Malaysia remains within the top 20% in the Global Competitiveness Index 2012-2013 by the World Economic Forum.
In the report profiling 144 economies, Malaysia's ranking, however, slipped down four notches this year to the 25th spot, coming in behind other developed Asian countries such as Hong Kong (9th), Japan (10th), Taiwan (13th) and South Korea (19th).
“We also still trailing behind Singapore, which retained its second spot, while Luxembourg, New Zealand, United Arab Emirates as well as South Korea overtook Malaysia this year,” it said.
The common perception of an increase in crime negatively impacted Malaysia's ranking.
However, the study also noted that public trust in politicians has im-proved 17th place from last year's 25th, and an improvement in transparency of government policymaking, up from 26th spot to 17th.
“The most notable advantages are found in Malaysia's efficient and competitive market for goods and services (11th) and its remarkably supportive financial sector (6th), as well as its business-friendly institutional framework.
“In a region where many economies suffer from the lack of transparency and the presence of red tape, Malaysia stands out as being successful at tackling both issues.”
The report, however, said much remained to be done to put the country on a more solid growth path.
It added that the surprisingly low level of technological readiness could undermine Malaysia's efforts to become a knowledge-based economy by 2020.
It said the global competitiveness scores were calculated using public and private data around 12 key categories considered to be the pillars of competitiveness. These included public institutions, infrastructure, health and education, market efficiency and technological readiness.
Economist Tan Sri Ramon Navaratnam said he hoped Budget 2013 would address flaws, especially in the capital and brain outflow that were fundamental to a sustainable competitive position.