KUALA LUMPUR – The weak ringgit is to blame for Malaysia’s decline in the 2024 World Competitiveness Rankings, said Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz.
The ministry’s preliminary study of Malaysia’s slide from 27th place in 2023 to 34th this year found that the primary reason was reliance on last year’s data to measure national competitiveness, he said of the index by the International Institute for Management Development.
“(The report) was based on data from last year, 2023, compared to 2022, so there is a one-year lag.
“The factor that had the most significant impact is the stability of the ringgit, as highlighted in the rankings,” he said after launching the Centralised Sustainability Intelligence Solution at Bursa Malaysia today.
Tengku Zafrul added that the weak ringgit had affected many of the aspects taken into account by the rankings, including productivity and efficiency.
The rankings measure competitiveness by four sectors – economic performance, government efficiency, business efficiency and infrastructure – with more sub-sectors under each.
Malaysia’s slide by seven spots puts it behind Indonesia, which rose to 27th from 34th in 2023, and Thailand which improved to 25th place from 30th.
Within the Asia-Pacific region, Malaysia slid by four spots to 10th place out of 14 countries.
However, Tengku Zafrul said Malaysia’s competitiveness should improve since the ringgit was strengthening.
“As you know, the ringgit was affected in 2023, and that had an effect on our competitiveness, but now the ringgit has strengthened, and if the same momentum continues, the ranking should improve,” he said.
Another factor affecting competitiveness was low contribution from the electrical and electronics (E&E) export sector last year, when exports of high-end manufacturing products, especially in E&E, saw a decline.
“This was in tandem with the slowdown in trade worldwide, but this year we can see that the sector has improved. The trade numbers have gone up quite considerably, by about more than 10% in May 2024.”
He also cited government spending beyond the budget as another reason affecting competitiveness, according to Free Malaysia Today.
Putrajaya had spent above the allocation for fuel subsidies and other expenditures when the price of raw materials increased due to the Russia-Ukraine war.
He also said the current ongoing exercise to rationalise subsidies should improve Malaysia’s ranking next year. – June 21, 2024