RP scrapes bottom of the barrel in competitiveness

SPECIAL REPORT: PHILIPPINES COMPETITIVENESS
 
State of the Nation
 
In health, science and technology, education, energy and many other areas, the Philippines scored the second worst in a competitiveness rating of 57 countries.

The 2009 World Competitiveness Yearbook, compiled by the International Institute for Management Development (IMD), ranks the Philippines 43rd out of 57 countries.

The country ranked 56th in infrastructure and 43rd overall, three notches down from last year (40th) and the worst score among 13 Asia Pacific countries in the report.

“Essentially, the study concluded that the rank of the Philippines remained unchanged from last year when viewed in the context of a pool of nations that the IMD studies over the year,” said Ma. Lourdes Sereno, executive director of the Asian Institute of Management (AIM) Policy Center, the local partner of IMD.

“However, when viewed in the context of the ranked, the Philippines made a significant slip, from second to the last in Asia Pacific, to rock bottom,” she said during the release of the rankings on Monday.

Asian countries that were not included in the study were Vietnam, Cambodia, Myanmar, Brunei Darussalam and Papua New Guinea.

Indonesia outranks the Philippines, jumping nine notches from 51st place out of 55 countries last year, to 42nd place out of 57 this year. Philippine labor productivity is second to last in Asia, next to Indonesia.

Stuck at the bottom

“We have not been able to break out of the bottom third despite the promise of last year’s ranking,” said Felipe Alfonso, AIM interim president, as he made public the survey results on Monday. “The results are largely based on data from early 2008, so the rankings may not reflect the impact of the crisis last year.”

The United States is No. 1, followed by Hong Kong, Singapore, Switzerland, Denmark and Sweden.

Among the member countries of the Association of Southeast Asian Nations (Asean), the Philippines placed last while Singapore ranked 3rd; Malaysia, 19th; Thailand, 26th; and Indonesia, 42nd; Vietnam, Cambodia, Myanmar, Brunei and Papua New Guinea are not on the list.

“Except in business efficiency, we have been overtaken by these Asean neighbors,” said Sereno. “And except in prices, Philippines performance is poor.”

Philippine scorecard

The country fared worst in pupil-teacher ratio in high-school and elementary levels (No. 57 and 56, respectively). The Philippines ranks 56th in high school enrolment; the number of dependents younger than 15 and older than 64 years old; and the number of Internet users.

In business efficiency, however, the country is No. 2 in the hourly compensation for manufacturing workers, No. 3 in gross annual income in services professions, and No. 7 in the “high flexibility” of Filipinos when faced with new challenges.

In both remuneration of managers (including bonuses and long-term incentives) and in the average number of working hours per year, the Philippines ranks No. 12.

The weaknesses, however, include overall labor productivity and the percentage of population in the labor force, investment risk and image abroad.

In economic performance, the Philippines ranks No. 5 in cost-of-living and fared fairly well in real GDP growth and GDP growth per capita (15th and 16th, respectively); and resilience of the economy and current account balance as a percentage of GDP (both No. 21).

GDP, a key economic indicator, is the total cost of all final goods and services produced in a country in a year.

The downside for the Philippines, according to the report, include low GDP per capita (No. 56); relocation of services, youth unemployment, and employment—all in the bottom 50.

Government efficiency was in the top 10 when it came to collected total tax revenues, exchange rate stability, and ageing as a non-burden on society. It is in the top 10 in government subsidies to private and public companies and the personal income tax rate.

The minus side include the fact that foreign investors were free to acquire control in local companies, the complex procedures required when starting a business, poor credit rating, high firing costs based on number of weeks of salary and high government foreign debt.

Significance of ranking

The ranking, while only one of so many that also lists the Philippines in a better light, is not to be taken lightly. The competitiveness index “is a key reference for investors,” said AIM Dean Victoria Licuanan.

“We aren’t slipping behind in absolute figures but in competitiveness against the 56 countries, we are behind,” Sereno said.

“We are convinced it’s time for action, to face the hard truths,” she added.

The health indicator was “very bad,” she said, pointing out that Filipinos are paying for healthcare out of their own pockets, which is dire when you are poor. Government expenditure on health “is not enough,” she added.

Dr. Joseph Lim of Ateneo de Manila University’s Economics Department said, “We have bad scientific infrastructure.”

“Science education is the worst in Asia and basic research is the lowest. We have the lowest number of Internet users, just next to India which has a bigger population.” –Paul M. Icamina, Special Reports Editor, Manila Times