largely due to the decline in business and government efficiency.
Thailand was ranked 25th in 2024, while Indonesia ranked 27th. The ranking by the Switzerland-based International Institute for Management Development (IMD) comprises four “factors”, namely business efficiency, government efficiency, economic performance, and infrastructure.
There were 67 countries in the 2024 World Competitiveness Ranking. Malaysia’s worst performance was in business efficiency, where it ranked 40th, compared to 32nd in 2023, with a score of 41.5.
In particular, within the sub-factor of productivity and efficiency, Malaysia fell 17 spots to 53rd, while the sub-factor of management practices dropped 11 places to 42nd.
Notably, Malaysia suffered a decline in all five sub-factors within business and government efficiency. In the factor of government efficiency, the sub-factors of business legislation fell five places to No. 50 in the rankings, while the societal framework fell three places to 42nd, and public finance dropped two spots to 35th.
The report listed five challenges for Malaysia, namely increasing investment in research and development to boost business resilience, optimising the labour market to maximise workforce productivity, updating policies and regulations to improve global competitiveness, leveraging advanced technologies to accelerate productivity growth, and mitigating increasing costs through strategic productivity enhancements.
The top five positions in the 2024 World Competitiveness Ranking were taken by Singapore, followed by Switzerland, Denmark, Ireland, and Hong Kong.
We used to be at number 10 in 2010. There is no reason why we cannot scale up again with the right strategies. We need to, because such a ranking has implications for investments, especially foreign direct investments.
I would single out strengthening our talent pool, especially in the technology space, as a key strategy. This is where investment in research and development (R&D) can make the difference. We are still low on industry-academia collaboration in R&D. There are ways to improve, which have been suggested countless times.
It is unfortunate that we have remained resistant to change. We are still stuck in our unwillingness to collaborate. We need to put in place a proper governance structure to invigorate such industry-academia R&D partnerships.
A factor that may have contributed to our 10th position in 2010 was that very governance structure. The Performance Management and Delivery Unit (Pemandu), which was created to further our economic transformation agenda, did an excellent job of bringing industry and academia closer.
Competitiveness ranking should not be taken lightly. We need to adopt the right strategies to improve our ranking position. It can mean a lot as we venture out to secure investment. In an era where technology is a key determinant of the world economy, we need to revisit our technology development strategy.
Even more crucial is technology for sustainability. Raising such talents will go a long way to addressing the decline in our competitiveness ranking. This is becoming more urgent as interest in higher education shows signs of waning. We need to address this.
Professor Datuk Dr Ahmad Ibrahim is affiliated with the Tan Sri Omar Centre for STI Policy at UCSI University and is an associate fellow at the Ungku Aziz Centre for Development Studies, Universiti Malaya.
The views expressed here are the author’s own and do not necessarily reflect those of Twentytwo13.
