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Among the factors behind the decline in performance was uncertainty faced in the stability of the country's currency exchange rate.
Following recent news that Malaysia's place has dropped in the annual World Competitiveness Ranking (WCR), Minister of Investment, Trade and Industry YB Senator Tengku Datuk Seri Utama Zafrul Aziz has affirmed that this is no reason to "panic" — noting such measuring sticks may be used as indicators to further improve national performance.
Commenting on the rankings, Minister Zafrul stressed that it is important to remember that the WCR ranking for 2024 is mostly based on 2023 data: "So, the ranking in WCR 2024 reflects Malaysia's performance in 2023 compared to 2022."
That being said, he pointed out that some of the areas studied have still improved over the year.
Among the factors behind the decline in the country's performance in the WCR 2024 are:
- Uncertainty in the stability of currency exchange rate
- Decrease in export of high-tech products
- Increase in government subsidies
Uncertainty in currency exchange rate stability
In terms of exchange rate stability, Malaysia ranked in the 30th place in the WCR 2024, compared to second place the previous year, directly affecting 25% of the overall score.
However, Minister Zafrul assured: "Stable economic growth, continuing declining unemployment rate, as well as controlled inflation will improve Malaysia's position in the future."
Decrease in export of high-tech products
While the declining global demand and rising global competition also affect other countries, Minister Zafrul affirmed that this year's new investments will begin to have an impact in 12 months' time.
"[The] projected increase in annual global semiconductor sales of 16% in 2024 and 12.5% in 2025 will benefit Malaysia as the world's sixth largest semi-conductor exporter."
Increase in Government subsidies
The Malaysia Government had budgeted RM64bn in terms of subsidies for the year 2023, although the actual expenditure totalled RM81bn — 26% higher than the budgeted amount. According to Minister Zafrul, among the reasons is the sudden increase in fuel in lieu of the Ukraine-Russia conflict.
However, with Malaysia's targeted subsidy approach, those in need continue to receive helped: "But at the same time, we can reduce the risk of a spike in Government spending."
Savings from these measures can also be channeled to other social programmes to support the Malaysian economy, states the Minister.
Moving forward
As part of efforts to increase Malaysia's competitiveness, Minister Zafrul asserts that best practices from the 12 most competitive economies will be used as benchmarks for improvement measures.
Malaysian Productivity Corporation (MPC), agencies under MITI will cooperate and engage all relevant ministries and Government agencies to carry out an integrated analysis to identify the main causes of the decline in Malaysia's ranking and will draft recommendations for the appropriate increase of national competitiveness.
Lead image / Minister of Investment, Trade and Industry YB Senator Tengku Datuk Seri Utama Zafrul Aziz
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