Firm Performance and the Business Environment in Malaysia : A Comparison with High - Income and Upper - Middle - Income countries
Firm-level survey data on registered private firms reveal that firms in Malaysia have much lower labor productivity than their counterparts in 43 upper-middle-income and 14 high-income countries. It will be difficult for Malaysia to achieve the high-income status without a significant improvement in labor productivity of the private sector firms. The lower productivity of Malaysian firms is pervasive and holds across sectors and firm-sizes. Drivers of productivity such as outward orientation of the firms, innovation, training of workers and top manager’s experience are all lagging in Malaysia compared to the high-income and upper-middle-income groups. Malaysia does outperform in terms of low regulatory burden on the firms and better quality of power supply. However, corruption and crime are worse in Malaysia than in the high-income and even upper-middle-income countries.