Zafrul: Weak Ringgit in 2023 Affected Malaysia’s Global Competitiveness Ranking, Will Improve This Year

Previously, we shared how Malaysia recorded its worst placement in the International Institute for Management Development’s (IMD) latest edition of the World Competitiveness Ranking.

In the 2024 edition, our country was ranked 34th out of 67 nations and economies, with neighbouring countries Indonesia and Thailand both overtaking us for the very 1st time.

Malaysia’s ranking fell due to the Ringgit’s weakness last year

Source: The Edge Markets

Now, the Ministry of Investment, Trade and Industry (MITI) has come out to explain Malaysia’s decline in the ranking and allay fears by the public regarding the drop.

As reported by BERNAMA, its Minister, Tengku Datuk Seri Zafrul Abdul Aziz, explained that the drop in the ranking was due to the Ringgit’s weakness in 2023.

Source: IMD

He further elaborated that based on MITI’s preliminary study of IMD’s report, Malaysia’s drop from 27th to 34th in the ranking was due to the report’s reliance on 2023 data to measure national competitiveness.

Tengku Zafrul asserted,

“(The report) was based on data from last year, 2023, compared to 2022, so there is a one-year lag. The factor that had the most significant impact is the stability of the ringgit, as highlighted in the rankings.”

Source: 123RF

For illustration purposes

The MITI Minister added that the Ringgit’s weakness last year had various implications, such as the valuation of investments, productivity, and efficiency, which are closely related to the Ringgit’s value and consequently reflect concerns about economic stability.

The Ringgit has strengthened, and the E&E sector has bounced back this year

Source: IMD

However, given that the Ringgit has strengthened this year, Zafrul assured that the ranking would be improved, more so if the Ringgit’s momentum continues.

Besides that, the MITI Minister also pointed to the low competitiveness ranking as being a result of low contribution from the electrical and electronic (E&E) exports last year, which was in tandem with the slowdown in trade worldwide.

For this year, Zafrul stressed that the sector has improved considerably by about 10% in May 2024.

Source: 123RF

For illustration purposes

So, what do you guys think of the MITI Minister’s statement? Share your thoughts with us in the comments!

Also read: Indonesia & Thailand Overtake Malaysia in World Competitiveness Ranking for 1st Time as We Drop to 34th