0

CONTENTS World Competitiveness Yearbook: The Methodology 1 How The Report is Compiled 3 Highlights 4 Malaysia’s Performance in the 4 Competitiveness Factors 6 Economy Continues to Form the Bedrock of Society 9 Making Red Tape a Thing of the Past 12 For Enterprises, Efficiency is Key 15 The Building Blocks of an Economy: Infrastructure 18 National Mission: Acknowledge the Challenges 22 Appendices 1. The World Competitiveness Scoreboard 2012 23

2. Competitiveness Rankings by Populations Greater than 20 Million 25

3. Competitiveness Rankings by Per Capita less than USD20,000 26

4. Competitiveness Rankings by Asia-Pacific Region and

Competitiveness Rankings by ASEAN Region 27

5. Characteristics of Top Five Most Competitive Economies in WCY 2012 28

6. The Methodology of Computing the Rankings of WCY 2012 29

7. IMD World Competitiveness Yearbook 2012 Press Release 31

8. Taskforce on Enhancing Malaysia’s Competitiveness 33

9. Inter-Agency Planning Group (IAPG) on Competitiveness Data 34

1

WORLD COMPETITIVENESS YEARBOOK: THE METHODOLOGY

The World Competitiveness Yearbook (WCY) is published by the

Institute for Management Development (IMD), based in Lausanne,

Switzerland. For over 20 years, the IMD World Competitiveness

Yearbook has benchmarked the performance of the world’s most

competitive economies. The WCY contains a detailed profile for 59

economies as well as extensive section of data tables with global

rankings covering over 300 indicators. The data are primarily hard data,

measurable statistics to provide the most objective assessment of

countries’ competitiveness in today’s global world. This hard data is

complemented by perceptions of competitiveness by the business

community from the Executive Opinion Survey (EOS).

2. The World Competitiveness Yearbook 2012 (WCY 2012) presents competitiveness ranking in four categories:

2

i) global (overall); ii) by size (Population exceeding 20 million; and population

less than 20 million); iii) by wealth (GDP per capita greater than USD20,000 and

GDP per capita less than USD20,000); and, iv) by regions (Europe-Middle East-Africa, Asia-Pacific, and

The Americas).

3. The WCY is recognised as the leading annual report on the

competitiveness of nations and has been a pioneer in competitiveness

since 1989. It measures the different facets of a country’s competitive

environment: Economic Performance, Government Efficiency, Business

Efficiency and Infrastructure as follows:

Economic Performance• Macro-economic evaluation of the domestic

economy

Government Efficiency• Extent to which government policies are

conducive to competitiveness

Business Efficiency• Extent to which the national environment

encourages enterprises to perform in aninnovative, profitable and responsible manner

Infrastructure• Extent to which basic, technological, scientific

and human resources meet the needs ofbusiness

3

HOW THE REPORT IS COMPILED 4. This report is based on quantitative or statistical data and

qualitative or perception data, obtained from the feedback of the

private sector through the Executive Opinion Survey (EOS). The

survey was administered from January to March 2012 by the Malaysia Productivity Corporation (MPC) as a partner institute to IMD.

Respondents also took part in online surveys through the IMD’s website.

5. The perception data is used to complement the statistical data

to quantify issues that are not easily measured, for instance

management practices and labour relations. Respondents involved in

this survey are from the business community representing the Small and

Medium-Sized Enterprises (SMEs), large companies including the Multi-

National Corporations (MNCs) and also Government Linked Companies

(GLCs).

6. In determining overall competitiveness of nations, 4 competitiveness input factors, 20 sub-factors and 329 criteria are utilised in the WCY 2012. Among the criteria, 247 criteria (quantitative

data: 131 and perception data: 116) are taken into consideration to

determine the overall competitiveness ranking, while 82 criteria are used

as background information.

4

HIGHLIGHTS

7. Overall in the WCY 2012 report, Malaysia moves up to 14th position out of 59 competitive countries. Strengthening its overall competitiveness performance by 2 positions (2011:16th), this ranking

places Malaysia among the world’s top 15 most competitive countries led

by Hong Kong (1st); USA (2nd); Switzerland (3rd); Singapore, Sweden,

Canada, Taiwan, Norway, Germany, Qatar, Netherlands, Luxembourg,

Denmark, Malaysia and Australia.

8. The competitiveness performance in the overall scoreboard of the

59 economies is shown in Appendix 1 while Table 1 below presents the

Top 15 Countries of the World Competitiveness Scoreboard 2012.

Table 1: Top 15 Countries of the World Competitiveness Scoreboard 2012

5

9. Among countries with population greater than 20 million, Malaysia advances its position to 5th position out of 29 countries; ahead of Australia, 6th, United Kingdom, 7th, Korea, 8th, China Mainland,

9th and Japan, 10th (Appendix 2). Malaysia maintains its 2nd position among 29 countries ahead of China Mainland, Chile and Thailand

(Appendix 3) among countries with GDP per capita less than USD20,000.

