Southeast Asia's "tiger cubs" roar on: the latest IMD rankings show growth and fortitude in Southeast Asia.

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: (www01.imd.ch).

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.

WORLD COMPETITIVENESS: OVERALL RANKINGS (1999-2003)

                             1999    2000    2001    2002    2003

Group 1: Population greater than 20 million
Argentina                     15      22      23      26      29
Australia                      3       3       3       3       2
Brazil                        17      15      16      15      21
Canada                         2       2       2       2       3
China Mainland                11      11      12      12      12
Columbia                      23      23      21      20      16
France                         8       7       8       9       8
Germany                        4       4       4       4       5
India                         19      18      19      17      20
Indonesia                     25      24      24      25      28
Italy                         13      16      13      14      17
Japan                         10      10       9      11      11
Korea                         21      12      11      10      15
Maharashta (India)             0       0       0       0      19
Malaysia                       9       9      10       6       4
Mexico                        14      14      15      19      24
Philippines                   12      17      18      18      22
Poland                        20      19      25      22      27
Romania                        0       0       0       0      23
Russia                        26      26      22      21      26
Sao Paulo (Brazil)             0       0       0       0      13
South Africa                  22      20      17      16      18
Spain                          7       8       7       8       9
Taiwan                         5       6       5       7       6
Thailand                      16      13      14      13      10
Turkey                        18      21      20      23      25
United Kingdom                 6       5       6       5       7
USA                            1       1       1       1       1
Venezuela                     24      25      26      24      30
Zhejiang (China)               0       0       0       0      14

Group 2: Population less than 20 million
Austria                       10      12       9       8      10
Bavaria (Germany)              0       0       0       0      18
Belgium                       13      13      12      13      13
Catalonia (Spain)              0       0       0       0      20
Chile                         16      16      17      15      16
Czech Republic                20      20      21      19      21
Denmark                        7      10      10       4       3
Estonia                        0       0      16      16      17
Finland                        5       3       4       2       1
Greece                        19      19      19      21      26
Hong Kong                      6       8       2      10       4
Hungary                       18      18      18      18      23
Iceland                       11      11      11      11       9
Ile-de-France (France)         0       0       0       0      15
Ireland                        8       5       8       9      11
Israel                        15      15      13      17      22
Jordan                         0       0       0       0      29
Lombardy (Italy)               0       0       0       0      24
Luxemburg                      3       6       5       5       6
Netherlands                    1       1       1       1       8
New Zealand                   14      14      15      14      14
Norway                        12       9      14      12      12
Portugal                      17      17      20      20      25
Rhone-Alps (France)            0       0       0       0      18
Singapore                      2       2       3       6       2
Slovak Republic                0       0      22      23      28
Slovenia                      21      21      23      22      28
Sweden                         9       7       7       7       7
Switzerland                    4       4       6       3       5

* GORDON FELLER

(Southeast Asia's "Tiger Cubs" Roar On, page 20) is a US citizen who has lived and worked in Asia for more than a decade. A graduate of Columbia University's undergraduate and graduate schools, Gordon began his long period of work in Asia while still a student. He is the author of more than 150 articles on Asian business, many of which look at the growing presence of Russian oil and gas companies in the Asian marketplace. Gordon can be reached via email at: [e-mail]