Singapore, Hong Kong, Malaysia and Taiwan the most competitive economies in Asia, reports IMD business school

The best performing economies in our region are still small, export-oriented economies with success “based on the efficiency of the government and a regulatory environment that is extremely business friendly”, according to director of the IMD World Competitiveness Center, Professor Arturo Bris (pictured).

“Singapore and Hong Kong’s success is in the services sector, while Malaysia and Taiwan have traditionally been export-oriented manufacturing countries that have made in the last years an amazing effort to develop their services sector and open further to foreign trade and capital,” Bris said.

These observations follow the release of the IMD’s 2014 world competitiveness ranking of 60 countries. It reflects more than 300 criteria, two-thirds of which are based on statistical indicators and one-third on an IMD survey of more than 4000 international executives.

The top 10 countries include two from our region: Singapore (3) and Hong Kong (4). Japan (21) climbed in the rankings, helped by a weaker currency that has improved its competitiveness abroad. Elsewhere in Asia, both Malaysia (12) and Indonesia (37) made gains, while Thailand (29) fell amid political uncertainty.

Professor Bris said that Japan deserved a special mention, as it had improved three positions compared to last year’s ranking. “On the other hand, South Korea and Thailand lost ground because of the deterioration of government and business efficiency,” he said.

Most big emerging markets slid in the rankings as economic growth and foreign investment slowed and infrastructure remained inadequate. China (23) fell, partly owing to concerns about its business environment, while India (44) suffered from inefficient labour markets and ineffective business management. The Philippines (42) also fell.

“Within each region, differences between countries have increased significantly in the last years, with successes and failures alike,” Bris said.

Image abroad

As part of its 2014 ranking system, the IMD World Competitiveness Center looked at perceptions of each country as a place to do business.

Seven of the top 10 countries in the overall ranking for 2014 are also in the top 10 for having an image abroad that encourages business development, according to a survey of executives based in these countries. There appears to be a strong correlation between a country’s overall competitiveness ranking and its international image as a place to do business

The survey finds that executives in Singapore are most bullish on their country’s overseas image than most, while South Korea is far higher on this criterion than in the overall ranking. By contrast, executives in Taiwan are gloomier about their country’s international image.

“While economic performance changes from year to year, perceptions are longer term and shift more gradually,” Bris said.

“They can also lead to a virtuous circle of better image and better economic performance.

“So how executives feel their country is being perceived is a potentially useful guide to future competitiveness developments there.”

Bris noted that while exports and trade were key to competitiveness, the ability to attract capital and foreign investment was also vital.

“The promotion of small and medium enterprises is important, however large corporations as national champions are the pillars of the best performing economies,” he added.

“Prosperity requires strong institutions that encourage innovation and entrepreneurship.”

The IMD World Competitiveness Yearbook will be published at the end of June.