Competitiveness ranking: An objective perspective

MALAYSIA’S competitiveness ranking dropped by seven notches to 34 in 2024, from 27 in 2023.

It was the worst ranking on record as the lowest score was 32 in 2022 based on the available data since 1997.

The country’s ranking also slipped four rungs to 10 out of 14 countries in the Asia-Pacific region, making it the first time that Malaysia had ranked lower than Thailand (25 from 30 in 2023) and Indonesia (27 from 34 in 2023).

We must view the slip rationally and identify areas for improvement in order to undertake necessary actions for improvement. 

Prime Minister Datuk Seri Anwar Ibrahim had remarked: “We take an open approach and if there is constructive criticism to improve, we will do it. We will not take a too defensive stand if there are weaknesses that could be improved.”

From 1997 to 2024, it was observed that our country’s ranking had declined 14 times, went up 13 times while one time remained unchanged.

On a long-term trend analysis, Malaysia’s competitiveness ranking had been slipping since 2010

Our ranking had dropped by nine notches to 28 in 1999, 10 notches to 26 in 2005, six notches to 16 in 2011, 12 notches over four years to 24 in 2017.

In 2020, the ranking had declined by five notches to 27, and dropped by seven notches to 32 in 2022 from 25 in 2021 (see chart).

The highest ranking on record was 10 in 2010. Since then, it was hovering between 12 and 19 from 2012 to 2016, before slipping lower to between 22 and 34 from 2017 to 2024.

The government has eight years to achieve top 12 in the Global Competitiveness Index, one of the seven key performance indicators targeted under the Madani Economy Framework.

We have to analyse objectively the factors and components attributing to the competitiveness trends, and identify areas for improvement. Policymakers must use the findings of this report to benchmark progress, stimulate policy debate and identify potential challenges.

On the competitiveness landscape, the ranking for “government efficiency” dropped by four notches to 33 in 2024 from 29 in 2023, reflecting largely a drop in business legislation (to 50 in 2024 from 45 in 2023), societal framework (to 42 in 2024 from 39 in 2023) and institutional framework (31 in 2024 versus 29 in 2023).

The ranking for “business efficiency” dropped by eight notches to 40 in 2024 from 32 in 2023.

This was reflected in productivity and efficiency (53 in 2024 versus 36 in 2023), management practices (42 in 2024 versus 31 in 2023), attitudes and values (40 in 2024 versus 34 in 2023), Labour market (34 in 2024 versus 30 in 2023).

While the “infrastructure” ranking was maintained at 35 in 2024, the technological infrastructure slipped to 29 in 2024 (2023:16), while the ranking was still low for scientific infrastructure, health and environment, and education.

As for the “economic performance” competitiveness, it was ranked eight (seven in 2023), mainly due to a sharp drop in domestic economy to 35 in 2024 from 16 in 2023, as real gross domestic product growth slowed to 3.6% in 2023 (8.7% in 2022) on a normalisation of domestic demand post the Covid-19 pandemic as well as exports contraction.

We believe that the ranking for the domestic economy will improve in 2024-2025 as the economy will strengthen to grow by 4.5% to 5.5% over the medium-term, underpinned by continued expansion of domestic demand and stronger momentum of exports recovery.

However, we caution that domestic economic growth outlook remains subject to downside risks, mainly from the worsening of geopolitical tensions, stubborn inflation, as well as higher and longer interest rate in the US economy causing more financial volatility.

On the domestic front, any delay and execution risk in the implementation of approved investment projects and fiscal projects as well as slower consumer spending inflicted by the subsidy rationalisation’s cost adjustment would temper domestic economic growth.

Malaysia remains a sweet spot to investors.

The respondents of the Executive Opinion Survey have ranked the following top five key attractiveness factors for the economy. They were business-friendly environment (61.8% of total respondents), followed by cost competitiveness (58.8%), reliable infrastructure (52.9%), skilled workforce (44.1%), and dynamism of the economy (39.2%).

