Dato’ Mohd Razali Hussain The Perdana Leadership Foundation CEO Forum 24 th September 2014 Taking Malaysian Productivity from the Industrial Era to the Knowledge Age

Knowledge Economy Definitions The knowledge based economy” is an expression coined to describe trends in advanced economies towards greater dependence on knowledge, information and high skill levels, and the increasing need for ready access to all of these by the business and public sectors. Knowledge Economy as production and services based on knowledge-intensive activities that contribute to an accelerated of technical and scientific advance, as well as rapid obsolescence. Source: Annual Review of Sociology Vol. 30, (2004), pp

Productivity House Source: Productivity Report 2013/2014 3

4 GDP Growth and Contribution (%) Sources: (i) Department of Statistics, Malaysia (ii) Total Economy Database, The Conference Board

5 Released: 22 nd May (12/60) 2013 (15/60) Released: 3 rd September (20/144) (24/148) The Global Competitiveness Report by World Economic Forum (WEF) Released: 19 th October (6/189) 2013 (12/185) Global Innovation Index by INSEAD Released: 3 rd July (33/143) 2013 (32/142) Major Reports on Competitiveness

Source: EODB 2013, World Bank, WCY 2014 Malaysia ranks Ease of Doing Business (EODB) 6 /189 countries, WCY / 60 countries (overall). Income 45 / 60 productivity-wise countries 47 out of 60 How do we retrieve the ‘outcomes’ of being top rank in competitiveness? GDP Per Employee (PPP, USD) 6 Productivity, Income & competitiveness

7 Productivity led growth to push Malaysia out of efficiency driven stage

Malaysia’s performance in ICT Global Innovation Index 2013 Source: Productivity Report 2013/2014 The telecommunications services industry has matured and is able to generate higher added value through product and service innovation 8

9 86% of Malaysian firms are Adopter /Adapter - focus on incremental innovation Malaysia’s Productivity Challenges : Technological capability Ability to create new technology/ significant improvement on existing process/technology TIC Level 36.2%52.2% 5.3%6.3% 0%

10 Technological Readiness Taiwan Singapore Malaysia Korea Hong Kong Chile Canada Australia Score

Foreign - low wage and low skilled support Malaysia’s large & export oriented enterprises Labour market Inefficiency 30% of workforce in the manufacturing sector are foreign workers. 95% of foreign workers are production workers. Malaysian Manufacturing’s ability to transform itself to being ‘high-income’ status ready is being prevented by over-reliance on foreign workers Nearly 30% of Workforce are foreign workers 95% of foreign workers are production workers 5% are skilled workers 7 industries employ 74% of all foreign workers 5 industries with reliance higher than 25% % % 11.9%9.8% 13.8% 2013 Percentage of Foreign Workers, Source: i. Department of Statistics, ii. Study on Transformation Strategy for Labour Intensive Manufacturing Industries in Malaysia by Frost & Sullivan Malaysia 11

National Policy on the Development and Implementation of Regulation Ease of Doing Business Business Enabling Framework : Comprehensive Scanning of Business Licenses Industrial Sector Regulatory Review Let us show you the way on how to optimise your resources Creating value for your business through customer focus Innovate your process to improve efficiency Analysing your business using MPC productivity assessment tools Your one-stop business health-check Evaluating your performance for business sustainability Get to know about productivity Sharpen your productivity knowledge All you need to know about productivity Where we are in the global ranking? Malaysia’s position against the worlds’ most competitive countries Snapshots of Malaysia’s position in the international ranking 12

13 Contradiction? Balancing Value Innovation Local Human Long Term Strategy Systemic Regulation Reform Value Creation Cost Reduction Foreign Technology Action Strategic Regulation Reform Eliminate waste

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