Malaysia business rating slips

<p><strong>Malaysia dropped five places to 24th in this year’s ranking of business competitiveness by the IMD World Competitiveness Centre, after falling to 19th in 2016 from 14th in 2015.</strong></p> <p>Malaysia was ahead of Japan (26th place), Thailand (27th), the Philippines (41st) and Indonesia (42nd), according to the IMD Business School in Switzerland.</p> <p>Hong Kong and Switzerland took the top two spots again, while Singapore moved up to third from fourth. The US ranked fourth, its lowest position in five years, and the Netherlands was fifth.</p> <p>The Swiss centre announced: “From a list of 15 indicators, respondents to the executive opinion survey were asked to select five that they perceived as the key attractiveness factors of their economy.</p> <p>“The five highest key attractiveness indicators are cost competitiveness, about 52.9 per cent, followed by business-friendly environment at 48.1 per cent, reliable infrastructure at 47.1 per cent, the dynamism of the economy at 43.3 per cent and skilled workforce at 42.3 per cent,” the report added.</p> <p>For Malaysia, the areas of decline included start-up days, start-up procedures, the current account balance, renewable energies, redundancy costs, GDP growth per capita (3.6 to 2.59), public expenditure on education per child and currency stability.</p> <p>Improvements mentioned included internet bandwidth speed, mobile broadband use, state subsidies, labour productivity, unemployment among young people, increased education achievement and the cost-of-living index.</p> <p>Meanwhile, Malaysia’s manufacturing sector <a href="https://www.ft.com/content/53873a8a-89c3-3c59-ba91-514e07e60b24">slid back</a> into contraction last month, having only just ended two years of contraction in April.</p> <p>The Nikkei-Markit manufacturing purchasing managers’ index recorded 48.7 in May, down from 50.7 in April and below the 50-point divide between expansion and contraction. Apart from April, Malaysia’s manufacturing sector last reported growth in March 2015.</p> <p>The fall in May resulted from a modest deterioration in business conditions from April’s marginal improvement.</p> <p>Production declined for the first time in four months while output, new orders and purchasing activity all dropped as client demand reportedly declined. A drop in export orders dragged on total business as respondents reported reduced fresh orders from elsewhere in Asean, including Singapore, Thailand and Indonesia.</p> <p>Employment increased slightly for the first time since January.</p> <p>Economist Paul Smith of IHS Markit said: “Latest data dashed hopes of a sustained manufacturing upturn in Malaysia, with the headline PMI returning to contraction territory. Simultaneous growth of production and new work in April had raised the prospect of an economic turnaround, but both returned to decline in May. Panellists reported weak demand both domestically and abroad, citing disappointing sales in nearby Asian economies.</p> <p>“That said, there were some positives to take from May’s survey… firms remained optimistic towards the 12-month outlook. The degree of positive sentiment was relatively muted, however.”</p> <p style="text-align: right;">Source: Asean Economist</p>