All ASEAN-5 countries except Singapore dropped in the new Global Competitiveness Index 2016-2017 issued by the World Economic Forum (WEF), some of them significantly. The main reason for the slump is that global economic prospects look less favourable as a result of China’s slowdown, anemic growth in Japan and other advanced economies, as well as persistently low commodity prices that are undermining the growth and public finances of several economies in the region.
Malaysia, traditionally listed second behind Singapore in the region, dropped to rank 25 from 18 in the previous year out of 138 countries, not just because of slowing exports and declining commodity prices alone, but also because of a 40-per cent depreciation of the ringgit due to political irritations over an alleged massive corruption case on the highest state level and the subsequent investment outflow.
On the global list, Malaysia remains ahead of economies such as South Korea China, but was overtaken by Belgium, Austria, Luxembourg, France, Australia, Ireland and Israel.
According to the report, Malaysia’s performance showed a decline in several of the indicators including institutions, health and primary education, higher education and training. However, among 27 Asia-Pacific countries, Malaysia is still placed seventh.
Thailand’s ranking dipped two places to 34 from last year. The WEF’s areas of concern in this country include healthcare and primary and higher education. The report also said that Thailand need to make improvements in areas related to business sophistication, technological readiness and innovation if the country wants to break out of the middle-income trap.
Thailand’s strength is a greatly improved macroeconomic environment thanks to a better government budget balance and percentage of gross national savings, the report noted. But its weaknesses remain government instability, inefficient government bureaucracy and corruption.
Indonesia’s competitiveness dropped four places to rank 41. The WEF says that despite many reforms to the country’s business environment, its performance remains one of contrasts. It ranks high for market size and reasonably well for its macroeconomic environment, but poorly in healthcare, basic education, labour market efficiency, infrastructure and technological readiness, while it keeps suffering from inefficient government bureaucracy and rampant corruption.
The Philippines fell the most in the ASEAN-5 group, by ten notches to 57, the first time in a decade that the country slipped in the WEF ranking.
There was a decline in seven of the 12 pillars used to determine economic competitiveness of economies, namely institutions, infrastructure, goods market efficiency, labour market efficiency, technological readiness, business sophistication and innovation.
The most problematic factors in doing business in the Philippines were identified as inefficient government bureaucracy, inadequate infrastructure, corruption and high tax rates.
“The country appears to be going backwards compared to its peers in some of the more complex areas of competitiveness. Its technological readiness ranking fell 15 places to 83, business sophistication dropped ten places to 52 and innovation fell 14 places to 62,” the WEF said.
Among other ASEAN countries, Vietnam fell four points to 60 and Cambodia dropped one notch to 90. Vietnam’s biggest problems are an inadequately educated workforce, policy instability and tax regulations, while Cambodia needs to tackle its corruption problem and its inefficient government bureaucracy, together with the low skill-level of its working population.
Laos and Myanmar are not listed in this year’s report. Last year, they ranked 83 and 131, respectively.
Brunei appears in this years list, ranking 58. Its most problematic issues are given as inefficient government bureaucracy, access to financing, restrictive labour regulations, poor work ethic in national labour force and Inadequate supply of infrastructure.
Globally, the five most competitive countries are Switzerland, Singapore, the United States, Germany and Netherlands, whereby the only change was that Germany overtook the Netherlands.
At the rear end, the countries with the lowest level of competitiveness were (ascending): Yemen, Mauritania, Chad, Burundi and Malawi.