By fostering a more business-friendly environment and thriving ecosystem, Malaysia can unlock the full potential of its investment opportunities, entrepreneurial spirit and innovative capabilities. Both public and private sectors have to step up efforts in reskilling and upskilling the workforce.

The Malaysia Economy Madani Framework, New Industrial Master Plan 2030 and National Energy Transition Roadmap has laid the direction, initiatives and policy thrusts to transform the economy and manufacturing industries into high technology as well as green sustainability.

Malaysia has embarked on a series of incremental reforms to address competitiveness issues related to subsidies, transparency in public procurement, over-reliance on foreign workers, technological capacities as well as skills development.

Nevertheless, the following bottom five indicators have the lowest percentage of respondents are effective labour relations (17.6%), competitive tax regime (17.6%), competency of government (16.7%), strong research and development culture (15.7%), and quality of corporate governance (11.8%).

The taskforce comprising of representatives from public and private sectors not only need to sustain the improvements or even raise their ranking higher but also work on

improving the components and factors that contributing to a decline in competitiveness ranking.

The government, through a Special Task Force to Facilitate Business or Pemudah platform, is drafting a document entitled “New Deal For Business” to boost business confidence, stimulate economic growth as well as drive national digital transformation.

The need for a new look at the new deal for business. In an increasingly complex economic and business environment, we have to redouble our efforts to reduce business paint points, address structural impediments and situational challenges as well as undertake reforms towards dealing with bureaucratic red tape, inefficient and outdated regulations and undue regulatory burden faced by investors and businesses when doing business in Malaysia.

The pain points for businesses amongst others are problems of lengthy processes for registration, inconsistency application processes across states and lengthy approval time for incentives, the difficulty in complying with regulations, complexity in getting a construction permit, layering at various agencies and departments, burden of providing the same information multiple times as well as outdated rules, regulations and laws.

There are also funds and incentives support as well as financial related pain points such as tedious application procedures and processing, resulting in slow disbursement of fund and low utilisation rate.

Delivering a new deal for business must go beyond ‘business as usual” and “government knows all”, requiring a long-term commitment to maintain a cordial and clean relationship between government-business to create a conducive ecosystem where business feels empowered to invest, to innovate and to create good jobs.

Priority actions are as follows:

> “Act, Enable, Influence” framework, which offers a comprehensive approach to outline a defined sustainable and meaningful relationship between government

and businesses with a culture of collaboration to achieve common goals to grow our economy. The Government is not merely an actor implementing consistent

and simpler rules and regulations, but also listen to businesses and allow the right business voices’ active participation in policy development and shaping the

operating environment.

> Maintaining an effective open, inclusive and honest engagement between business and government (Federal, state and local authorities) with innovative and critical thinking can provide certainty and consistency for businesses as well as break down barriers to efficiency and high productivity.

> Developing new ways to oversee and assess the impact of regulations on business, including a full review of existing and new government’s policies and regulations are developed to ensure businesses are consulted at all stages.

> Three Rs of effective REGULATORY REFORMS: First, RETAIN regulations that support the basic rules of a market economy. Second, REPLACE regulations that

have legitimate aims but also have harmful unintended consequences. Third, REPEAL regulations that are motivated primarily by the manipulation of public

policy for unproductive rent-seeking.

> PEMUDAH to monitor and assess the competitiveness performance of Federal, state and local authorities in reforming processes and regulations for making them more efficient, accessible and simple as well as to avoid costly regulations for businesses and investors. Focus on regulating the exercise of power to constantly streamline administration and delegate power, improve regulation, and upgrade services.

> Provide a central dashboard as policy tool to monitor and analyse the performance of government websites and digital services (e.g. tracking website traffic, automated reports with key metrics to inform the progress of KPI, benchmark performance compared to other government websites).

By Lee Heng Guie who is Socio-Economic Research Centre executive director. The views expressed here are the writer’s own.

