On the Beat | By Wong Chun Wai

The race is far from over

Many Malaysians have been buying the euro, pound and dollar when it began to decline against our ringgit.

For parents, it means it has become a little cheaper to pay for education and certainly to travel to Europe and the United States.

For businessmen, the cost of imports has reduced and would surely make the balance sheet look better at the end of the financial year.

The ringgit has also performed very well against the Australian dollar, which must surely be welcomed by many of us.

Year to year, the ringgit has appreciated by about 6% against the US dollar, 19% against the euro and 16% compared with the pound.

It may still be early days as we have just finished the first quarter of the year, but the 10.1% economic growth has certainly been impressive. Not only are we out of the woods but the figure is the highest quarterly growth in a decade.

Rosy outlook

There are simple reasons for these figures – exports are up, external factors are improving, there is low inflation, foreign money is coming in again and there is rising interest rates.

It is important to note that many Malaysian companies have reported a strong performance for the first quarter.

Public consumption has risen to 6.3% from 0.7%, reflecting public confidence and certainly job security, thus the willingness to spend, which helps to generate the economy.

The 10.1% first quarter result has prompted analysts to relook the earlier forecast of 5.5% GDP growth rate – now they are talking of 6.6% and even 7.0% to 7.5%.

There was also another piece of good news – Malaysia has taken the 10th spot on the Switzerland-based IMD's World Competitiveness Yearbook for 2010, a result that will make it more attractive to foreign investors. We are up from 18th placing last year, which is certainly a big jump. The list measures Malaysia against 58 countries this year, from 57 nations last year.

With an index score of 87,228, Malaysia has joined the ranks of the most competitive countries in the world ranking with Singapore, Hong Kong, the United States, Australia, Switzerland, Sweden, Canada, Taiwan and Norway.

Malaysia also made big leaps in government and business efficiency. It was ranked ninth, against 19th last year, for government efficiency and fourth for business efficiency compared with 13th previously.

The economic performance and the infrastructure factors improved to eighth, against ninth last year, and 25th, from 26th position respectively.

The question now is whether Malaysia can sustain the momentum for the rest of the year. The second quarter could be less robust, given the impact of the slowing down of fiscal stimulus spending while there could be external factors beyond our control.

While we deserve a pat on the shoulder, it is still too early for celebrations as there are a few factors that we need to recognise.

No room for complacency

Foreign direct investments continue to be a concern, our stock market is still lacklustre and private investments have still not recovered.

Our neighbours – Indonesia and Vietnam – have become attractive because of their cheap labour, large market and lower cost of doing businesses. Singapore continues to attract a steady stream of professionals and skilled workers.

Malaysia is still struggling, unable to pull in the best talent with some groups still insisting on clinging to their protectionist attitude and not realising that we will be left behind in a strongly competitive world.

The world has changed and all the talk about race supremacy is inconsequential if we are nobodies on the world stage.

We have to break out of this mode and create an identity for Malaysia as a place for the best brain and talent if we are to become a high-income nation.

The “Malaysia Boleh” slogan has instilled a sense of hope and confidence but some of us have also become unrealistic, even arrogant, thinking that we are among the best when we have lagged behind in the region.

The global market place does not tolerate mediocrity and flip-flop decisions. We need to change fast and certainly there is much hope on the New Economic Model (NEM), which was unveiled in March, with more details being released.

The first quarter 10.1% figure should also not be a reason for anyone to believe that all is fine and that the old ways are working.

The Prime Minister has to tear down the old structures, put up new frameworks and push for the changes under the NEM. Well done and keep up the momentum, sir!