Malaysia Competitiveness

 The rapid creation and dissemination of knowledge and information on
the back of advances in ICT are altering the manner in which goods and services
are produced and marketed, and investments are made. Trade and investment
transactions are conducted on-line and are becoming increasingly virtual. This
has changed the basis and format for global and regional competitiveness and
forced developing nations in particular, to review their policies and strategies.
These countries are opening up their markets and economies to encourage freer
flow of trade and investment as well as knowledge, technology and expertise. The
developing economies that wish to take advantage of ICT are being wired-up rapid pace to facilitate the process. Given these global developments, it is crucial
for Malaysia to respond to the external environment to remain competitive by
developing into a knowledge-based economy.


Malaysia is facing increasing competition for its labour-intensive and
lower-end manufactured products from the lower-wage and resource-rich developing
economies such as China, Indonesia and Thailand. Many of the local manufacturers
of these products have been compelled to differentiate their products as well as
refocus on specific market segments to remain competitive. With respect to hightechnology
and knowledge-intensive industries, Malaysia has yet to match the
competency of the more advanced economies such as South Korea, Japan and
Taiwan.


To maintain its competitive edge, Malaysia will need to aggressively
undertake productivity improvements in traditional industries and at the same
time, enhance its technological and knowledge capabilities to move into the midrange
and higher-end products. It is also imperative for local industries to move
along the value chain into related upstream and downstream activities. These
changes will be necessary so that the manufacturing and services sectors can lead
economic growth during the OPP3 period. Towards this end, the knowledgebased
economy can provide the platform to accelerate this transition.