Over the years, Malaysia’ economy has been somewhat bogged down by structural issues; causing the nation to lag behind some of its counterparts within the region, said Minister in the Prime Minister’s Department Datuk Seri Mustapa Mohamed.
While COVID-19 has caused unimaginable damage to the global economy, it has also provided Malaysia with an opportunity to address the issues that have been holding back the economy and implement sweeping changes and reforms on a number of fronts.
“Covid-19 has presented opportunities for us to reform on many fronts. Going forward, the government will address a number of issues in the long-term economic recovery plan,” he said in his opening speech at the 2020 Malaysian Banking and Finance High Level Meeting and Virtual Conference.
“This includes addressing red tape and regulatory matters. According to the World Bank, businesses in Malaysia, for example, need 17 days to deal with procedures related to starting a business. In comparison, they only need 1.5 days in Singapore and Hong Kong and eight days in South Korea. The mismatch between labour demand and supply, unemployment of youth and fresh graduates, the low percentage of skilled workforce and our high reliance on low-skilled foreign workers are also contracting the Malaysian economy’s ability to compete effectively,” he said.
As of 2019, Datuk Mustapa noted that approximately 10 to 32 percent of total employment within Malaysia’s agricultural, construction, manufacturing, and services sectors is occupied by foreign workers.
“Another critical issue to address is the low technology adoption among firms, especially the small and medium enterprises. The pandemic has exposed a number of vulnerabilities in the Malaysian economy. We now have a window of opportunity to implement radical reforms,” he added.
Comparing Malaysia to its regional peers, Datuk Mustapa also mentions that competition has been steadily growing over the past few decades, citing nations such as Vietnam, the Philippines, and Indonesia for displaying impressive growth.
In terms of economic-related rankings, he said Malaysia has a long way to catch up with Singapore, which has consistently been ranked in the top tier of three major rankings namely the IMD World Competitiveness Ranking 2020, the WEF Global Competitiveness Index and the World Bank Ease of Doing Business report 2020.
“I know some of us do not like to be compared to Singapore, which is]a small city state. But there are many advantages to being small and hence it may not be an apple-to-apple comparison to Malaysia. Nevertheless, it is useful to observe the success factors of Singapore and explore what we can do to improve our rankings,” noted Datuk Mustapa.