Making the Philippines competitive

The Philippines ranks 39th out of 58 economies in the IMD’s World Competitiveness Scoreboard. [IMD is the International Institute for Management Development.—Ed]

If you think that is good, consider the ranking of the four other original members of the Asean. Muslim Indonesia is No. 35, troubled Thailand is 26, racially mixed Malaysia is 10 and island state Singapore, surprise, No. 1. In other words, the Philippines is last among the five major Asean economies.

In the ease of Doing Business ranking in 2010, the Philippines came out No. 144 out of 158 countries ranked by the World Bank. The 144th place is down from the 141st ranking in 2009.

To be sure, there is the element of fairness or bias in these rankings—to the Philippines’ disadvantage. In the IMD Index, the United States has barely survived a financial meltdown, thanks to its bankers with bad ethics, banks with bad transparency, and regulators who hardly regulate. Yet the US is a close No. 3 to the No. 2, Hong Kong, and No. 1, Singapore—with scores of 99.09, 99.35, and 100 points, respectively.

Less than a point separates the Top Three in competitiveness.

Managing an island economy like Hong Kong and Singapore, where annual tourist volume is bigger than their population, is much easier than managing a country like the Philippines whose population is the 12th largest in the world and where political rights take precedence over economic rights.

The main reason Singapore is No. 1 in IMD is it posted a growth rate of 13 percent— 15.5 percent actually in the first quarter. But that is coming from a deep recession—so anything above zero will be great.

The Philippines had a growth rate of 7.3 percent, coming from a respectable 1.1 percent growth in the fourth quarter 2009—and being only one of four economies in Asia to survive the recession during the year.

And why should Thailand be 13 rungs better than the Philippines—26th vs. 44th, when Bangkok was riven by two months of mass protests that ended with at least 70 deaths and scores injured—proof that its democratic institutions are fragile? The Philippines has just had its cleanest election—and quickest count—in the last 100 years, proof that our democracy is stable.

Compared with many countries of Europe, the Philippines is much better off. Unemployment is 7.4 percent.

If you think that’s serious, consider the unemployment rates of countries richer than the Philippines—China 9.6 percent; US 9.9 percent, Euro area 10 percent, Belgium 11.6 percent, France 10.1 percent, Greece 12.1 percent, Hungary 11.8 percent, Turkey 14.4 percent, India 10.7 percent, Spain 19 percent, and South Africa, host of the World Cup, 25.2 percent (one of every four people has no job).

Yet, China is No. 18 in competitiveness, Belgium No. 25, France 24th, India 31st, and Spain 36th. Isn’t massive unemployment a sign of lack of competitiveness?

This is not to gloss over the admittedly many wrongs in the Philippine economy and business environment. For one, red tape can be crippling. To start a business requires 15 procedures and 52 days. In Canada, it takes ten minutes. Opening a warehouse takes 24 steps. Closing a business takes 5.7 years in the Philippines! And businessmen pay taxes 47 times a year and spend 195 hours doing so—the equivalent of 24 working days.

And graft has led to mass penury, according to presidential winner Benigno Aquino III. Builders must pay bribes to secure permits or get things done. Up to 40 percent of the national budget goes to corruption.

Noynoy’s budget team thinks P280 billion was lost in corruption alone in 2009. That money, he estimates, can build 280,000 schools or 560,000 classrooms or purchase 280 million sets of textbooks or train thousands of teachers. From 2002 to 2009, more than P1 trillion went to corruption.

Clearly, reforms must be put in place. This is one reason why Noynoy Aquino was backed tremendously by Big Business—to cut red tape, reduce corruption, make the Philippines competitive, solve mass unemployment and mass poverty.

Noynoy has promised to “streamline the approval process, not only for setting up new businesses but also in the regular day-to-day transactions with government, such as the payment of taxes. We will do this on a national as well as the local level.”

It’s a tall order but then Noynoy has an overwhelming mandate. He should have started yesterday, by naming his economic, finance and budget ministers, not showbiz personalities who he think were responsible for his victory.

Noynoy is proclaimed today as our president beginning June 30. Today too is Day One of his presidency. He has to hit the ground running. He has the hopes and aspirations of a long suffering nation.

Congratulations and good luck, Mr. President. –TONY LOPEZ, Manila Times

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