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The e-invoice conundrum dilemma

 

Mandatory e-invoice countdown

CYBERJAYA: In just one week, the one-year countdown begins in earnest for all businesses in the country to switch to the mandatory electronic invoicing (e-invoicing) rule.

Ahead of its full rollout on July 1, 2025, the Inland Revenue Board (LHDN) will be officially launching a free software on June 1 to help businesses, both big and small, ease into the system.

LHDN chief executive officer Datuk Abu Tariq Jamaluddin (pic) said businesses could actually already use e-invoicing when the software was made available for free on May 15.

“The free programme will be officially launched on June 1. More than 60 pilot companies and service providers have committed to issuing e-invoices in a production environment by June 30 this year through the MyInvois integration,” Abu Tariq told The Star in a recent interview.

He added that on Aug 1, the first phase of the project will begin with about 5,000 companies, which record annual earnings of RM100mil and above, adopting the use of e-invoices.

The second phase will begin on Jan 1 next year for companies with annual earnings of between RM25mil and RM100mil.

ALSO READ: Give us time to adjust, urge small business

“The final phase is for all businesses or enterprises offering sales or services to come on board with e-invoicing by July 1 next year,” he added.

The gradual move by LHDN, Abu Tariq said, would help in the seamless transition to e-invoicing, while benefiting taxpayers and the board.

“It will also help stem billions in losses due to the shadow economy and is in line with the nation’s digitisation goals by 2030,” he added.

It was previously reported that the nation lost about RM70bil in tax revenue last year due to illegal activities and tax evasion.

Although a recent survey by LHDN showed about 98% of businesses accepting e-invoicing, Abu Tariq acknowledged that there was pushback from certain quarters, particularly small and medium enterprises (SMEs) and hawkers.

Among their concerns was the fine of between RM200 to RM20,000 for each breach of the e-invoicing regulations, he added.

He explained that companies earning less than RM100mil annually need not use e-invoicing this Aug 1 because they do not fall within the category.

“In general, at the initial stage of implementation, there is no need for taxpayers to get an e-invoice as proof of expenditure,” LHDN had said in response to a recent viral post by Datuk Seri Dr Wee Ka Siong.

The MCA president had questioned the manner in which e-invoicing was being “forced upon businesses, particularly petty traders and hawkers”.

Dr Wee, who is the Ayer Hitam MP, also questioned why businesses had to submit 55 data entry points under the system and whether their data was safe from hackers.

LHDN has since clarified that only six out of the 55 data entry points need to be filled up to complete the e-invoice for automatic appraisals.

Abu Tariq explained that e-invoicing can be filed once a month as a “consolidated invoice.”

The consolidated invoice, he said, represents monthly overall sales and services transactions instead of daily individual entries for each sale.

“This will make compliance easier for micro-businesses because they only need to submit their consolidated invoice once a month.”

However, he noted that consumers or buyers have the legal right to demand e-invoicing receipts once the system is fully implemented on July 1 next year.

“Action can be taken against the seller for failing to do so,” he said.

To allay worries, he said LHDN will deal with non-compliance on a case-by-case basis.

Other criticisms cited as impeding the use of the online filing system were the expected rise in operating cost, lack of mobile phone subsidy or aid, and poor signal coverage in rural areas.

Abu Tariq said LHDN is currently in talks with online platform providers providing cashless payment facilities on how best to capture sales transactions through their scanning or QR code systems.

With one year to go before e-invoicing is fully enforced, he said there is ample time for adjustments and improvements.

He also encouraged SMEs, petty traders and hawkers to start using the free e-invoicing software to familiarise themselves with the system and get their books in order by July 1 next year.

A look into the challenges of the new digital system which will be made mandatory in stages from Aug 1.

BY now, most of the business world is aware of the looming deadlines for the implementation of e-invoicing.

The thorny subject tends to elicit groans from company owners and their accountants and administrators.

