Mustapa: Better productivity growth expected for 2017

This article first appeared in The Edge Financial Daily, on June 1, 2017.
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KUALA LUMPUR: Malaysia is on track to achieve stronger productivity growth in 2017, paving the way for the country to reach its target of a 3.7% productivity growth by 2020, according to International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

That said, Mustapa cautioned that Malaysians could not afford to rest on their laurels, saying “we need to buck up to meet the target”, and that collaboration between the public and private sectors is also critical for achieving the productivity target.

The country registered a 3.5% growth in labour productivity to RM78,218 in 2016, from RM75,548 in 2015.

“I’m confident we can achieve a higher percentage [of productivity growth] this year because we have better [economic] growth prospects for 2017,” said the minister, indicating that the soon-to-be-released export figures for April are “quite good”.

“We have also set up the National Productivity Council, bringing together the public and private sectors, which will be jointly monitoring the implementation of the Malaysia Productivity Blueprint (MPB) with the Economic Planning Unit,” Mustapa told the media at the launch of the Malaysia Productivity Report 2016/2017 by Malaysia Productivity Corp.

The manufacturing sector was the largest contributor to productivity, growing 1.4% to RM106,647 in 2016, followed by the services sector (2.8%, RM68,166) and the agriculture sector (3.4%, RM55,485).

While Malaysia did well in terms of productivity growth, Mustapa said more needs to be done in order to meet the target of a 3.7% productivity growth to RM92,300 by 2020.

The minister urged for greater collaboration between the government and the private sector in order to further improve productivity levels.

“We have done quite well, although we are a shade below our target of 3.7%. The challenge going forward is not only to maintain and improve the growth, but also making sure that we maintain the momentum in productivity improvement.

“We all have to buck up to meet the target, and the public and private sectors need to collaborate and cooperate much more closely with each other for this to happen,” he said.

Mustapa emphasised the importance of productivity as a key transformation enabler for the country to reach developed nation status, highlighting the MPB which was announced by Prime Minister Datuk Seri Najib Razak on May 8.

The blueprint has outlined five strategic thrusts, namely building the workforce of the future, driving digitalisation and innovation, making industry accountable for productivity, forging a robust ecosystem and securing a strong implementation mechanism.

“Productivity must be addressed holistically. The blueprint has outlined a governance model with clear roles and responsibilities for both the public and private sectors to ensure cohesive effort, clear ownership and transparent outcomes from both parties.

“The outcome of the blueprint will be a game changer for productivity improvements in Malaysia, shifting mindsets from business-as-usual to enhancing competitiveness and productivity,” said Mustapa.

He added that the MPB has identified nine key sectors which need improvement in productivity, with electrical and electronics, chemical products and food and beverages as immediate priorities in the first wave of implementation.