Thailand, Indonesia drop in global competitiveness

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Thailand watThailand and Indonesia were the only two countries in the Association of Southeast Asian Nations (ASEAN) that dropped in the new Global Competitiveness Report 2015-2016 released on September 29 by the World Economic Forum compared to last year’s report. All other countries in the region gained, most of all by Vietnam which climbed 12 notches. Singapore remained top in the region and a solid world’s second best.

Singapore beat everyone but Switzerland for the fifth consecutive year. Its competitiveness is broad-based – it scores in the top 10 in nine out of the 12 pillars. Its particular strengths are the efficiency of its goods, labour and financial markets and the quality of its higher education and training system. It also scores strongly for its infrastructure, macroeconomic stability and the transparency and efficiency of institutions. Areas for improvement include a relatively low rate of participation of women in the workforce.

Vietnam advanced 12 places to 56th in the index, indicating its progress in moving away from an economy driven by unskilled labor and natural resources transitioning into an efficiency-driven economy. The report said the weight of Vietnam’s efficiency enhancers, including higher education and market size, has increased from 35 per cent last year to 35.8 per cent this year. The new report also named the most problematic factors for doing business in Vietnam, of which access to financing was at the top. It was followed by policy instability, inadequacy educated workforce, poor work ethic in labour force and corruption.

WEF ranking
Click to enlarge

Malaysia moved up two positions to 18, marking the country’s s highest ranking since 2005 in the highly-influential and closely monitored report.The report indicates that Malaysia’s competitiveness lies in goods market efficiency and financial market development pillars in which Malaysia is ranked in the top ten at 6th and 9th positions, respectively. Malaysia improves in most of the 12 pillars, with gains in macroeconomic stability as the budget deficit continues to be reduced to the lowest in six years (3.7 per cent of GDP), higher education and, most notably, technology readiness.

The Philippines continues to claw its way up as it climbed five notches. The country ranked 47th among 140 economies this year, an improvement from its 52nd spot among 144 countries last year, the report showed. The ranking last year was seven notches higher than the previous year’s spot.

With regards to Thailand, many analysts think that the military regime does prolong political uncertainty and thus undermine Thailand’s economic competitiveness. Thailand has seen a huge drop in foreign direct investment this year as other companies choose the nation’s neighbouring countries with better business environments. Foreign investors withdrew a net $1.2 billion from domestic equities in August this year alone, the biggest monthly outflow in two years.

Furthermore, the military regime has prevented Thailand from further integrating with the world economy. Military rule led to the suspension of free trade talks with the European Union last year. Many analysts think that as long as the military regime sticks to power, it will continue to undermine competitiveness.

In Indonesia, which dropped three notches, although overall prospects remain positive, growth is expected to remain below the levels recorded in previous years. As in other emerging countries and in addition to lower capital accumulation that results from reduced investments, productivity over in the past has been stagnatingwhich could have contributed to the current situation.

A failure to embrace long-term structural reforms that boost productivity and free up entrepreneurial talent is also harming the economy’s ability to improve living standards, solve persistently high unemployment and generate adequate resilience for future economic downturns, according to the report.

Of the other three ASEAN countries, Laos, Cambodia and Myanmar, all climbed up the ladder on the index, while still experiencing a huge gap to their neighbours. Brunei Darussalem has not been assessed

The Global Competitiveness Report 2015-2016 assesses the competitiveness of 140 world economies. Using a mixture of quantitative and survey data, it ranks countries overall by combining 113 indicators grouped under 12 pillars of competitiveness: institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.

Full report (pdf, 403 pages) here.

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Reading Time: 3 minutes

Thailand and Indonesia were the only two countries in the Association of Southeast Asian Nations (ASEAN) that dropped in the new Global Competitiveness Report 2015-2016 released on September 29 by the World Economic Forum compared to last year’s report. All other countries in the region gained, most of all by Vietnam which climbed 12 notches. Singapore remained top in the region and a solid world’s second best.

Reading Time: 3 minutes

Thailand watThailand and Indonesia were the only two countries in the Association of Southeast Asian Nations (ASEAN) that dropped in the new Global Competitiveness Report 2015-2016 released on September 29 by the World Economic Forum compared to last year’s report. All other countries in the region gained, most of all by Vietnam which climbed 12 notches. Singapore remained top in the region and a solid world’s second best.

Singapore beat everyone but Switzerland for the fifth consecutive year. Its competitiveness is broad-based – it scores in the top 10 in nine out of the 12 pillars. Its particular strengths are the efficiency of its goods, labour and financial markets and the quality of its higher education and training system. It also scores strongly for its infrastructure, macroeconomic stability and the transparency and efficiency of institutions. Areas for improvement include a relatively low rate of participation of women in the workforce.

Vietnam advanced 12 places to 56th in the index, indicating its progress in moving away from an economy driven by unskilled labor and natural resources transitioning into an efficiency-driven economy. The report said the weight of Vietnam’s efficiency enhancers, including higher education and market size, has increased from 35 per cent last year to 35.8 per cent this year. The new report also named the most problematic factors for doing business in Vietnam, of which access to financing was at the top. It was followed by policy instability, inadequacy educated workforce, poor work ethic in labour force and corruption.

WEF ranking
Click to enlarge

Malaysia moved up two positions to 18, marking the country’s s highest ranking since 2005 in the highly-influential and closely monitored report.The report indicates that Malaysia’s competitiveness lies in goods market efficiency and financial market development pillars in which Malaysia is ranked in the top ten at 6th and 9th positions, respectively. Malaysia improves in most of the 12 pillars, with gains in macroeconomic stability as the budget deficit continues to be reduced to the lowest in six years (3.7 per cent of GDP), higher education and, most notably, technology readiness.

The Philippines continues to claw its way up as it climbed five notches. The country ranked 47th among 140 economies this year, an improvement from its 52nd spot among 144 countries last year, the report showed. The ranking last year was seven notches higher than the previous year’s spot.

With regards to Thailand, many analysts think that the military regime does prolong political uncertainty and thus undermine Thailand’s economic competitiveness. Thailand has seen a huge drop in foreign direct investment this year as other companies choose the nation’s neighbouring countries with better business environments. Foreign investors withdrew a net $1.2 billion from domestic equities in August this year alone, the biggest monthly outflow in two years.

Furthermore, the military regime has prevented Thailand from further integrating with the world economy. Military rule led to the suspension of free trade talks with the European Union last year. Many analysts think that as long as the military regime sticks to power, it will continue to undermine competitiveness.

In Indonesia, which dropped three notches, although overall prospects remain positive, growth is expected to remain below the levels recorded in previous years. As in other emerging countries and in addition to lower capital accumulation that results from reduced investments, productivity over in the past has been stagnatingwhich could have contributed to the current situation.

A failure to embrace long-term structural reforms that boost productivity and free up entrepreneurial talent is also harming the economy’s ability to improve living standards, solve persistently high unemployment and generate adequate resilience for future economic downturns, according to the report.

Of the other three ASEAN countries, Laos, Cambodia and Myanmar, all climbed up the ladder on the index, while still experiencing a huge gap to their neighbours. Brunei Darussalem has not been assessed

The Global Competitiveness Report 2015-2016 assesses the competitiveness of 140 world economies. Using a mixture of quantitative and survey data, it ranks countries overall by combining 113 indicators grouped under 12 pillars of competitiveness: institutions; infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.

Full report (pdf, 403 pages) here.

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