But as the government is postulating, it is a necessary evil in order to ensure taxes are fully paid.

But then again, is it the only option? Is e-invoicing the best solution to having a more effective tax system?

It does seem that it is going to be a painful, expensive and time-consuming exercise, and hence, does the means justify the end?

In July 2023, the Inland Revenue Board (IRB) issued the first guideline under section 134A of the Income Tax Act 1967 for the implementation of e-invoicing.

Companies with revenues of Rm100mil or more will have to carry out e-invoicing from Aug 1. Those with a turnover of more than Rm25mil will be next, with their deadline being Jan 1, 2025. All companies are to be filing their e-invoices by next July.

Thannees Tax Consulting Services managing director S M Thanneermalai says even though there is about a month left before the first group needs to do the necessary, many of them are unprepared.

“Many companies are waiting to see what will happen to the first batch. The impression that many have is that the e-invoicing deadlines will be postponed, similar to what happened with the low-value goods and high-value goods taxes,” he says.

There are parties who disagree with the idea of e-invoicing, especially in a country which has had a goods and services tax (GST) regime in the past. The GST was introduced in Malaysia in 2015 and abolished in 2018.

Tan Sri Soh Thian Lai of the Federation of Malaysian Manufacturers (FMM) says the GST is the panacea for Malaysia’s debt woes.

“The GST is a timely lifeline for the country’s debt dilemma and a means to shore up adequate fiscal buffers to weather the next economic downturn,” he adds, adding that the problem is that the government lacks the political will to reintroduce the GST.

“The government is focusing on short-term measures rather than doing the right thing for the benefit of the nation in the longer term.

“As the GST is a broad tax base system which would increase indirect taxes, it will also give the government flexibility to reduce direct taxes (personal income and corporate taxes) to make the country a more attractive business destination,” he says.

Soh notes that some companies have voiced their apprehension of e-invoicing, considering the sheer size, volume and complexity of transactions involved.

“These include export and import transactions that require companies to self-bill for overseas purchases. They are also concerned about the readiness of their systems for implementation and compliance with e-invoicing,” Soh says.

So, how complex is e-invoicing going to be? Companies have two ways of digitally filing their invoices to the tax office. One is through the IRB’S own Myinvois Portal. But this means that companies need to manually do it and the understanding is that only companies with a small number of invoices can take this route.

This is why the IRB will be providing all companies with application programming interfaces (APIS), which then will allow companies’ own systems to directly connect with the tax office, thereby automating the submission process.

This will require companies to upgrade their own systems or invest in a new system. “Companies must automate their existing enterprise resource planning (ERP) systems or use a software that can directly speak to the IRB’S Myinvois Portal. Initially, for the first year, it can be a burden to businesses cost-wise, similar to the implementation of the GST back then.

“Companies either have to customise their existing systems (if they are not up to date) or find a suitable middleware. It is going to be expensive,” says Thanneermalai.

He notes that businesses may also need to hire consultants, particularly if they require help to navigate the e-invoicing process and understand the required documentation.

“The IRB can provide assistance, but it is already inundated with many questions, making it challenging for it to address individual concerns comprehensively. Hence, the IRB may offer generic answers which may not hold up during audits, potentially leading to problems in the future,” he says.

However, others do not think that the cost is going to be prohibitive.

Ernst & Young Tax Consultants Sdn Bhd tax managing partner Farah Rosley says the cost for MSMES in gearing up for e-invoicing will not be burdensome, as they can access the Myinvois Portal which is free.

“Larger corporations will typically have the necessary manpower and IT departments to integrate e-invoicing into their existing systems,” she adds. Meanwhile, the government has also announced a tax deduction of up to RM50,000 per year (up to the 2027 year of assess

“The cost for MSMES in gearing up for e-invoicing will not be burdensome, as they can access the Myinvois Portal which is free.” 