10. Regionally, among 13 Asia-Pacific countries, Malaysia improves by one position to 4th; after Hong Kong, Singapore and Taiwan. Among

ASEAN countries, Malaysia maintained its 2nd position ahead of

Thailand (3rd), Indonesia (4th) and Philippines (5th) (Appendix 4). It is

stated by the IMD in its press release that “All Asian economies have declined except for Hong Kong (1st), Malaysia (14th) and Korea (22nd).”

6

MALAYSIA’S PERFORMANCE IN THE 4 COMPETITIVENESS FACTORS

11. The report assesses a country based on four competitiveness

factors: Economic Performance, Government Efficiency, Business Efficiency and Infrastructure. Among the four competitiveness factors,

Malaysia registered commendable improvements in both the Business Efficiency factor, from 14th last year to 6th position and Government Efficiency to 13th (2011:17th).

12. Notable contributory factors include Business Legislation, Finance,

Institutional Framework, Societal Framework and Productivity and

Efficiency. The improved performance in Government Efficiency and

7

Business Efficiency is testimony that the policies and strategies that

leverage on public private sector collaboration had borne fruits.

13. In Economic Performance, Malaysia remains among the top 10 countries, though its position slipped by 3 places from 7th last year. This

is attributable to employment issues; specifically in terms of employment

as a percentage of the population as well as marginal growth in

employment, and concerns over rising prices. Wealth creation also

needs to be expedited as Malaysia’s GDP per capita at USD9,609;

ranked 47th out of 59 economies, remains comparatively low.

14. Infrastructure improves marginally to 26th position from 27th position with vast improvements in Basic Infrastructure but areas of

concern remains in Health and Environment, Education and Scientific

Infrastructure. The infrastructure factor remains a challenge in Malaysia’s

journey to becoming a high income economy. This is reflected in its

position which had remained in the mid-twenties range, in the past few

World Competitiveness Reports as shown:

8

15. The overall performance of Malaysia in the four competitiveness

and 20 sub-factors is shown in Table 2.

Table 2: Malaysia’s Competitiveness Ranking

9

ECONOMY CONTINUES TO FORM THE BEDROCK OF SOCIETY

16. Malaysia’s improved ranking in the WCY 2012 reflects the impact of measures the Government has undertaken to improve competitiveness of the Malaysian economy. These wide ranging

measures include improvements in the delivery and efficiency of public

services and increased transparency and accountability. Malaysia’s

enhanced competitiveness is rooted in the innovative and bold initiatives

the government has undertaken this past year to drive development,

growth, and create a resilient private sector.

17. Malaysia’s Economic Performance is ranked at the 10th position in the WCY2012 attributable to higher investments. In the

face of challenging external environment, Malaysia remains attractive to

foreign and local investors. Foreign Direct Investment (FDI) in Malaysia

amounted to RM36.6 billion in 2011 contributing to Malaysia’s 11th

position (2011:13th) among 59 economies in terms of international

investment. The country had surpassed the RM83 billion target for

realised private investments with an achievement of RM94 billion in

2011.

18. Malaysia is now more selective in its search for Foreign Direct

Investment (FDI), with focus placed on quality investment which

10

would bring with it high technology, capital-intensive, green and

alternative energy technologies and knowledge intensive industries.

Besides quality FDIs, the government is also adopting a culture of

competitiveness and innovation which will facilitate the country’s

transition into a high-income economy.

19. Private Investment will be supported by domestic-oriented

industries and projects under the Economic Transformation Programme (ETP), while the public sector will remain supportive with

higher capital expenditure by both the Federal Government and the non-

financial public enterprises. This investment scenario is expected to

enhance the demand for high value jobs in the country.

20. In relation to international trade, Malaysia is among the top 10 performing countries, ranked 6th in WCY2012. Acknowledging the

importance of market diversification, various measures undertaken by

the Government such as improvements in the efficiency of financial

market, strong domestic competition and solid property rights have

enabled Malaysia to move up 6 positions to 24th out of 132 economies in

the latest World Economic Forum’s Global Enabling Trade Report

(GETR) 2012, placing Malaysia among the top 20 per cent of global

trade-enabled economies.

21. The Government acknowledges that Malaysia needs to keep diversifying its export markets and depend less on traditional markets

as a way to sustain the country’s growth momentum. With the crisis in

the United States, Eurozone and some parts of East Asia, Malaysia has

intensified export promotion programmes in the Middle East and North

11

African Region. In 2011, the United Arab Emirates imported RM12.86

billion from Malaysia, followed by Saudi Arabia (RM3.97 billion), and Iran

(RM3.21 billion).

22. To address the concerns of rising prices, the government had

taken proactive measures to address the rising cost of living through

programmes such as Bantuan Rakyat 1Malaysia financial assistance,

1Malaysia Clinics, Kedai Rakyat 1Malaysia and Menu Rakyat 1Malaysia.

