KUALA LUMPUR: The delay in implementing subsidy rationalisation is among the reasons cited for Malaysia's decline in the 2024 World Competitiveness Ranking (WCR), says Prime Minister Datuk Seri Anwar Ibrahim.
He said that criticisms regarding subsidy rationalisation in that report were quite tough, which saw Malaysia's position drop to 34th place.
"It was linked to our delay in implementing subsidies rationalisation, on our lack of firmness in the matter.
"Malaysia is criticised for not being stern enough with its expenditure matters. Despite our increasing expenditures and a ballooning deficit, we continue to approve additional allocations, such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA).
"I have to admit this, but given the economic situation, we have to consider the people too," he said.
Anwar, who is also the finance minister, said this in response to Datuk Taib Azamudden (PN-Alor Star), who inquired about the government's strategy following Malaysia's fall to 34th place in the WCR, as well as significant declines across sub-sectors of the domestic economy and business productivity and efficiency to 40th position compared to 24th place during the pandemic.
The WCR Report, released by the International Institute for Management Development (IMD), also ranked Malaysia fourth among Asian countries after Singapore, Thailand, and Indonesia.
Anwar also acknowledged other shortcomings listed in the WCR, particularly regarding the country's economic growth and the weakness of the ringgit.
"On the economic growth, post-Covid 19, it soared above a very low threshold, hence the comparison was also affected.
"On the weakness of the ringgit. Last year it was weak and challenging. However, there have been improvements this year."
Meanwhile, in reply to an additional question from Datuk Rosol Wahid (PN-Hulu Terengganu), Anwar said the expenditure to cover subsidies was not included in the assessment, which resulted in Malaysia's position not being affected.
"It was not within the assessment before. Indonesia took tough action two years ago on the targeting of rice, flour and sugar subsidies, leading to a significant improvement in their performance.
"On the other hand, the report states that Malaysia's subsidies are an 'unrealistic economy prescription', with prices lower compared to the market," he said.
Nonetheless, Anwar said that the report continued to affirm Malaysia's status as a stable economy.
He added that the government was not taking a defensive approach to issues raised in the report.
"We have scrutinised the WCR report, and I have requested the cabinet to take a more open approach with constructive criticisms so that we can improve.
"We will address the criticisms and improve. Yes, political stability helps, but a clear economic framework will further assist us to soar further, with all the improvements to be made.
"(And) our performance can improve significantly compared to before."