Hong Kong's overall competitiveness ranking falls by two places to 7th

閱讀中文版本

Singapore and Taiwan ranked fourth and sixth respectively, keeping them in the top 10 globally.

In the latest World Competitiveness Yearbook (WCY) 2023 published by the International Institute for Management Development (IMD), Hong Kong's overall competitiveness ranking fell by two places from the preceding year, thus ranking seventh globally for this edition.

Denmark retained the first spot this year, followed by Ireland and Switzerland in the second and third place respectively. Notably, Ireland's ranking jumped nine places from last year.

The ranking is based on 336 competitiveness criteria categorised into four factors: economic performance, government efficiency, business efficiency, and infrastructure.

Global top 10 in 2023:

1. Denmark (1^st in 2022)
2. Ireland (11^th in 2022)
3. Switzerland (2^nd in 2022)
4. Singapore (3^rd in 2022)
5. Netherlands (6^th in 2022)
6. Taiwan, China (7^th in 2022)
7. Hong Kong SAR (5^th in 2022)
8. Sweden (4^th in 2022)
9. USA (10^th in 2022)
10. UAE (12^th in 2022)

In Asia, Singapore and Taiwan ranked fourth and sixth respectively, keeping them in the top 10 globally. On the other hand, Indonesia saw the biggest improvement in ranking, rising by 10 places compared to last year.

Ranking across Asia in 2023:

• Singapore (2023 ranking: 4^th; compared to 2022: -1)
• Taiwan, China (2023 ranking: 6^th; +1)
• Hong Kong SAR (2023 ranking: 7^th; -2)
• China (2023 ranking: 21^st ; -4)
• Malaysia (2023 ranking: 27^th; +5)
• Korea Rep. (2023 ranking: 28^th; -1)
• Thailand (2023 ranking: 30^th; +3)
• Indonesia (2023 ranking: 34^th;  +10)
• Japan (2023 ranking: 35^th ; -1 )
• India (2023 ranking: 40^th ; -3)
• Philippines (2023 ranking: 52^nd ; -4)

Zooming into different criteria, Hong Kong continued to rank second globally in "government efficiency", and the ranking in "infrastructure" also improved by one spot to 13^th. However, due to the epidemic upsurge last year, the city fell slightly in "business efficiency". The Hong Kong economy weakened notably and recorded negative growth in 2022. As such, the ranking in "economic performance" dropped.

As regards the sub-factors, Hong Kong continued to top the ranking in "business legislation", and was amongst the top five in "tax policy", "international investment", "international trade", and "technological infrastructure".

On the findings, a HKSAR government spokesperson said the IMD's WCY 2023 recognised that Hong Kong continued to be one of the most competitive economies in the world. The slight fall in ranking was mainly owing to the epidemic upsurge and weak economy last year. Therefore, the city should stay vigilant of the increasingly intense competition among economies and respond proactively, striving to further enhance Hong Kong's competitiveness.

As Hong Kong resumes normalcy and restores full connectivity to the Mainland and the rest of the world, the spokesperson added that Hong Kong's economy will improve notably this year.

Malaysia's response to its growth in the rankings

Seeing as Malaysia recorded improvement in all four competitiveness factors studied, Minister of Investment, Trade & Industry, YB Senator Tengku Datuk Seri Utama Zafrul Aziz, commented: "We are pleased to note that Malaysia has improved to 27^th place in the World Competitiveness Index. For MITI, what is key is on how we can improve further.

"While Malaysia performed well in terms of its prices, basic infrastructure and tax policies, we must earnestly address issues such as talent development of an industry-ready workforce; digital-first mindset for sectors; regulatory reforms for ease of doing business at national and sub-national levels; and the pursuit of sustainable development.

"These are areas that MITI and its agencies are seriously working on through the upcoming New Industrial Master Plan 2030, which is set to reform Malaysia’s manufacturing sector’s foundations for us to become a more competitive economy."

Datuk Kamaruzzaman Johari, Chairman of Malaysian Productivity Corporation (MPC), added: "MPC believes in pushing further to enhance productivity across all sectors that will improve overall competitiveness factors. Our focus is on key productivity drivers - talent development, technology adoption, and regulatory reform for a thriving business environment.

"MPC is committed to embedding ESG principles and fostering a sustainable economy. The green transition is inevitable as resource management determines competitiveness."

Boosting Malaysia’s global competitiveness

The Ministry of Investment, Trade and Industry (MITI) has highlighted the New Industrial Master Plan 2030 (NIMP 2030), which is set to be launched in August 2023, and expected to focus on:

• Advancing economic complexity;
• Facilitating digitisation and technology for the manufacturing sector;
• Pushing for carbon neutrality; and,
• Safeguarding economic security and inclusivity.

MITI has identified five sectors – aerospace, chemicals and petrochemicals, digital economy, electrical and electronics, and pharmaceuticals – that will drive industrial transformation, as well as enhance the manufacturing and exports of more complex products to further develop Malaysia into a knowledge-based economy. The focus on these industries is expected to propel Malaysia’s SMEs into high-yield and high-value market segments.

Meanwhile, MPC has been mandated to manage the unnecessary regulatory burdens on businesses by reducing issues and challenges related to government bureaucracy. It is expected to undertake a systematic regulatory review at all Ministries and Government Agencies, State Governments, and Local Authorities to mitigate bureaucratic issues including compliance costs; as well as inefficient use of resources and manpower to facilitate the ease of doing business at the national and sub-national levels. 

Thank you for reading our story! Please leave us a comment if you enjoy our content — take our 2023 Readers' Survey here.

Lead image / Shutterstock