These initiatives are expected to overcome the rakyat’s concern on food,

education and other living expenditure. Inflation is likely to stay subdued

and is expected to moderate this year, averaging between 2.5% and

3.0%.

23. In the Economic Performance factor, among the criteria that

Malaysia performs well are:

• Diversification of the economy (industries and export markets) is

extensive, ranked 4th (2011:14th).

• Unemployment rate (% of labour force) at 3.1%, ranked 4th

(2011:4th).

• Long term unemployment (% of labour force) at 0.2%, ranked 4th

(2011:4th).

• Current account balance (% of GDP) at 11.48%, ranked 5th

(2011:5th).

• Exports of goods (% of GDP) at 81.45%, ranked 5th (2011:4th).

• Tourism receipts (International tourism receipts as a percentage of

GDP) at 7.49, ranked 7th (2011:3rd).

12

• Direct investment flows abroad (% of GDP) at 5.30%, ranked 9th

(2011:7th).

• Trade to GDP ratio (Exports + Imports) / (2xGDP) at 87.50, ranked

10th (2011:5th).

Areas for Improvement under Economic Performance include:

• Employment (% of population) at 37.55%, ranked 53rd (2011:51st).

• GDP per capita (USD per capita) at USD9609.36, ranked 47th

(2011:46th).

• Exports of goods-growth (% change based on USD values) at

14.29%, ranked 47th (2011:24th).

MAKING RED TAPE A THING OF THE PAST

24. In the WCY 2012, Malaysia registered commendable improvement in Government Efficiency to 13th position (2011:17th),

with marked improvements in Institutional Framework, ranked 13th

(2011:17th); Business Legislation at 21st position (2011:30th); and Societal

Framework at 25th position (2011:29th).

25. Central to the value of private-sector dialogue and collaboration in

making red tape a thing of the past is the establishment of state-level

13

PEMUDAH in all states to address specifically state and local level

issues. Such a move is both timely and expedient as businesses engage

with local authorities in all their operations and Taskforces at the state

level can play a more active role in providing inputs and implementing

initiatives undertaken by PEMUDAH at the federal level. This has pushed

up Government Efficiency a few notches.

26. Malaysia improved 9 positions at 21st (2011:30th) in terms of Business Legislation. Proactive measures undertaken by the Focus

Group on Business Process Re-engineering (FGBPR) which has

embarked on “Modernising Business Licensing” (MBL) had enhanced

government delivery service. All procedures related to the application of

business-related licenses at 23 ministries and agencies were reviewed.

27. In this context, 52% of 761 licenses were identified to be eliminated

and simplified, leading to estimated business license compliance cost reduction of RM729 million. This had contributed to improving the

environment for ease of doing business in Malaysia, impacting positively

on the rankings for Government Efficiency.

28. To further enhance transparency and accountability, the Government has implemented various initiatives such as

implementation of Malaysia’s first ever complete Integrity Pact between

the government and its vendors/suppliers and the Corporate Integrity

Pledge by 64% of companies announced under the Entry Point Projects

(EPP).

14

29. Taking it to the next level, enforcement comes in with the passing

of the Whistleblower Protection Act on 15 December 2010 and the creation of compliance units in all five key enforcement agencies.

With the Reward and Recognition guidelines on rewarding civil servants

who report instances of corruption which lead to successful prosecutions,

the system is well in place to create the aspired regulatory ecosystem.

30. The Financial Sector Blueprint launched by the Central Bank

of Malaysia in December 2011 will further strengthen the capacity of the

financial sector in supporting Malaysia’s transformation towards

becoming a high value-added & high-income nation.

Among the criteria in the top 10 positions for Government Efficiency

are:

• Adaptability of Government policy to changes in the economy

is high at 7.30, ranked 2nd (2011:4th).

• Ease of doing business is supported by regulations at 7.16,

ranked 5th (2011:5th).

• Central Bank policy has a positive impact on economic

development at 7.82, ranked 6th (2011:3rd).

• Legal and regulatory framework encourages the

competitiveness of enterprises at 7.03, ranked 6th (2011:5th).

• Start-up days (number of days to start a business) at 6.00,

ranked 10th (2011:34th).

15

Areas for improvement under Government Efficiency:

• Government subsidies (%) (to private and public companies

as a % of GDP) at 4.25%, ranked 52nd (2011:50th).

• Tariff barriers (tariffs on imports: Most favoured nation simple

average rate) at 8.00, ranked 46th (2011:47th).

• Government budget surplus/deficit (% of GDP) at -4.99%,

ranked 45th (2011:43rd).

FOR ENTERPRISES, EFFICIENCY IS KEY

31. For the Business Efficiency factor, Malaysia is ranked among the top 10 in the world at 6th position (2011:14th). Key to the business

and investment environment are issues pertaining to talent as well as

human capital which are crucial to sustain Malaysia’s competitiveness.

Strategic programmes include review of the education system, review of

existing and proposed labour legislation and policies, foreign worker

policies, upskilling and upgrading the workforce, and strengthening

human resource management had been prioritised.

