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Title page
Contents
Abstract/Resume 4
Introduction 7
Malaysia's productivity performance and outlook 8
Improving the quality of education 10
Raising the quality of basic education 11
Graduate employability and labour force skills demand 15
System efficiency-improving student outcomes at current or lower expenditure levels 16
Strengthening innovation 18
A simplified innovation governance framework with clear delegation of responsibilities 19
Strengthening business innovation and harnessing the potential of SMEs 21
Improving the relevance and recognition of university and public research institute output 22
Further improving the competition framework 23
Inadequate agency independence and resourcing is affecting regulatory outcomes 23
Exemptions reduce the consistency of competition regulation 25
Enhanced merger review in Malaysia 25
Enhanced regulatory frameworks for SMEs 26
Removing barriers to firm entry 27
More accommodative exit policies 27
Trade, investment and furthering regional integration 28
Building on solid trade fundamentals 29
Regaining momentum for liberalising services investment 31
Increased participation in global value chains 31
Continuing to enhance regional integration 32
Boosting public sector productivity 34
Empowering agencies by aligning and streamlining responsibilities 34
Effective programmes and procurement processes 36
A holistic framework for incentivising the public service 38
References 40
Table 1. Malaysia's ambitious sectoral targets for labour productivity growth 10
Table 2. An example of performance review by KPI 38
Figure 1. Labour productivity growth has declined 8
Figure 2. Labour productivity growth by sectors 8
Figure 3. Fixed broadband subscription prices are relatively high 9
Figure 4. Labour productivity growth in services subsectors 10
Figure 5. Student performance on PISA is low 12
Figure 6. Socioeconomic status affects PISA performance in mathematics 13
Figure 7. Higher per capita spending on basic education would benefit students 14
Figure 8. Education immigration and emigration flows 17
Figure 9. Innovation indicators 19
Figure 10. Patent applications by Malaysian residents and non-residents 20
Figure 11. Innovation governance involves a complex array of actors 20
Figure 12. Malaysia's technological upgrading has slowed 22
Figure 13. SME productivity lags large firms 26
Figure 14. New business entry has not increased much 27
Figure 15. Resolving insolvency has the largest distance to the frontier 28
Figure 16. Trade facilitation indicators frontier 29
Figure 17. The STRI for selected sectors 30
Figure 18. FDI restrictiveness index 2015 31
Figure 19. Malaysia has lost some ground with respect to export diversity and complexity against regional GVC competitors 32
Figure 20. The Trans-Pacific Partnership Agreement will boost Malaysian real incomes mainly through behind the-border 33
Figure 21. Malaysia's public sector is large but its governance compares well internationally 35
Boxes
Box 1. Education migration in Malaysia 16
Box 2. Benefits to Malaysia of regional trade agreements 33
Box 3. Best practices of the OECD countries in the evaluation of public sector productivity 39
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