Malaysia 19 years behind South Korea, complacency, graft among culprits

Malaysia are 19 years behind South Korea in terms of productivity, the Malaysian International Chamber of Commerce and Industry said today, naming graft, leakages, complacency and archaic labour laws as road blocks.

Its executive director Stewart Forbes said Malaysia's Gross Domestic Product (GDP) per worker productivity last year was equivalent to South Korea's - but in 1995.

"Malaysia's historic productivity growth was unimpressive although at one time, Malaysia, South Korea and Taiwan all started out on the same level playing field.

"Putrajaya is always quick to point out that Malaysia is better than Thailand or Vietnam or Indonesia. But why is Malaysia choosing the worst to make comparisons?

"Putrajaya ought to be comparing Malaysia to Taiwan, Singapore or South Korea. They should set the bar higher when making comparisons," Forbes said.

He was speaking at a discussion "Budget 2015: Balancing Growth, Fiscal Sustainability and Rising Cost of Living", organised by the Asian Strategy & Leadership Institute (Asli) in Kuala Lumpur today.

"Complacency is never far away and comparing yourself to the worst countries instead of to the best will only make people rest on their laurels instead of striving for more."

Moderator Tan Sri Dr Ramon V. Navaratnam agreed with Forbes, saying Malaysians had lost the fire which helped the country reach its current level since independence.

Ramon, the Centre for Public Policy Studies chairman, said a lack of meritocracy had played a role in Malaysians losing the edge in terms of productivity.

"Companies which hire foreign workers have claimed that Malaysians are too demanding, including wanting weekends off and higher pay," Ramon said.

Forbes warned against creating a dependence on the 1Malaysia People's Aid (BR1M) handouts, saying it would undermine capacity building.

"Putrajaya must take steps to ensure that BR1M does not become something which is expected rather than an assistance," Forbes said.

"While the handouts for the lower income groups will help, the introduction of GST next year and subsidy rollbacks will increase cost of living."

Forbes praised Putrajaya over Budget 2015, noting that the government would earn more revenue from the Goods and Services Tax, continued investment and trade.

However, he also noted that Putrajaya would earn less revenue through direct taxation due to decreases in the individual and corporate tax rates.

"Putrajaya will also be spending a fair amount of money in giving out BR1M handouts," he said, adding continued leakages would also cost the government money.

"Malaysia loses at least RM1.5 to RM2 billion due to smuggling activities including contraband alcohol, cigarettes and fuel," he said, adding this did not include corruption and wastage.

Forbes also noted that the Budget 2015 expenditure was still focused on operational rather than development, and said corruption and productivity issues had yet to be addressed.

"Putrajaya also needs to focus on amending labour laws in Malaysia as they are quite archaic and hark back to post-independence days.

"A balance needs to be struck in Malaysia's labour laws to bring it in line with the 21st century. Changes need to be made to bring it up to date," he said. – October 17, 2014.

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