32. The effectiveness of these programmes is reflected in the

enhanced performance for Management Practices at 4th (2011:6th);

Attitudes and Values at 5th (2011:7th); Labour Market at 6th (2011:8th);

16

Finance at 10th (2011:17th) and Productivity and Efficiency at 23rd

(2011:27th). Another successful initiative is the ability to attract Malaysian top brains based overseas to return and serve in Malaysia.

33. In 2011, Talent Corporation had successfully attracted 680

Malaysians to return and work in the country under the Returning Expert

Programme. In the first 4 months of 2012, 400 Malaysian experts were

approved, reflecting the higher confidence among these professionals

that transformation is happening in Malaysia.

34. Recognising that a country cannot be competitive if only the public

sector is expediting change and improvement, the private sector delivery system also needs to be examined. In line with the

aspirations of the Government to improve business service delivery, a

Focus Group on Private Sector Efficiency and Accountability Towards Consumerism had been established to address issues of

human capital, consumer management, information technology and

various aspects of consumerism in developing business policy. The

setting up of this focus group serves as a catalyst for the private sector to

improve their delivery system for service excellence.

Several criteria in the top 10 positions under Business Efficiency factor

are:

• Industrial disputes (working days lost per 1,000 inhabitants

per year average 2008-2010) at 0.02, ranked 4th (2011:6th).

17

• Stock market capitalisation (% of GDP) at 172.64%, ranked

6th (2011:7th).

• Stock market index (% change on index in national currency)

at 0.78%, ranked 6th (2011:17th).

• Overall productivity-real growth (Estimates: % change of real

GDP per person employed) at 4.50%, ranked 9th (2011:13th).

• Remuneration in services professions (Gross annual income

including supplements such as bonuses, USD) ranked 9th

(2011:9th).

• Labour productivity (PPP) growth (% change of GDP (PPP)

per person employed per hour) at 4.50%, ranked 10th

(2011:13th).

Areas for improvement under Business Efficiency include:

• Female labour force (% of total labour force) at 35.96%,

ranked 53rd (2011:52nd).

• Labour force (% of population) at 43.12%, ranked 48th

(2011:55th).

• Part-time employment (% of total employment) at 4.30%,

ranked 47th (2011:45th).

18

THE BUILDING BLOCKS OF AN ECONOMY: INFRASTRUCTURE

35. Meeting the needs of enterprises in a cohesive and vibrant

business environment, Malaysia was ranked at 26th (2011:27th) among 59 economies in the Infrastructure factor. This factor measures the

extent of basic technological, scientific and human resources to meet the

needs of business enterprise.

36. Among the sub-factors in Infrastructure, the most significant improved performance was recorded by Basic Infrastructure at 8th

(2011:13th) and Technological Infrastructure at 16th (2011:18th), while

Scientific Infrastructure at 28th (2011:29th), Education at 33rd (2011:35th)

and Health and Environment which maintained its position at 36th, remain

areas of concern.

37. The Government’s continuous efforts to upgrade physical infrastructure and enhance access and connectivity in support of

economic development had contributed to a more vibrant domestic

business, higher tourism and investment inflows. The enhanced

performance is driven by big infrastructure projects and reliable

implementation.

19

38. Various government initiatives under the Government

Transformation Programme (GTP) mainly under the NKRAs of

Improving Rural Basic Infrastructure (RBI) and Improving Urban Public Transport have succeeded in delivering transformation benefits

to both the rural and urban communities. New and upgraded roads have

also opened up opportunities for greater economic development and

heralded the implementation of telecommunications infrastructure such

as telephone landlines and mobile connectivity.

39. The Government has also made significant progress in enhancing the quality of urban public transportation such as

increasing the public transport modal share in the Klang Valley and

subsequently apply the successful initiatives in other major cities. More

initiatives are continuously being undertaken in pursuit of Malaysia’s

ambition of creating a world-class, integrated urban transportation

system that is both affordable and efficient.

40. As Malaysia moves towards becoming more innovation-driven, ICT services are poised to spearhead the development of innovative

technologies and capabilities and enhance technological readiness.

Malaysia improved 2 positions to rank at 16th in terms of Technological

Infrastructure. Among the contributing criteria are increased investment

in telecommunications (ranked 7th); funding for technological

development which is readily available (ranked 9th); and technological

regulation that supports business development and innovation (ranked

8th).

20

41. Recognising that there are areas of concern in infrastructure, specifically for scientific, education, health and environment infrastructure, the Government had under the budget 2012, allocated

RM100 million to fund SMEs design and commercialisation efforts. This

involves innovation campaigns, reality shows, documentaries, market

validation of products and commercialisation of intellectual properties

(IPs) by institutions of higher learning.

42. With the establishment of the Malaysian Innovation Agency (AIM) and the launch of the National Innovation Strategy (NIS), innovation is expected to accelerate. One successful initiative includes

matching research from selected universities with the private sector with

over 1,000 (IPs) identified.

