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Monday, June 20, 2011

Part 3: Welfare state & Nordic model

My Comment on IMD 2011 World Competitiveness Ranking - Part 3

IMD analyze the countries based on four main criteria namely Economic Performance, Government Efficiency, Business Efficiency and Infrastructure.
Among the four criteria above. Malaysia ranking in Infrastructure are most steady and consistent but lowest among the four criteria:
                                         2011                  2010               2009
US                                    1                           1                      1
Sweden                             2                           2                      2
Denmark                           3                           5                      6
Switzerland                       4                           3                       4
Finland                             5                           6                       3
Canada                             6                           4                      7
Germany                           7                           8                       9
Norway                            8                           7                       10
Iceland                              9                           9
Singapore                        10                          11                      8
Japan                              11                          13                      5
Netherlands                     12                          12                     11
Austria                             13                         10                     13
Australia                          14                          18                     12
Israel                                15                         16                     18
Taiwan                             16                          17                    23
UK                                  17                          15                    16
France                             18                         14                     14
Belgium                            19                          19                    15
Korea                              20                          20                    20
Hong Kong                      21                          23                    19
Luxembourg                     22                          21                    17
New Zealand                    23                          22                    21
Iceland                             24                           24                    22
Portugal                            25                          29                    24
Spain                                26                           28                   31
Malaysia                          27                           26                    25

US top in Infrastructure, and Sweden second for 3 consecutive year. Sweden ranked no 4 this year from 6 previous year in IMD 2011 Competitiveness ranking

Malaysia consistently ranked around 25 to 27 in a dropping trend

If Malaysia want to improve in Competitiveness ranking. Improvement in Infrastructure category have the highest chance to improve it overall ranking as Malaysia ranking in Infrastructure remain consistent even Malaysia IMD Competitiveness ranking moving up and down in the last 3 years.

Among all the country. All Nordic Model countries or Scandinavia ranked within top 10 of infrastructure ranking. This is similar to welfare state debated heavily recently among ruling party and opposition PAS.

However, Nordic model are high tax country. Sweden (2) are the highest tax rate country in the world. Ikea, a Swedish company, move to Denmark initially and later to Switzerland due to high tax rate.

US (1) ranked first under Infrastructure category but have more competitive tax rate compare to Nordic model country. Among the country within top 10 under Infrastructure. Singapore, the only aisa country. consistently ranked within top 10 ranking with much lower tax rate than US and other western countries.

I feel it is a bit difficult to model against Sweden if PAS or Pakatan Raykay want to implement welfare state especially it high tax rate. Despite I have advocate Malaysia to follow Sweden, but not on the tax rate. Sweden company like Sony Erricson, Electrolux also not the most competitive company in the world. However, Sweden are one of the countries that invest most in R&D in terms of percentage of GDP.

Furthermore, Sweden ranked either as the first or second country publishing the highest number of scientific publications in the fields of medical science, natural science  and engineering in 2001. Sweden was world-leading in medical science and second only to Switzerland in natural science and engineering in terms of the number of publications per capita.

However, there is more information and publication that able to obtian on Finland then Sweden. Thus, it is far more easy to model against Finland than Sweden. Finland has high number of NGO and active civic society.However, in Malaysia, NGO are used to push up water tariff. Malaysia can't rank high in infrastructure if utility cost are high.

Further, Finland company like Nokia are more competitive than Sweden Sony Erricson. Further, Finland have more technology innovation like Linux,email and recently Angry Bird game etc.

However, Nordic Model countries have strong labour Union, which is bad on economic base on history in UK. UK in reccession under ruling Labour Party until take over by Margaret Thatcher Conservative Party. However, UK has loss it competitiveness to Germany. Thus, both BN and Pakatan Rakyat in Malaysia should learn from this experience.

In Finland , Education is compulsory between the ages of 7 and 16 . Tertiary education is free and living expenses are to a large extent financed by the government through student benefits. If Education is free, then, the recent Public Service Department (PSD) scholarship mess can be avoided.

