The Malaysian Insider, 15 May, 2008.

KUALA LUMPUR, May 15 — Malaysia's ranking in international competitiveness among top economies improved this year, moving up to 19th place from 23rd last year despite stiff external challenges.

In releasing the rankings, the IMD, the leading global business school based in Switzerland, said this was Malaysia's best ranking over the last three years since 2005 when it was ranked 25th, 22nd in 2006, and 23rd last year.

In lauding Malaysia's achievement, analysts said the improved delivery system mounted by the government was continuing to bear fruit and enhanced the country as an attractive destination for businesses and investments.

They also said Malaysia should not rest on its laurels but persevere to raise productivity and quality to keep ahead amid stiff challenges while the IMD felt the country should enhance the scientific and technological infrastructure to meet the needs of a competitive economy.

The IMD said Malaysia has to achieve a customer-centric, innovative and proactive public service while leveraging on public-private partnerships to move the economy up the value chain.

"Nurturing innovative and resilient small and medium-sized enterprises to make them more dynamic," was yet another challenge, the IMD said in its World Competitiveness Yearbook (WCY) released today worldwide.

Some 55 top economies comprising industrialised and advanced countries are covered by the WCY.

In an immediate response to the improved ranking, Shahrul Kamal Ramli, Alliance Investment Bank's vice-president for senior institutional sales, said it would give a positive impact on foreign direct investments (FDIs) which have their radar on Malaysia.

"It would be a clearer indication to new foreign investors out there which are still evaluating stage whether to invest in Asian countries especially Thailand, Indonesia or Vietnam,” he said.

"They might choose Malaysia as their investment destination,” he told Bernama today.

Dr Zamros Dzulkafli, senior economist of RAM Holdings Bhd, said: "We should celebrate this achievement and continue to work to increase our productivity.

"We are an open economy and with globalisation being high on the international agenda, Malaysia continues to be more integrated with the global economy.

"Malaysia continues to show high potential as among the top competitive economies in the region and the world."

Aseambankers chief economist Suhaimi Ilias said Malaysia has seen FDI inflows recovering from a low of just US$600 million in 2001 to US$9.4 billion last year.

The FDI momentum remains positive this year, as reflected by the jump in approved value of foreign manufacturing projects to RM16 billion in January-March 2008 versus RM4 billion over the same period last year (2007: RM33 billion).

"This shows that fiscal incentives like cuts in corporate income tax and efforts to improve the country's delivery system are yielding positive results," said Suhaimi.

Located in Lausanne on Lake Geneva, the IMD is the global meeting place for executives from all over the world, while the WCY is reputed to be the worldwide reference point of competitiveness of nations, ranking and analysing how an economy creates and sustains competitive enterprises and in the process manages its path to prosperity.

The United States took top spot again this year, followed by Singapore, Hong Kong, Switzerland, Luxembourg, Denmark, Australia, Canada, Sweden, the Netherlands, Norway, Ireland, Taiwan, Austria, Finland, Germany, China, New Zealand, Malaysia and Israel.

The IMD said Malaysia has to raise the innovative and creative capacity of human capital for the knowledge-based economy, which the government has consistently been emphasising.

Shahrul Kamal said the higher ranking would have a long-term positive impact on the country.

Zamros said globalisation nevertheless brings together stiff competition as the market was now borderless.

"Exporting goods and services thus requires higher standards to be accepted internationally and Malaysia must work towards higher value added and sustained high quality," he said. — Bernama