43. The Government’s ongoing reform on the healthcare delivery system has shown results where quality of hospital services has

improved and the health infrastructure meets the needs of society factor

as indicated by its improved ranking to 10th position from 18th.

Healthcare services continue to expand and the dual system in

healthcare service has provided greater accessibility choices of

healthcare institutions.

Among the criteria that achieved top ten positions under Infrastructure

are:

• High-tech exports (% of manufactured exports) at 44.52%,

ranked 4th (2011:3rd).

• Investment in telecommunications (% of GDP) at 0.83%,

ranked 7th (2011:8th).

21

• Science degrees (% of total first university degrees in science

and engineering) at 44.12%, ranked 7th (2011:6th).

• Total public expenditure on education (% of GDP) at 6.51%,

ranked 10th (2011: 4th).

Areas for improvement under Infrastructure include:

• Secondary school enrollment (% of relevant age group

receiving full-time education at 68.41%, ranked 56th

(2011:54th).

• Energy intensity (commercial energy consumed for each

dollar of GDP in kilojoules) at 13,793.14, ranked 52nd

(2011:53rd).

• Medical assistance (number of inhabitants per physician and

per nurse) ranked 51st (2011:50th).

• CO2 emissions intensity: carbon dioxide emissions intensity

(CO2 industrial emissions in metric tons per one million USD

of GDP) at 850.93, ranked 51st (2011:51st).

• Illiteracy % (adult (over 15 years) illiteracy rate as a

percentage of population at 7.54%, ranked 49th (2011:51st).

• Total health expenditure (% of GDP) at 4.8%, ranked 48th

(2011:51st).

• Total R&D personnel nationwide per capita (full time work

equivalent – FTE per 1000 people) at 0.78, ranked 46th

(2011:48th).

22

NATIONAL MISSION: ACKNOWLEDGE THE CHALLENGES

44. Though Malaysia is the top 14th most competitive nation, Malaysia

needs to continuously strive to sustain this competitiveness

achievement. This is particularly important in the context of achieving

high income economy status by 2020. In this regard, Malaysia needs to focus on addressing the following challenges:

• Continue efforts to drive economic growth through transformation programmes;

• Create modern value-adding jobs to boost productivity growth; • Ensure a conducive environment for businesses to thrive and grow; • Nurture and retain first-class skills required for a high-income

economy; and • Enhance commercialisation of R&D products and services.

45. As this yearbook indicates, the foundation and supporting infrastructure to encourage competitiveness is in existence. Acknowledging that innovation is the game changer, the Government has emphasised and emplaced policies and incentives to drive innovation in the country. It is now pivotal for the public and private sectors, as well as academia to further leverage on these

innovation initiatives and make innovation the priority. Amplifying an

organisational culture that is willing to allow fresh and divergent ideas to

take root is imperative towards enhancing the nation’s competitiveness.

23

Appendix 1

THE WORLD COMPETITIVENESS SCOREBOARD 2012

COUNTRIES 2012 2011

RANK VALUE RANK VALUE Hong Kong 1 100.00 1 100.00 USA 2 97.76 1 100.00 Switzerland 3 96.68 5 92.59 Singapore 4 95.92 3 98.56 Sweden 5 91.39 4 94.06 Canada 6 90.29 7 90.78 Taiwan 7 89.96 6 92.01 Norway 8 89.67 13 86.31 Germany 9 89.26 10 87.82 Qatar 10 88.48 8 90.22 Netherlands 11 87.16 14 85.71 Luxembourg 12 86.05 11 86.48 Denmark 13 84.88 12 86.42 Malaysia 14 84.22 16 84.12 Australia 15 83.19 9 89.26 UAE 16 82.49 28 73.19 Finland 17 82.47 15 84.38 United Kingdom 18 80.14 20 80.28 Israel 19 78.57 17 81.63 Ireland 20 78.47 24 77.10 Austria 21 77.67 18 81.62 Korea 22 76.75 22 78.50 China Mainland 23 75.77 19 81.10 New Zealand 24 74.88 21 79.80 Belgium 25 73.48 23 77.60 Iceland 26 71.54 31 70.82 Japan 27 71.35 26 75.21 Chile 28 71.29 25 76.83 France 29 70.00 29 71.39

24

THE WORLD COMPETITIVENESS SCOREBOARD 2012 (cont’d)