No reason to fear, firms told

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This is the 'freedom' the US advocates: People who tell the truth have to plead guilty; US consolidate ties with Australia, strengthen small cliques in Asia-Pacific: expert

WikiLeaks founder Julian Assange walks through the US Federal Courthouse in the Commonwealth of the Northern Mariana Islands in Saipan, Northern Mariana Islands, on June 26, 2024 Photo:VCGAfter a years-long legal battle surrounding the founder of WikiLeaks, Julian Assange, a dramatic turn has finally arrived. He has obtained long-awaited "freedom," though at the cost of pleading guilty to a felony charge related to his alleged role in orchestrating one of the largest-ever breaches of US classified military and diplomatic documents. On Thursday, he landed back home in Australia, as a free man for the first time in 12 years.

People who tell the truth have to confess in exchange for "freedom" - the fate of Assange demonstrates that the "free beacon" of the US has ultimately collapsed. 

Founded in 2006, WikiLeaks exposed US military war crimes four years after its inception. Assange, the founder of the website, quickly became embroiled in lawsuits, with the US charging him with 18 counts, including violations of the Espionage Act. Arrested and imprisoned in the UK, Assange spent 1,901 days in a three-meter long, two-meter-wide cell, isolated from the world for 23 hours a day. Simultaneously, the US requested his extradition. The 52-year-old man now appears much older than his real age.

The US was determined to extradite Assange, ostensibly because he released what the US claimed was classified information related to national security and foreign affairs through WikiLeaks. However, in reality, it is a show to demonstrate that anyone who dares to challenge US hegemony and embarrass the US will be punished, Shen Yi, a professor at Fudan University, told the Global Times. By holding Assange accountable, the US government also hopes to set a strong precedent, demonstrating a zero-tolerance attitude toward leaking information that threatens its hegemonic status and reputation, and deterring other potential whistleblowers and leakers.

The seemingly sudden release of Assange can be seen as the most "dignified" choice for the US. The "plea deal" not only demonstrates the US' emphasis on the so-called national security, but also reduces the uncertainty of further legal battles, seemingly giving the US a "sense of victory," said Lü Xiang, a research fellow at the Chinese Academy of Social Sciences.

The US has displayed its double standard once again. Protecting human rights and freedom is something that US adversaries, not the US itself, should do. Speech that serves US interests, regardless of whether it is factual or logical, can get a free pass. But what the US does not like, especially the truths that would embarrass the US, are considered "guilty" or even a "crime." The narratives of freedom of speech swing with changes in US interests. 

Although the US can force Assange to "plead guilty" through various means, the atrocities exposed by WikiLeaks cannot be erased. WikiLeaks exposed a large number of US diplomatic cables and military confidential documents during the Afghanistan and Iraq wars, revealing US war crimes. The video of the US military "Apache" helicopter shooting civilians in Iraq will continue to be remembered by people.

In order to cover up its crimes, laws can become tools of the US government. The chilling effect it hopes to achieve on "whistleblowers" not only brings personal harm to Assange but also deepens the world's profound doubts about the values that the US boasts. 

A years-long international saga involving Assange may be over, but this history of injustice will always be remembered. Its impact will continue to resonate in the public and media spheres, reminding people of the US' trampling of freedom and human rights.Source link

Settling Assange's case helps US consolidate ties with Australia, strengthen small cliques in Asia-Pacific: expert

A demonstrator holds a placard reading "Freedom for Julian Assange" during a protest outside of the Royal Courts of Justice, Britain's High Court, on February 21, 2024. Photo: AFP

The curtain has closed on Julian Assange's saga as the WikiLeaks founder pleaded guilty to violating US espionage laws and walked out of court as a free man on Wednesday. Yet his case has exposed the hypocrisy of the US' long-flaunted freedom of speech and the ugliness of the country's relentless efforts to crush those who have "got in the way."

