Philippines slips in IT competitiveness

THE PHILIPPINES slipped a notch in a list of 66 economies ranked according to support they give information technology (IT) firms in a biennial survey conducted by the Economist Intelligence Unit for Business Software Alliance.

The IT Industry Competitiveness Index gauges economies’ extent of such support according to six indicators, namely:

• overall business environment (with a weight of 10%), which considers foreign investment policy, private property protection, business regulation by the state and freedom to compete;

• IT infrastructure (20%), which covers spending on software, hardware and IT services; computer ownership; Internet security; as well as mobile and broadband penetration;

• human capital (20%), covering enrolment in higher education, enrolment in science courses, employment in IT and quality of technology skills;

• research and development (R&D) environment (25%), covering state and private sector R&D spending, number of new domestic patents each year and receipts from royalty and license fees;

• legal environment (10%), which considers comprehensiveness of intellectual property (IP) laws, adherence to treaties, enforcement of IP rights as well as status of laws on electronic signature, data privacy and cybercrime; and

• support for IT industry development (15%), which covers access to investment capital, progress in e-government, public spending on IT and absence of state bias for specific technologies or sectors.

Strengths and weaknesses

Based on these metrics the survey, titled: “Investment for the future: Benchmarking IT industry competitiveness 2011,” saw the Philippines slipping a notch to 52nd place compared to the 2009 ranking, as its overall score dipped 0.6 points to 27.9 out of a maximum of 100 — “the highest and best possible score.”

Gauged against specific indicators, the Philippines showed mixed performance, with scores of 67.8 for business environment, just 7.3 for IT infrastructure, 34.9 for human capital, zero for R&D environment, 50.5 for legal environment and 51 for support for IT industry development.

Topping the list were the United States, which stayed in 1st place with a score of 80.5, up 1.6 points; Finland, still at 2nd place (72, down 1.6 points); Singapore, up six places to 3rd (69.8, up 1.6); Sweden, down a notch to 4th (69.4, down 2.1); United Kingdom, up a notch to 5th (68.1, down 2.1); Denmark, up two places to 6th (67.9, down 0.7); Canada, down three spots to 7th (67.6, down 3.7); Ireland (up three places with a score of 67.5, up 0.6 points) and Australia (down one spot, also with a score of 67.5, down 1.2 points) sharing 8th place; as well as the Netherlands (down five places with score of 65.8, minus 4.9 points) and Israel (up three places with the same score, up 1.5 points) sharing 10th spot.

The bottom 10 places were occupied, in descending order, by Indonesia in 57th place with a score of 24.8, Venezuela (24.5), Ecuador (23.1), Kazakhstan (22.8), Pakistan (22.3), Nigeria (21.4), Bangladesh (20.6), Azerbaijan (20.3), Algeria (19.5) and Iran (18.8).

Grouped with 16 other Asia-Pacific peers, the Philippines ranked 12th behind (in descending order) Singapore, Australia, Taiwan, Japan, New Zealand, Hong Kong, South Korea, Malaysia, India, China and Thailand; and above just Vietnam, Sri Lanka, Indonesia, Pakistan and Bangladesh.

“Countries [sic] that have seen continued investment in key competitiveness enablers such as R&D environment, talent and skills are notable gainers in the 2011 index,” the report read.

“The importance of competitive IT industry environments extends, of course, beyond the sector and its players to impact on [sic] national economic competitiveness overall.”

Sought for comment, Gillian Joyce G. Virata, executive director for information and research of the Business Processing Association of the Philippines, said investments in education would help the country’s IT sector compete better.

“We need to invest more in better-quality education,” Ms. Virata said via text on Wednesday.

She also cited the need for “production of more original software products that establish our IT capability globally.”

“Government and domestic industries also need to outsource more work to our Philippine-based and Filipino-owned IT companies.” — KAM, Businessworld