COUNTRIES 2012

2011 RANK VALUE RANK VALUE

Thailand 30 69.00 27 74.89 Estonia 31 66.95 33 68.26 Kazakhstan 32 66.89 36 66.15 Czech Republic 33 66.19 30 70.99 Poland 34 64.18 34 66.86 India 35 63.60 32 70.65 Lithuania 36 63.42 45 60.21 Mexico 37 63.18 38 64.03 Turkey 38 62.24 39 63.79 Spain 39 61.12 35 66.68 Italy 40 60.64 42 62.75 Portugal 41 60.38 40 63.79 Indonesia 42 59.50 37 64.61 Philippines 43 59.27 41 63.29 Peru 44 58.71 43 62.65 Hungary 45 57.34 47 58.92 Brazil 46 56.52 44 61.04 Slovak Republic 47 55.67 48 58.59 Russia 48 55.16 49 58.38 Jordan 49 53.24 53 55.18 South Africa 50 53.16 52 56.86 Slovenia 51 52.96 51 56.88 Colombia 52 51.89 46 59.77 Romania 53 48.93 50 57.50 Bulgaria 54 48.45 55 53.56 Argentina 55 48.20 54 54.67 Ukraine 56 46.88 57 51.45 Croatia 57 45.30 58 49.40 Greece 58 43.05 56 51.88 Venezuela 59 31.45 59 35.25

25

Appendix 2

COMPETITIVENESS RANKINGS BY POPULATIONS GREATER THAN 20 MILLION

COUNTRIES 2012 2011

RANK VALUE RANK VALUE USA 1 97.76 1 100.00 Canada 2 90.29 3 90.78 Taiwan 3 89.96 2 92.01 Germany 4 89.26 5 87.82 Malaysia 5 84.22 6 84.12 Australia 6 83.19 4 89.26 United Kingdom 7 80.14 8 80.28 Korea 8 76.75 9 78.50 China Mainland 9 75.77 7 81.10 Japan 10 71.35 10 75.21 France 11 70.00 12 71.39 Thailand 12 69.00 11 74.89 Poland 13 64.18 14 66.86 India 14 63.60 13 70.65 Mexico 15 63.18 17 64.03 Turkey 16 62.24 18 63.79 Spain 17 61.12 15 66.68 Italy 18 60.64 20 62.75 Indonesia 19 59.50 16 64.61 Philippines 20 59.27 19 63.29 Peru 21 58.71 21 62.65 Brazil 22 56.52 22 61.04 Russia 23 55.16 24 58.38 South Africa 24 53.16 26 56.86 Colombia 25 51.89 23 59.77 Romania 26 48.93 25 57.50 Argentina 27 48.20 27 54.67 Ukraine 28 46.88 28 51.45 Venezuela 29 31.45 29 35.25

26

Appendix 3

COMPETITIVENESS RANKINGS BY GDP PER CAPITA LESS THAN USD20,000

COUNTRIES 2012 2011 RANK VALUE RANK VALUE

Taiwan 1 89.96 1 92.01 Malaysia 2 84.22 2 84.12 China Mainland 3 75.77 3 81.10 Chile 4 71.29 4 76.83 Thailand 5 69.00 5 74.89 Estonia 6 66.95 8 68.26 Kazakhstan 7 66.89 10 66.15 Czech Republic 8 66.19 6 70.99 Poland 9 64.18 9 66.86 India 10 63.60 7 70.65 Lithuania 11 63.42 17 60.21 Mexico 12 63.18 12 64.03 Turkey 13 62.24 13 63.79 Indonesia 14 59.50 11 64.61 Philippines 15 59.27 14 63.29 Peru 16 58.71 15 62.65 Hungary 17 57.34 19 58.92 Brazil 18 56.52 16 61.04 Slovak Republic 19 55.67 20 58.59 Russia 20 55.16 21 58.38 Jordan 21 53.24 24 55.18 South Africa 22 53.16 23 56.86 Colombia 23 51.89 18 59.77 Romania 24 48.93 22 57.50 Bulgaria 25 48.45 26 53.56 Argentina 26 48.20 25 54.67 Ukraine 27 46.88 27 51.45 Croatia 28 45.30 28 49.40 Venezuela 29 31.45 29 35.25

27

Appendix 4

COMPETITIVENESS RANKINGS BY ASIA – PACIFIC REGION

COUNTRIES 2012 2011

RANK VALUE RANK VALUE Hong Kong 1 100.00 1 100.00 Singapore 2 95.92 2 98.56

Taiwan 3 89.96 3 92.01 Malaysia 4 84.22 5 84.12 Australia 5 83.19 4 89.26 Korea 6 76.75 8 78.50 China Mainland 7 75.77 6 81.10 New Zealand 8 74.88 7 79.80 Japan 9 71.35 9 75.21 Thailand 10 69.00 10 74.89 India 11 63.60 11 70.65 Indonesia 12 59.50 12 64.61 Philippines 13 59.27 13 63.29

COMPETITIVENESS RANKINGS BY ASEAN REGION

COUNTRIES 2012 2011

RANK VALUE RANK VALUE Singapore 1 95.92 1 98.56 Malaysia 2 84.22 2 84.12 Thailand 3 69.00 3 74.89 Indonesia 4 59.50 4 64.61 Philippines 5 59.27 5 63.29

28

Appendix 5

Characteristics of Top Five Most Competitive Economies in WCY 2012

HONG KONG

USA

SWITZERLAND

SINGAPORE SWEDEN

Year 2012 2011 Year 2012 2011 Year 2012 2011 Year 2012 2011 Year 2012 2011 Rank 1 1 Rank 2 2 Rank 5 6 Rank 4 3 Rank 5 4

• Hong Kong has a high level of macro-economic stability due to its excellent fiscal management which has resulted in a low level of government debt and an improving macroeconomic environment.

