Southeast Asia's "Tiger Cubs" Roar

Back to Contents of Issue: October 2003

The latest IMD rankings show growth and fortitude in Southeast Asia. By Gordon Feller

by Gordon Feller

THE INTERNATIONAL INSTITUTE OF Management Development's (IMD) World Competitiveness Yearbook recently appeared, confirming the increasing and enduring competitiveness of the Southeast Asian economies compared to those in Europe. Malaysia in particular jumped several ranks, from 10th in 2001 to 4th in 2003, when ranked against countries with populations over 20 million. Another strong performer in this category was Thailand, which jumped from 14th in 2001 to 10th in 2003. While the USA remained the most competitive in the over 20 million category, Australia replaced Canada as the second most competitive.

Measured against the similarly lean and mean smaller Scandinavian countries, Singapore also performed well, raising its rank from 3rd and 6th in 2001 and 2002 to 2nd in 2003. Hong Kong made a relative comeback in this category, also recovering from a ranking of 6 in 2002 to reach 4 this year -- though its ranking was even better in 2001, when it was rated the second most competitive "smaller" country. Finland replaced the Netherlands as the most competitive country in this smaller nation category, and New Zealand has remained relatively stable with a rank of 14 this year, up from 15 in 2001 and 2002.

Other Asian economies, especially the East Asian "tiger" economies did not perform so well. Japan, still Asia's dominant economic power whose fortunes affect many Asian economies due to high levels of trade and investment, dropped from 9th to 11th. South Korea fell from 11th in 2001 to 15th in 2003. Mainland China was ranked 12th in each of the past three years, and Taiwan slipped from 5th to 6th.

Bottom dwellers -- the Philippines and Indonesia -- with large and diverse populations and considerably more political instability than other Southeast Asian nations, dropped from 18 to 22 and 24 to 28 respectively.

The two tables (facing page, right) present rankings for competitive nations with a population of over and under 20 million and include the Asian Pacific nations surveyed. Full survey results along with detailed accounts of methodologies, executive summaries and quantitative ratings broken down by the key competitiveness elements of economic performance, government efficiency, business efficiency and infrastructure for all 59 nations surveyed are available at the World Competitiveness Year Book Web site of the International Management Development Institute: (

This analysis may be a surprise for Asian business strategists, especially the growing competitiveness of Singapore, Malaysia and Thailand as they face a rising China. Yet both Malaysia and Thailand retain lower operating costs, relatively efficient governments and business systems and -- compared to China -- "known" and mature infrastructures. Singapore's infrastructure and planning are among the best worldwide, and a halt to the threatening trend of higher operating costs over the past 10 years has helped Singapore remain competitive. However, the economic effects of the SARS crisis and instability in the Middle East and Arab worlds are not yet factored into the calculations.

South Korea and Japan, however, as well as perhaps Taiwan, seem to be losing their competitive edge from the years when they were seen as the tigers of Asia. The tiger cubs are catching up fast. In the midst of both regions lies China, ranked as 12th most competitive country among the over 20 million population category, and to the west, India -- an economy which is poised to follow China as a new market and business base.

Interestingly, foreign investment has not been breaking down the doors to get into the Malaysian consumer and business market, perhaps because investors remain wary of a relatively small and low-affordability consumer market and retain concerns about political succession and the sentiments of a majority Muslim population. Most of these latter concerns, however, are overestimated, and despite a relatively docile workforce and still above average levels of protection and red tape, Malaysia remains an opportunity for business that should not be ignored. Thailand continues to surprise, though there are concerns that expectations are being artificially inflated by domestic stimulus measures that may, in the end, not be managed well at middle and lower levels.

As usual, the IMD World Competitiveness Report offers extensive data from 52 partner institutes worldwide -- much food for thought for any who take their international business strategies seriously. @

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