Last year, Malaysia ranked 10th in IMD Competitiveness ranking in 2010 and Norway ranked 9th. Sadly, Non of the private sector nor GLC HQ model again DIGI HQ D'House . Digi are only one of successful company from Norway in Malaysia. However, it is undeniable that Malaysia working cultural a bit difficult to change to D'House Model.

Base on the above analysis. I feel Malaysia can model against Finland and Singapore on Infrastructure

Related Post:
Lim Kit Siang : Why do Finland’s schools get the best results?
Randon Shots : Finland...Where Less Is More

Part 2: Economic Performance
Next Part 4: Business Efficiency

Tuesday, June 14, 2011

My Comment on IMD 2011 World Competitiveness Ranking - Part 2

IMD analyze the countries based on four main criteria namely Economic Performance, Government Efficiency, Business Efficiency and Infrastructure.

Among the four main criteria above. Malaysia rank high in Economic Performance. Minister of international Trade and Industry, Dato' Sri Mustapa Mohamed issued a media statement, which specifically stated :
8. It should be highlighted that the ranking for Economic Performance, which gives a
macro economic evaluation of the domestic economy and is based on real/hard data,
improved to 7th position this year ahead of Taiwan, Sweden, Canada, Australia, UK and

Switzerland. Malaysia has come a long way since 2007 where we were ranked 12

Let see the trend as usual:

IMD 2011
Economic Performance:
                                                  2011                2010               2009
United States                                1                       1                     1
Qatar                                            2                       2                     5
China                                            3                       3                     2
Hong Kong                                   4                       4                     3
Singapore                                     5                       5                      8
Germany                                       6                        9                     6
Malaysia                                    7                        8                      9
Luxembourg                                 9                       11                    4
Thailand                                       10                      6                     14
Australia                                      13                      7                    15
Netherlands                                  19                     14                     7

Economic Performance is only criteria that Malaysia has 3 consecutive uptrend. From 9th in 2009 move up to 8th in 2010 and again to 7th position in 2011.

Malaysia has overtake  Luxembourg, Thailand, Australia and Netherlands, which ranked higher than Malaysia one or two years ago.

However, Germany, which ranked lower than Malaysia previous year, has overtake Malaysia in 2011,  thanks to Germany buoyant exports and a more flexible labor market. Coincidentally, Germany also ranked 10th in IMD world competitiveness ranking. A spot Malaysia occupy in 2010.

We have benchmark German against Japan in Asia in 2005. Germany banking industry relation with business is like Keiretsu of Japan. It is this form of banking relation that cause Japan into prolong recession, of which, Malaysian ex-Finance Minister Tun Daim has prevent such banking industry relationship that prevent Malaysia into a Japan like recession during 1997-98 Asian Financial crisis

The relation of Deutsche bank with Siemen and daimlerchrysler is like of Mitsubishi in Japan.

However, Germany has a large SME base which is similar to Taiwan and Malaysia. German SME, which is family base like Malaysia, however, able to continuesly advance in technology. SME in Malaysia usually unable to advance in technology or technology will loss after pass to next generation. This is largely due to popularity of Germany vocational training. Malaysia in correct direction by promoting vocational training among non-bumiputra entrepreneur recently. Vocational training common among bumiputra but not common among non-bumiputra despite there is no quota of entry like other institute of higher learning. Malaysia should make full used of German Malaysia Institute

As Malaysia able to overtake Germany last year. There is a possibility that Malaysia will overtake Germany again.

It seem a bit difficult to challenge US(1) and China(3) as this is the two economic giant in the world. Hong Kong(4) benefited from China with it close proximity. This leave only Singapore. Malaysia able to leverage on Singapore economy with it close proximity among the two.

The Southern Development Corridor and Iskandar Malaysia is a way of Malaysia try to leverage on Singpore economy. However, Malaysia should solved it biometric system mess at second crossing fast.