• It offers one of the world’s most business friendly environments with world class institutions, infrastructure, market efficiency and the dynamism of its financial sector.

• Hong Kong has very efficient goods markets characterised by openness to foreign ownership, extremely low tariffs and low trade barriers.

• The regulatory framework has proven to be robust and sound in guarding against systematic failures, with high degree of interconnectedness to overseas financial centres.

• Hong Kong’s financial sector shone brightly in recent years because of its stock markets and remarkable IPO activity, expanding expertise in funds management and decision to experiment with an offshore renminbi.

• Despite all its

setbacks, the US remains at the center of world competitiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation.

• US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates strongly with the business sector in R&D.

• Combined with the scale opportunities afforded by the sheer size of its domestic economy-the largest in the world by far, continues to make the US very competitive.

• The labour markets are characterised by the ease and affordability of hiring workers and significant wage flexibility.

• The goods markets are characterised by low levels of distortion within the context of a very competitive environment.

• In terms of ICT readiness, the country can rely on excellent and affordable ICT infrastructure.

• Switzerland’s

scientific research institutions are among the world’s best, strong collaboration between the academic and business sectors with high company spending on R&D.

• Excellent infrastructure, highly developed financial market as well as efficient labour market.

• Independent judiciary, strong rule of law, and a highly accountable public sector.

• Excellent capacity for innovation and a very sophisticated business culture.

• Dual education: Switzerland is known as one of the few countries which practises a dual education system after compulsory schooling. There are about 200 recognised apprenticeships in Switzerland.

• Strong focus on

education, providing individuals with the skills needed for a rapidly changing global economy.

• Has been assessed as the best in the world for both lack of corruption in the country and government efficiency.

• Singapore also performs well in efficiency of its goods and labour markets and for its financial market sophistication.

• Singapore also has world-class infrastructure with excellent roads, ports, and air transport facilities.

• Programs championed by the Tripartite Alliance for Fair Employment Practices (TAFEP) and policies to attract high calibre foreign manpower contribute to Singapore’s standing as a low-risk business location to key decision makers.

• The country benefits

from the world’s most transparent and efficient public institutions.

• The HSE National Clinical Programmes provide a national, strategic and co-ordinated approach to a wide range of clinical services. The aim is to modernise the manner in which hospital services are provided across a wide range of clinical areas through the standardisation of access to, and delivery of, high quality, safe and efficient hospital services.

• Very low levels of corruption and undue influence and a government that is considered to be one of the most efficient in the world: public trust of politicians.

• Private institutions in Sweden demonstrate the utmost ethical behavior supported by strong auditing and reporting standards. • Sweden has developed

a very sophisticated business culture and is one of the world’s leading innovators.

29

Appendix 6

THE METHODOLOGY OF COMPUTING THE RANKINGS OF WCY 2012

The method of computing the rankings for World Competitiveness is as follows:

Below are the steps in computing the rankings for World

Competitiveness: i) The national environment is divided into four main factors

namely, Economic Performance, Government Efficiency,

Business Efficiency and Infrastructure.

ii) In turn, each of these factors is divided into 5 sub-factors

which highlight every facet of the areas analysed. Altogether,

the WCY features 20 such sub-factors.

iii) These 20 sub-factors comprise of 247 criteria and 82

background information, each of the 329 criteria is ranked,

although each sub-factor does not necessarily have the same

30

number of criteria (for example, it takes more criteria to

assess Education than to evaluate Prices).

iv) Each sub-factor, independently of the number of criteria it

contains, has the same weight in the overall consolidation of

results that is 5% (20x5 =100).

v) Criteria can be hard data, which analyse competitiveness as it

can be measured (e.g. GDP) or soft data, which analyse

competitiveness as it can be perceived (e.g. Availability of

competent managers). Hard data criteria represent a weight of

2/3 in the overall ranking whereas the survey data represent a

weight of 1/3. In addition, some criteria are for background

information only, which means that they are not used in

calculating the overall competitiveness ranking (e.g.

Population under 15).

vi) Finally, aggregating the results of the 20 sub-factors makes

the total consolidation, which leads to the overall ranking of

the WCY.

