Download Economic Competitiveness of the Nation

ASLI-SEDAR ROUNDTABLE DISCUSSION
Saturday, January 14, 2006
Economic Competitiveness
of the Nation
By
Datuk Paul Low
Vice President
Federation of Malaysian Manufacturers (FMM)
Economic freedom helps create real wealth
Selected Countries
Average per capita
GDP,$000s, 1996
Hong Kong, New Zealand,
Singapore, Switzerland, U.K., USA
$14.8
Argentina, France, Germany,
Mexico, Spain
$12.4
Botswana, Estonia, Greece,
Hungary, South Africa, Sri Lanka
$6.4
China, Egypt, India, Nicaragua,
Pakistan, Tanzania
$3.1
Algeria, Brazil, Nepal, Nigeria,
Zimbabwe, Rwanda
Growth of real per
Capita GDP, %, 1985-96
$2.5
Source: I. Gwartney & R. Lawson, Economic Freedom of the World, 1997 Annual Report
Vancouver, Fraser Institute
The size of the global arena will have increased nearly 12-fold by 2027
US $ trillion
$91
5
13
Local
Globalizing
$28
4
18
6
1997
Source:The Mckinsey Quarterly, 1999, #4 “ Getting to Global
$73
Global
2027 (estimate)
Growth Performance of Malaysia
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Average 1960s
Average 1970s
Average 1980s
Average 1990s
Average 1971-1990
Average 1991-2000
2000
2001
2002
2003
6.0%
7.5%
5.8%
7.1%
6.7%
7.1%
8.9%
0.3%
4.1%
5.3%
Import substitution
Export orientation
Heavy industries
High-tech
Can past high growth
rates be sustained?
Malaysia’s Competitiveness…
Attracting Investments
• Fifth most competitive country
– Institute for Management Development, Switzerland
• Seventh in world as FDI location for investments
– UNCTAD
• Top quartile of 145 countries on ease of doing business
– The World Bank and International Finance Corporation
• 15th out of 60 countries & Top 3 for outsourcing
– A T Kearney
– Heavy manufacturing ranked Malaysia 16th most
attractive
– Light manufacturing ranked Malaysia 9th most attractive
Malaysia’s Competitiveness…
Trade
• 18th leading exporter & 20th leading importer in world
– WTO
• Fourth most open economy
– IMF
• Trade accounted for 208% of GDP
• Net exports contributed 2 percentage points to growth
• Trade increased by 23.2%
• Gross exports increased by 20.8% (2004)
• Manufactured exports grew by 19.7%
Key Imperatives
• Sustainable economic growth
• Generating wealth
• Income/ wealth disparity (NEP)
Key Drivers of Competitiveness
• Globalisation and Internationalisation
– Multiple location, multi cultural
– Elimination of protection
– Global sourcing (materials, services and expertise)
– Integration of demand & supply chain (logistics,
inventory mgt.)
– Global brands, marketing and market
customisation.
Key Drivers of Competitiveness
• Knowledge based
– Individual talent (creativity, intellectual property )
– Relational skills and transfer
– Acquisition, development, adoption,
contextualization and application
– Execution know how and skills
• Technology driven
– Convergence and integration of discipline
– Obsolescence, high pace of development
– Intelligent process (software engineering)
Generating Wealth
• Education opportunity to pursue preferred
field of study
• Support to pursue invention and
commercialisation
• Originator and risk taker to be rewarded
• Institutions and system support (policies,
incentives, grants etc) must have integrity
and clarity of purpose
• Non discriminatory – based on merit of each
case and transparent
Income/Wealth Disparity (NEP)
• Equity condition (ICA)
– Joint venture
• Quota Based affirmation action
– Predetermine outcome open to
manipulation
– Move to merit base
• Transparency in Government
procurement
Competitiveness in MindsetChange Trajectories
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Radical Change
Entire transformation
Enormous risks
Accept inevitability of change
Intermediate Change
Restructure key relationships
Unconventional ways to extract
value from core resources,
including diversify
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Creative Change
Constantly redeveloping assets
and resources
Innovation in fits and starts
Progressive Change
Incremental build-up of resources
and capabilities
Leveraging and sustaining
Carving out distinct positions
Change Trajectories…for Government
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Radical Change
Remove security of tenure from
civil service and local authorities
Change mindset
Meritocracy in civil service
Service standard measurement
Intermediate Change
Customer orientation
Track & trace
approval/processing
Remove overlapping functions
and fragmentation
Improve integrity
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Creative Change
Renewed professionalism
Institutionalised transparency
International competency
– Dealing with negotiations
Progressive Change
Integration & connectivity of
government services
Declaration-based approvals
Improve maintenance
Standardisation of procedures
Change Trajectories…for Manufacturing
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Radical Change
Bankruptcy – mindset change
Knowledge sharing culture
– R&D, innovation
Original equipment
manufacturing
Intermediate Change
Competitiveness
– cost, quality, speed
Mercantile attitude - local
companies
ICT adoption & literacy
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Creative Change
Value pioneering – create demand
High-tech entrepreneurship
Technology & knowledge-driven
culture
Global sourcing & collaboration
Progressive Change
Reverse investment – off shoring
Green productivity - resource
recovery
Agile, adaptable, integrated &
aligned supply chains
Branding
Change Trajectories… for Human Resource
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Radical Change
Immigration– a talent
attraction function needed for
growth
Education – creativity & merit
Intermediate Change
Flexible hire and fire policies
Productivity linked wage
system
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Creative Change
International sourcing of
knowledge to complement
technology transfer and FDI
Progressive Change
Middle management of
technical professionals who
can design, innovate and
adapt technology
Marketeers
Change Trajectories… for IT Industry
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Radical Change
IT talent pool
Coordinated IT applications eg
event driven systems
Drive need for adoption
Creator of intellectual property
Intermediate Change
IT literate workforce
Stand alone IT applications eg
ERP
“Follow the herd” adoption
Make IT components
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Creative Change
Outsource IT workforce globally
Networked IT applications
globally
Mass adoption
Licensed intellectual property
Progressive Change
Skilled IT workforce
Interoperate IT applications eg
supply chain management
Early adoption
Make IT products
Competitiveness in HRD
 OPERATOR (ACTUAL)
WORTH TO
FOREIGN
INVESTORS
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MANAGEMENT (DESIRED)
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MANAGEMENT (ACTUAL)
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THRESHOLD
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Courtesy of Prof Raj Balendra,
University of Strathclyde
TIME (YEARS)
Recommendations…Graduates
• Employability
– Skills & values
• Generic & technical –
design
• Right attitude & values
– Industry exposure
• Work in labs, R&D centres
• Actual project assignments
– 1-year in industry
– Vacation training
DESIGNERS
TRAINING
EXPERTISE
Product
Process
Machinery
Systems
Postgraduate
design &
manufacturing
Original
Mach. & System
“Design &
Manufacture”
Engineers
Engineering
Undergraduate
Problemsolving
Design
Design
Technicians
Technical
Colleges
Detailing
Design
Design
Managers
Non-engineer
Undergraduate
Manage Design
Procedure
Industrial
Designers
Art
Colleges
Product Modelling
& Visualisation
Courtesy of Prof Raj Balendra, University of Strathclyde