INVESTMENT, Trade, and Industry Minister Tengku Zafrul Abdul Aziz has blamed a weak ringgit and government overspending for Malaysia being placed lower in the World Competitiveness Index.
Zafrul said the under-valued ringgit had affected many factors, including productivity and efficiency, considered by the International Institute for Management Development (IMD) to measure competitiveness.
“In 2023, the ringgit was affected, so our competitiveness was affected by that. However, the ringgit has strengthened and, hopefully, the momentum will continue.
“We should be in a better position in next year’s ranking,” he told reporters at Bursa Malaysia’s headquarters today.
He said the government overspent last year due to the economic effects of the Ukraine-Russia war.
“What was allocated in the budget was lower than what was spent, so this shows inefficiency. Last year, the Ukraine-Russia war caused the price of raw materials to go up.
“That’s why our (allocation for) fuel subsidies and others did not meet the target. In fact, we had overspent, causing our points (in the competitiveness ranking) to decline,” he said.
He expected the government’s move to rationalise subsidies to improve Malaysia’s ranking next year.
Putrajaya had set aside RM64 billion for subsidies in 2023 but spent RM81 billion, 26% more than projected, due to the rise in fuel prices amid the Ukraine-Russia war.
Zafrul said the decline in exports in the electrical and electronics (E&E) sector had also affected Malaysia’s competitiveness, adding that this slowdown was linked to a drop in global trade.
“But this sector has gone up (now). So, if we sustain our growth in trade, especially in the E&E sector, we will gain more points,” he said.
Last year, Malaysia ranked 27th among 67 countries in the competitiveness index.
Malaysia slipped seven places to 34th this year.
Malaysia also fell to 10th among 14 countries in the Asia-Pacific region, ranking lower than Indonesia and Thailand for the first time. – June 21, 2024.
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