FOR FURTHER INFORMATION, PLEASE VISIT www.imd.org/wcy12

31

Appendix 7

IMD WORLD COMPETITIVENESS YEARBOOK 2012 PRESS RELEASE

Top 3 are Hong Kong, US and Switzerland

US competitiveness remains the key to global recovery LAUSANNE, SWITZERLAND (May 31, 2012) - IMD, a top-ranked global business school based in Switzerland, today announced the findings of its annual World Competitiveness Yearbook (WCY). The WCY rankings measure how well countries manage their economic and human resources to increase their prosperity. The most competitive of the 59 ranked economies in 2012 are Hong Kong, the US and Switzerland. Despite all its setbacks, the US remains at the center of world competitiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation. “US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong “pull effect” on the world. Europe is burdened with austerity and fragmented political leadership and is hardly a credible substitute, while a South-South bloc of emerging markets is still a work in progress. In the end, if the US competes, the world succeeds!” said Professor Stephane Garelli, director of IMD’s World Competitiveness Center. The most competitive nations in Europe are Switzerland (3), Sweden (5) and Germany (9), which have export-oriented manufacturing and fiscal discipline. Meanwhile, Ireland (20), Iceland (26) and Italy (40) look better equipped to bounce back than Spain (39), Portugal (41) and Greece (58), which continue to scare investors.

32

Emerging economies are not yet immune to turmoil elsewhere. China (23), India (35) and Brazil (46) have all slipped in the rankings, while Russia (48) climbed only one place. All Asian economies have declined apart from Hong Kong (1), Malaysia (14) and Korea (22). Latin America also had a tough year, with every nation falling except Mexico (37). Globalization and economic reform under threat One-third of the 329 ranking criteria come from an exclusive IMD survey of more than 4,200 international executives, which reveals a growing skepticism in some of the 59 economies toward globalization and the need for economic reforms. Globalization is still seen as a positive development in Ireland, Scandinavia, Chile, the UAE and many Asian economies. But attitudes are much more negative in Greece, Russia, most of Eastern Europe, a growing part of Latin America, and, last of all, in France. Attitudes toward reforms are more positive in Ireland, emerging Asia, Qatar and the UAE, Switzerland and Sweden. But the impetus for reform is much weaker in Argentina, the Czech Republic, Spain, and lastly – again – in France, where austerity is seen as a cure worse than the disease. “The recession has made the world economy more fragmented and diverse than ever, forcing companies to operate several parallel business models,” said Professor Garelli. ”Emerging economies are relying on domestic demand and national champion companies to insulate themselves from economic turmoil, while the “submerging” developed economies are turning to re-industrialization. In both cases, economic nationalism is back and protectionism is tempting.”

33

Appendix 8

TASKFORCE ON ENHANCING MALAYSIA’S COMPETITIVENESS The Taskforce on Enhancing Malaysia’s Competitiveness is

chaired by YB Dato’ Sri Mustapa Mohamed, Minister of International

Trade & Industry (MITI) with YB Senator Dato’ Sri Idris Jala,

Minister in the Prime Minister’s Office and Chief Executive Officer of

PEMANDU, as the Co-Chair. The Malaysia Productivity

Corporation (MPC) is the secretariat to this high level Taskforce.

The Taskforce on Enhancing Malaysia’s Competitiveness

comprises 17 members (11 public sector, 6 from private sector) with

the following terms of reference:

(i) To develop national policy initiatives to address short and long

term competitiveness issues;

(ii) To prioritise competitiveness issues that have the greatest

impact on productivity, standard of living and leadership in

global market; and

(iii) To collaborate with relevant bodies and agencies as well as

engaging with international ranking agencies involved in

enhancing Malaysia’s competitiveness.

34

Appendix 9

INTER-AGENCY PLANNING GROUP (IAPG) ON COMPETITIVENESS DATA

The Inter-Agency Planning Group (IAPG) on Competitiveness Data is led by the Malaysia Productivity Corporation to:

(i) coordinate and collaborate efforts in ensuring competitiveness

data is current and reflective of the actual situation in Malaysia;

(ii) provide and validate data required by IMD; and

(iii) engage with International Data Providers so as to ensure

Malaysia’s competitiveness data is well represented.

The IAPG comprises members from:

1. Department of Statistics Malaysia (DOSM) 2. Ministry of Finance (MOF) 3. Ministry of Education (MOE) 4. Ministry of Higher Education (MOHE) 5. Ministry of Domestic Trade, Co-operatives and Consumerism

(MDTCC) 6. Malaysia Science and Technology Information Centre

(MASTIC) 7. Public Works Department (JKR) 8. Intellectual Property Corporation of Malaysia (MYiPO) 9. Department of Immigration (DOI) 10. Bank Negara Malaysia (BNM) 11. Employees Provident Fund (EPF) 12. Inland Revenue Board of Malaysia (IRB) 13. Energy Commission 14. Ministry of Human Resources (MOHR) 15. Valuation and Property Services Department 16. Malaysian Communications and Multimedia Commission

(MCMC) 17. Bursa Malaysia

35

For further information on the World Competitiveness Yearbook 2012

(WCY 2012), please contact:

Malaysia Productivity Corporation (MPC) (Global Competitiveness Department (GCD))

Lorong Produktiviti, Off Jalan Sultan, 46200 Petaling Jaya,

Selangor Darul Ehsan, Malaysia.

Tel: 603-7960 0173 Fax: 603-7960 0206

Email: GlobalCompetitiveness@mpc.gov.my

1800 88 1140 www.mpc.gov.my