In its country profile highlights, WEF said the four-year decline in the quality of institutions that pushed Malaysia from 17 in to 43 had finally come to a halt, with the country remaining stable at 42nd place this year.
The main drag within this pillar remains the security situation (80th, up five places), said WEF on Thursday, Sept 9.
“In order to improve its competitiveness further, Malaysia will need to improve its higher education system, with particularly low enrollment rates at the secondary and tertiary levels.
“It would also be well served by encouraging greater technological adoption, particularly the use of ICTs, for productivity enhancements,” said the WEF.
Among Asia Pacific countries, Malaysia ranked ahead of China, Thailand, India, Indonesia and the Philippines.
Commenting on Malaysia’s ranking, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said the country scored the highest in the Legal Rights Index, together with Hong Kong SAR and Singapore.
Malaysia also scored high on the Strength of Investor Protection, where it ranked fourth after New Zealand, Singapore and Hong Kong SAR, he said in a statement on the same day.
“While we acknowledge that there are a number of areas for improvement, we are happy to see that the Report highlights a number of positive elements about the Malaysian economy.
“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 loans, 10th (GCR2009-2010: 13th),” he said.
Venture capital availability, soundness of banks, and transparent regulation of security exchanges had also contributed to financial market development in Malaysia, he said.
The Report noted that while Malaysia was ranked 26th, the country had a well-developed financial market (7th) and an efficient goods market (27th).
Malaysia also does relatively well in more complex categories, which matter the most for advanced economies, namely business sophistication (25th) and innovation (24th), boding well for the future, according to the report.
"On the other hand, there are also some good suggestions coming from the Report on areas where we have to improve. Four main pillars adversely affecting Malaysia's ranking are 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 (GCR2009-2010: 31st).
“I am glad to note that the government has already launched nationwide initiatives on tackling these issues" said Mustapa.
He said that among the proactive measures undertaken by the government to enhance Malaysia's competitiveness are the New Economic Model (NEM), which emphasises the achievement of high income, the Government Transformation Programme (GTP) to enhance government efficiency, and the implementation of initiatives under the Tenth Malaysia Plan.
"As these initiatives begin to take effect, we can expect to see improvements in Malaysia's overall competitiveness in the near future" he said.
The GCR's competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by Sala-i-Martin and introduced in 2004.
The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development.
The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
Switzerland topped the overall rankings in The Global Competitiveness Report 2010-2011, released today by the World Economic Forum ahead of its Annual Meeting of the New Champions 2010 in Tianjin.
The United States fells two places to fourth position, overtaken by Sweden (2nd) and Singapore (3rd), after already ceding the top place to Switzerland last year.
The WEF said that in addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States’ public and private institutions, as well as lingering concerns about the state of its financial markets.
“The Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and with Norway at 14th.
“Sweden overtakes the US and Singapore this year to be placed 2nd overall. The United Kingdom, after falling in the rankings over recent years, moves back up by one place to 12th position,” said the WEF.
WEF said China (27th) continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30.
Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable, it said.
Several Asian economies performed strongly, with Japan (6th) and Hong Kong SAR (11th) also in the top 20.
In Latin America, Chile (30th) is the highest ranked country, followed by Panama (53rd) Costa Rica (56th) and Brazil.
Several countries from the Middle East and North Africa region occupy the upper half of the rankings, led by Qatar (17th), Saudi Arabia (21st), Israel (24th), United Arab Emirates (25th), Tunisia (32nd), Kuwait (35th) and Bahrain (37th), with most Gulf States continuing their upward trend of recent years.
In sub-Saharan Africa, South Africa (54th) and Mauritius (55th) feature in the top half of the rankings, followed by second-tier best regional performers Namibia (74th), Botswana (76th) and Rwanda (80th).
Written by Surin Murugiah
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