Aim to do better

Workers at a Malaysian factory collecting newly-produced latex gloves to be packed for export. Attaining improvements in competitiveness, while laudable, is just the beginning. We also have to strengthen the foundations of our economic, political and social institutions, and values which are fundamental to long-term survival.

AIM TO DO BETTER  

Columnist - New Straits Times

ECONOMIC COMPETITIVENESS:

Productivity, human capital and social values are some areas that can still be improved

THE annual IMD ranking of 60 nations according to their competitiveness for 2014, was just released. The International Institute for Management Development (IMD), a top-ranked business school in Switzerland, ranked Malaysia 12th this year from its 15th position last year.

This fact should be read together with other information on rating, such as the ease of doing business and the ease in getting credit in which Malaysia is ranked 6th and 1st places, respectively. Our competitiveness did improve.

The Malaysian government must be congratulated for working hard to improve its ranking. To a certain extent, the exercise initiated many years ago by Tan Sri Sidek Hassan, then the Chief Secretary, has now materialised.

However, climbing to better positions will not be easy now, as we have to compete with other nations known for their liberal economic policies, such as Norway, Sweden and Singapore. This is not to say that we remain contented; on the contrary, we should always aim to do better.

Pursuing more liberal economic policies may not be that easy. If the progress of the Trans-Pacific Partnership Agreement (TPPA) is any guide, nations are more guarded and protective of their economic interests now.

The modest economic achievements that we attain now, amid an uncertain global economy, have planted more seeds of caution on the part of our citizens in opening up more market access and allowing more liberal commercial presence of foreign players.

This is often true. When economic prospects are not bright enough, people have a guarded confidence and are more cautious. Their memories of the 1997/98 financial crisis and the effects of the financial turmoil in 2009, are still fresh in their minds. Hence the calling and pressure for not conceding in our offer in the TPPA negotiations appear quite understandable.

If this is the case, how can we become more competitive and rise to higher positions in the years to come, when those nations at the top of the tally are already more liberal and technologically far superior?

Looking at the statistics, there are still a few avenues where we can enhance our competitiveness.

FIRST is in the area of productivity and efficiency. We should be able to raise output for the same amount of input or same output for lesser amount of input. We must also reduce wastages and inefficiencies around us.

SECONDLY, our human capital is another area which can help contribute to raising our nation's competitiveness. This can be achieved by the readiness of our workforce to absorb higher skills and new technologies allowing us to deepen our technological capability and push forward our production capability frontier. Our reliance on low-skilled foreign workers could have delayed our march to high-technology production.

Equally pertinent, our human capital and entrepreneurship should attach greater importance to research and development (R&D), and creativity and innovation, so as to generate large amount of intellectual property and assets which in turn create value on shore.

THIRDLY, still on human capital, we should not be only concerned with just absorbing new skills, but more importantly, we need to have the right frame of mind that will facilitate our long-term economic and social transformation.

Our social values must change to help that transformation process. Thus we must strive hard to weed out all negative things in society, such as drug addiction, the loafing culture (merempet), and too much politicking.

Instead we have to work for greater creativity and innovation which demand greater endurance, patience, and perseverance as well as having a good system of rewards and punishment, which incentivise us to observe and emulate such qualities.

There is no more important and critical factor than the role of effective leadership among and within us, who can initiate an all-round change in social values and mental make-up by the society. We may need another mental revolution, so to speak, as the challenges are many. Hence having right economic incentives alone may not be enough.

Moving forward, these are demanded by our Rukun Negara and our New Economic Model which call for substantive, rather than cosmetic, changes in all aspects of our life.

The enhancement of the role of human capital, strengthening of our social and moral fabric and values, greater commitment towards national unity, as well as to democratic institutions, are some of the social changes we need to bring about and sustain if we are to be strong and economically competitive. These are the foundations for long-term economic growth and social stability.

Thus attaining improvements in the position of competitiveness, while quite laudable, is just the beginning. We have to strengthen the foundations of our economic, political and social institutions, and values which are fundamental to long-term survival.

This is the expectation demanded of our leaders who have been elected to manage the affairs of the country. I think this is what transformational leadership is all about.