KUALA LUMPUR: Malaysia is ranked 34th out of 67 countries in the 2024 World Competitiveness Ranking (WCR) dropping seven places from its 27th ranking last year.
The WCR Report released by the International Institute for Management Development (IMD) ranked Malaysia fourth among Asean countries after Singapore, Thailand, and Indonesia.
Singapore emerged as the most competitive economy in the world, climbing four places from the previous year to surpass Switzerland in second place.
The report said that Malaysia fell behind in almost all assessed areas, including economic performance, government efficiency, and business efficiency.
It maintained its 35th position of 2023 for the infrastructure area.
Malaysia maintained its second-place ranking in the price sub-factor and ranked 11th in tax policy, although both positions decreased by one place from last year.
Malaysia fell 19 places to the 35th spot in the domestic economy sub-factor and 17 places to 53rd in the productivity and efficiency area. It also ranked 50th for business legislation.
According to IMD, the main challenges for Malaysia are in increasing investment in research and development (R&D) to boost business resilience, and optimising the labour market to maximise workforce productivity.
Other challenges include updating policies and regulations to improve global competitiveness, leveraging advanced technologies to accelerate productivity growth and mitigating increasing costs through strategic productivity enhancements.
Thailand is ranked 25th in the WCR, up five places, and Indonesia ranked 27th, up seven places from last year.
Meanwhile, the report underlined that countries such as China, India, Brazil, Indonesia, and Turkey have experienced rapid growth and development in recent decades and have become essential players in trade, investment, innovation, and geopolitics.
Malaysia, Thailand, and Chile were seen either stable or improving.
These countries offer new opportunities and markets for businesses and consumers but also pose new risks and uncertainties, the report said.
It said governments and firms the world over must adapt to the distinct cultural, institutional, and regulatory environments of these markets to succeed within them while also sticking to global quality and sustainability standards.
IMD World Competitiveness Centre director Arturo Bris believes the most competitive economies of the future will be those able to anticipate and adapt to this changing global context while simultaneously creating value and well-being for their people.
"The major competitiveness challenges for the world's economies in 2024 and beyond were transitioning to a low-carbon and circular economy, being mindful of emerging markets' increasing integration into the world economy, and keeping up with digital transformation," he said.