The US' gains from settling this high-profile case are multi-dimensional. Not only did the US intimidate people trying to expose US' dirty laundries, but it also removed one obstacle in its relationship with Australia, where Assange is from and where there has been advocacy for his release, observers noted. Consolidating coordination with Australia can help the US counter China's influence in the Western Pacific region through the creation of alliances, said experts. 

Assange walked free on Wednesday from a court on the US Pacific island territory of Saipan after pleading guilty to violating US espionage law, in a deal that allowed him to head straight home to Australia, per Reuters.

His release ends a 14-year legal saga in which Assange spent more than five years in a British high-security jail and seven years in asylum at the Ecuadorean Embassy in London battling extradition to Sweden on sexual assault allegations and to the US, where he faced 18 criminal charges.

Those charges stemmed from WikiLeaks' release in 2010 of hundreds of thousands of classified US military documents on Washington's wars in Afghanistan and Iraq - one of the largest breaches of secret information in US history.

During a three-hour hearing in Saipan, Assange pleaded guilty to only one criminal count of conspiring to obtain and disclose classified national defense documents but said he had believed the US Constitution's First Amendment, which protects free speech, shielded his activities.

"He [Assange] has suffered tremendously in his fight for free speech, for freedom of the press, and to ensure that the American public and the world community gets truthful and important newsworthy information," Assange's US lawyer Barry J Pollack said outside court in Saipan, Australian media reported.

The decades-long saga basically tells the world US political power can crush any form of freedom and legal terms, Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times.

Assange has endured a great deal over the past 14 years, yet his power and resources are too limited to effectively combat the US political machine, said Lü. While Assange's guilty plea is unjust and unfortunate, his experiences, along with WikiLeaks, have further exposed the real US to the world.

The case of WikiLeaks founder Julian Assange shows the world what US-style "freedom of the press" really is, said Wang Wenbin, then spokesperson for the Chinese Ministry of Foreign Affairs, at a press briefing in May.

Wang said the case shows the US believes exposure of other countries' secrets should be rewarded, but exposure of its own should be punished. The remarks came after Assange won a victory in his ongoing battle against extradition from the UK to the US, after the High Court in London granted him permission to appeal.

Secret diplomatic maneuvers 

Behind closed doors, an Australia-US-UK diplomatic dance opened the way for a plea deal to free the WikiLeaks founder, analysts and a diplomat previously involved in the case told AFP.

The tide shifted strongly in Assange's favor after Australian Prime Minister Anthony Albanese was elected in May 2022 and made his release a priority, a diplomat who did not want to be named told the AFP. 

Assange and his family had been advised previously that he should plead guilty and strike a deal because it would be difficult for the US to drop the charges, said the diplomat.

In February this year, Albanese said he hoped for an amicable end to the prosecution of WikiLeaks founder Julian Assange after Australian lawmakers ramped up pressure on the US and UK by passing a motion calling for Assange to be allowed to return to his home country.

The release of Assange has helped to remove a major obstacle between Washington and Canberra, strengthening their coordination. Washington had the current Asia-Pacific situation in mind when deciding to settle the case, Li Haidong, a professor at the China Foreign Affairs University, told the Global Times. 

The US and Australia have strong cooperation in both political and security aspects. Strengthening cooperation with Australia can help US counter China's influence in the Western Pacific region through the creation of alliances, Li explained. 

"I think part of the reason this has happened today is because it was becoming a significant issue for the relationship," Emma Shortis, senior researcher in international and security affairs at The Australia Institute thinktank, told media, noting that notably since London, Washington and Canberra agreed on a nuclear-powered submarine pact, AUKUS.

Li said after 14 years, the US has come to the conclusion that continuing to pursue the Assange case is no longer worth the effort. Therefore, Assange's confession and return to Australia are seen as a means for the US to save face and for the relationship between the US and Australia to be repaired.

What is even more tragic than Assange's guilty plea is that his fate is not the outcome of his own actions, but rather the result of a compromise and coordination among various governments for geopolitical reasons, said Li.

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