KUALA LUMPUR, Aug 12 — Malaysia needs to uplift its labour productivity growth to restore strong economic growth after the pandemic, according to the Organisation for Economic Co-operation and Development (OECD).

In its Economic Survey 2021 on Malaysia released today, OECD said a regulatory environment that foster competition and encourage business dynamism is an important component of a successful strategy to deliver long-term and sustainable economic growth.

"Malaysia has made a series of reforms to improve the competitiveness and dynamism of the business environment in recent years and has a strong track record of adopting good regulatory practice (GRP) tools.

"Overall regulatory frameworks have been revamped under the National Policy on Development and Implementation of Regulations (NPDIR), which streamlined various procedures related to business activity, and is implemented across government with the support of the Malaysia Productivity Corporation (MPC),” it said.

It said as a result of these and other reforms, Malaysia showed a remarkable performance in a number of international benchmarks of competitiveness ranking, for instance, 12th in the World Bank’s Doing Business Index in 2020.

OECD said the government has also increased its focus on improving competition, with the adoption of the Competition Act 2010, and a number of sectoral initiatives to increase competition, notably in telecommunications and energy.

"As Malaysia transitions to high-income status, the future sources of growth will increasingly need to shift to innovation and productivity gains, which calls for further improvements in business dynamism,” it said.

It said over the past decades, Malaysia has carried out a range of structural reforms but the productivity challenge called for renewed efforts to put forward bold policy reforms back on the agenda.

"While maintaining robust economic growth before the pandemic, Malaysia’s labour productivity growth had declined over the past decades, in contrast with other Southeast Asian countries.

"The decline of labour productivity growth is not entirely surprising as Malaysia has succeeded in converging to a higher level of labour productivity frontiers,” it added. — Bernama