COVID-19: Look-in point for Malaysia’s economic reform

By ANIS FARHANAH MALEK
anisfarhanah@dagangnews.com

KUALA LUMPUR 23 July - Most of Malaysia’s sectors especially economy and education have been facing a competitiveness challenge that has been present even before the COVID-19 pandemic.

Minister in the Prime Minister’s Department (Economy), Datuk Seri Mustapa Mohamed remarked this has posed challenges to Malaysia’s policy makers, resulting in the country lagging behind. 

Therefore, he said, COVID-19 has presented opportunities for Malaysia to reform on many fronts.

“Among middle tier countries in the region, Malaysia’s economic growth rate of 4.3% in 2019 was lower than the regional peers. Vietnam has recorded an impressive rate of 7%, the Philippines (6%) and Indonesia (5%).

“Bold strategic shifts are necessary to address low value-added economic activities, inequitable income distribution and regional disparity. 

“The COVID-19 pandemic has exposed a number of vulnerabilities in the Malaysian economy. We now have a window of opportunity to implement radical reforms,” said Mustapa in his keynote for KSI Strategic Institute for Asia Pacific’s 2020 Malaysian Banking and Finance High Level Meeting and Virtual Conference, today.

The radical reforms include addressing red tape and regulatory issues, where he said: “World Bank found businesses in Malaysia take up to 17 days to deal with procedures related to starting a business.”

“This is compared to only 1.5 days in Singapore and Hong Kong and eight days in South Korea,” he added.

Other than that, the mismatch between labour demand and supply, unemployment of youth and fresh graduates, the low percentage of skilled workforce and high reliance on low-skilled foreign workers is contracting the Malaysian economy’s ability to compete effectively. 

Another critical issue to address is low technology adoption among firms, especially the Small and Medium Enterprises (SMEs).

“We will ramp up our digital agenda. We will accelerate technology adoption and automation, especially for SMEs. This will not only increase efficiency and productivity, it will also help to reduce the reliance on low-skilled workers,” he said. 

Apart from the addressed issues, the major World Competitiveness Ranking in 2020 by IMD saw Malaysia ranked 27th out of 63 countries declining 5 notches in 2019 compared to Singapore that has consistently been ranked in the top tier of the ranking. 

“I know some of us do not like to be compared to Singapore, a small city state. Nevertheless, it is useful to observe the success factors of Singapore and explore what we can do to improve our rankings,” he asserted. - DagangNews.com