The recently launched Malaysia Productivity Blueprint should be a clarion call to the accountancy profession to overcome its current challenges, says Errol Oh
This article was first published in the July/August 2017 Malaysia edition of Accounting and Business magazine.
Many levers need to be pulled to make a nation strong and vibrant, but surely among the most critical is the one that determines productivity.
In his 1994 book, The Age of Diminished Expectations, Nobel Prize-winning economist Paul Krugman wrote: ‘Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.’
Unveiled on 8 May, the Malaysia Productivity Blueprint is a roadmap for how to reach the labour productivity growth target of 3.7% per annum during the 11th Malaysia Plan (11MP) period.
That five-year span leading to 2020 is not the long run Krugman had in mind, but the blueprint’s strategies and proposed changes are meant to have a deep and lasting impact. It starts with the recognition that Malaysia needs to end its heavy dependence on the infusion of capital and labour to stoke the economy, noting that ‘This input-driven growth is becoming more costly to sustain with every unit of input injected into the economy yielding less GDP growth compared to the past.’
This echoes the World Bank’s most recent biannual Malaysia Economic Monitor, published last December. It points out that with headwinds inhibiting capital accumulation and an ageing population slowing the expansion of the labour force, it is increasingly important for Malaysia to accelerate productivity growth.
More cohesion is also required; one of the blueprint’s guiding principles is that productivity must be addressed holistically and in tandem, at the national, sector and enterprise levels. The third big change required is the formation of a solid partnership between the government and the private sector.
Most people expect the government to take the lead when it comes to productivity policies and plans. But the blueprint now calls for a balancing of the role of the public and private sectors. In this partnership, the government provides the ecosystem that will enable productivity gains, while the private sector spearheads on-the-ground implementation at enterprise level. Also, suitable industry associations and enterprise champions will be identified and empowered to act as ‘key change agents’.
Aside from the overall labour productivity growth target, each of the five main economic sectors has its own one. Labour productivity in the services sector needs to grow by 4.1% a year over the 11MP period – more than double the 2% per annum recorded between 2011 and 2015.
This is where accountants, particularly those in public practice, have a significant part to play. One of the services subsectors with relatively lower productivity is professional services. The accounting profession should regard the blueprint as a clarion call to work harder to overcome productivity challenges such as the shortage of professionals, low adoption of ICT, lack of scale and regulatory inconsistency.
Errol Oh is executive editor of The Star
"Malaysia needs to end its heavy dependence on the infusion of capital and labour to stoke the economy"