It is undeniable that Malaysia moving to the right direction by implementing Greater Kuala Lumpur under Economic Transformation Programme (ETP), which will expand the economic effect of Singapore from Iskandar Malaysia further to Kuala Lumpur. However, this is a long term project hat will take time to see it effect.  Malaysia only able to leverage on Singapore via Southern Development Corridor and Iskandar Malaysia in short term. Thus, Malaysia should solved the mess cause by biometric system fast.

Part 1 : My Comment on IMD 2011 World Competitiveness Ranking - Part 1
Next Post : Part 3: Infrastructure

Monday, June 13, 2011

My Comment on IMD 2011 World Competitiveness Ranking - Part 1

Our global competitiveness rankings for 2011 as produced by the Switzerland-based Institute of Management Development (IMD) ranked Malaysia 16th out of 59 countries, marking a significant drop  from 10th in 2010. Malaysia ranked 18th in 2009.

Base on a 3 year trend. Malaysia still moving up from 18th in 2009 to 16th in 2011. At least it is an up trend.

When the rankings jump from 18th in 2009 to 10th last year. Government should know it is not easy to sustain. Malaysian would not have such disappointment if government evaluate it sustainability last year. It is now clear that Malaysia ranked high in 2010 due to 2008/2009 Global Financial crises which cause a lot of European country ranked lowly rather than Malaysia improved it own competitiveness. Now, when some European countries rebound. At least we can see where we stand.

Let have a 3 year ranking to see what is trend of Malaysia :

                                                 2011               2010          2009
USA                                           1                      3                 1
Hong Kong                                 2                      2                 2
Singapore                                    3                      1                 3
Sweden                                       4                      6                 6
Switzerland                                  5                      4                 4
Taiwan                                        6                      8                 23
Canada                                       7                       7                 8
Qatar                                                           8                                15                      14
Australia                                                      9                                5                        7
Germany                                                      10                              16                      13
Luxembourg                                                11                              11                       12
Denmark                                                      12                              13                        5
Norway                                                        13                               9                        11
Netherlands                                                  14                               12                      10
Finland                                                        15                               19                       9
Malaysia                                                       16                               10                      18 

Israel                                                            17                               17                      24

In fact, Malaysia has move up from 23th  in 2007 to 16 in 2011

Singapore, which often benchmark against Switzerland and Hong Kong has been consistently rank higher than Switzerland

The highest up trend country was Taiwan, up from 23th in 2009 to 6th in 2011.After change of ruling party pro- China via Economic Cooperation Framework Agreement (ECFA)

I have advocate Malaysia to benchmark against Sweden and Taiwan as early in 2005

Look at the above trend again. If we benchmark against Norway, which rank No 9 last year, We might still at 14th this year as Norway has drop to 13th. Thus, it is other countries that have improved their competitiveness that they overtake Norway and Malaysia rather than Malaysia dropping in Competitiveness.

Of course, Malaysia do drop in competitiveness to Netherland (14) & Findland (15).

Malaysia should at least rank 12th if able to overtake last year 9th position........Norway.

Hong Kong ranked top in both Government Efficiency & Business Efficiency

US ranked top in Economic Performance and Infrastructure

Singapore ranked second in both Government Efficiency & Business Efficiency after Hong Kong

Hong Kong ranked 4th in Economic Performance and Singapore ranked 5th

Sweden ranked second in Infrastructure after US for last 3 consecutive year

Related Post:
Lim Kit Siang :  Malaysia slips in economic competitiveness
Tony Pua :  Competitiveness Rankings Drop: Just "Perception"?
Lim Guan Eng : Malaysia has dropped six places from 10th in 2010 to 16th in the IMD’s 2011 World Competitive Rankings(en/bm/cn).
 Dr. Dzul : Malaysia slips in economic competitiveness
Din Merican: the Malaysian DJ Blogger : Malaysia is No 16 in IMD 2011 World Competitiveness Rankings
1-million-dollar-blog : 2011 IMD World Most Competitive Countries

Next Post: Part 2:Economic Performance