KUALA LUMPUR: The government should not be entirely blamed for the decline in global competitiveness as reported by the World Competitiveness Ranking (WCR), said the Small and Medium Enterprises Association of Malaysia (Samenta).

Its president, William Ng, said that businesses must share the government's burden following the drop to 34th place from 27th last year, to make Malaysia more competitive.

He noted that Malaysia's ranking significantly fell in five out of 20 sub-factors, which are given equal weighting in determining the ranking: domestic economy, productivity and efficiency, technological infrastructure, management practices, and attitudes and values.

As such, Ng said that businesses, including small and medium enterprises (SMEs), need to act swiftly to reduce their reliance on unskilled and low-skilled foreign workers as well as on government procurement and handouts.

"Samenta urges businesses and SMEs, among other measures, to adopt artificial intelligence (AI) tools and digitalisation," he said.

Last Tuesday, the WCR report revealed that Malaysia ranked 34th, falling seven places from the previous year's position of 27th.

Ng also said that although Malaysia's current ranking is its lowest in the past 20 years, a deeper examination is needed to understand why the country is at this level.

"Out of the 20 sub-factors given equal emphasis in determining the ranking, we experienced sharp declines in five areas: domestic economy, productivity and efficiency, technological infrastructure, management practices, and attitudes and values.

Our improvements in international investment, employment, and education were insufficient to offset the declines in these five sub-factors.

In the domestic economy sub-factor, Malaysia was severely impacted in the real GDP growth per capita indicator.

"This was due to the rapid increase in the number of unskilled and semi-skilled foreign workers entering the country in 2023, as a result of the ongoing war in Ukraine and the conflict in Palestine. We fell sharply by 20 places (from second to 22nd).

"In fact, the productivity and efficiency sub-factor is now our weakest ranking, at 53rd (a drop of 17 places from 36th in 2023)," he said.

He added that the significant declines in two other sub-factors under business efficiency - management practices and attitudes and values - reflect the transitional challenges faced by local businesses.

"This is an urgent call for assistance from the business community. 2023 saw a rapid increase in business compliance requirements, including in areas such as environmental, social, and governance (ESG) practices, big data, and corporate boards, leading many respondents to express fatigue and concern over meeting these stringent compliance requirements.

"There is a noticeable negative attitude among Malaysians towards globalisation, foreign brands, and culture, evaluation systems, and digital transformation - which led to a further six-place drop to 40th in the attitudes and values indicator, previously at 34th in 2022," he said.

https://www.nst.com.my/news/nation/2024/06/1068206/govt-not-solely-blame-malaysias-drop-competitiveness-ranking-says-group