Poor infrastructure, red tape hobble RP competitiveness

THE GOVERNMENT must increase infrastructure spending and cut red tape instead of beefing up investment incentives to improve the country’s attractiveness, the local partner of a Swiss-based competitiveness ranking body said in a forum on Friday.

The recommendation comes after the local partner, the Asian Institute of Management Policy Center (APC), reviewed which areas the Philippines fared poorly in the International Institute for Management Development’s 2010 World Competitiveness Yearbook.

The report, released back in May, ranked the Philippines as 39th most competitive among 58 economies in the world based on 20 sub-factors.

Among these sub-factors, the Philippines ranked nearly at the bottom in terms of investment flows, hard and soft infrastructure, and business legislation, the APC said.

The Philippines’ score in the competitiveness of its investment incentives, in contrast, is above average as it is ranked 20th out of 58th in this respect.

Thus, government spending should be focused on bolstering the Philippines’ hard and soft infrastructure while processes for business permits must be streamlined instead of doling out more tax perks to lure investors, APC Executive Director Ma. Lourdes A. Sereno said.

“We will gain nothing more by further lowering our tariffs nor do we gain by putting out more fiscal incentives,” Ms. Sereno said.

“It is really in the infrastructure ranking where we suffer the most deterioration. This is alarming because we are at the bottom at the barrel for this indicator. It is a signal to the Aquino administration that we can’t take things lying down,” she said.

“[And] we need to fix our ease of doing business in the Philippines. We have to make it simple,” Ms. Sereno added.

Concentrating efforts on these areas, she said, should place the Philippines in second quartile of the competitiveness ranking by 2014.

Private sector representatives at the event agreed with this prescription.

“No matter how much investment incentives we give, they will never come [unless they see investing here is profitable],” Ruy Y. Moreno, private sector director for operations at the National Competitiveness Council, said in his speech.

American Chamber of Commerce of the Philippines Senior Adviser John D. Forbes, also concurred at the sidelines of the event, adding however that the President must be given leeway to offer more incentives when attractive big-ticket investments.

Sought for comment, a Trade official said government’s thrust is indeed moving towards addressing the ease of doing business over granting more tax perks.

“[Trade Secretary Gregory L. Domingo] told us to focus on cutting red tape, improving the ease of doing business,” Virgilio P. Fulgencio, executive director of the department’s Center for Industrial Competitiveness, said at the sidelines of the event. –Businessworld