GLOBAL COMPETITIVENESS RANKING SLIDES 2 NOTCHES
Despite the frequent breast-beating of President Aquino about the economic gains under his administration and the reforms it supposedly introduced in the business sector, the Philippines was ranked the least competitive country in Asia-Pacific with its global ranking this year falling two notches to 41st place from last year’s 39th in the World Competitiveness Scoreboard.
The annual ranking of the Swiss-based International Institute for Management and Development (IMD) graded an Asian territory, Hong Kong, in a tie with the United States as being the most competitive this year.
In Asia, the Philippines was last among 13 countries ranked with a 63.291 out of a perfect 100 which was lower than that of Indonesia at 12th with a 64.61 score; India, 11th with a score of 70.649; Thailand, 10th with a score of 74.886, and Japan, 9th with a 75.214 score.
At the top of the rung were Hong Kong, first with a perfect 100; Singapore, second with 98.557; Taiwan, third with 92.011; Australia, fourth with 89.259; Malaysia, fifth with 84.12, and China, sixth with 81.1.
The report noted that challenges facing the country’s competitiveness included the need to improve policy coordination between national and local governments to improve governance, low investments in energy, transport, and other infrastructure to stimulate job creation and improve services delivery, poor access to and quality of basic education; the need to create a better business environment by lowering the costs of doing business to attract more investments, and lack of disaster readiness to reduce social and economic risks and costs.
Of particular interest in the ranking is that in the category on
government efficiency, the Philippines fell a steep six notches to 37th globally, from 31st last year.
According to the report the Philippines worsened in the area of fiscal policy, institutional framework, business legislation, and societal framework while improving only in public finance.
The Philippines improved its ranking on the category of business efficiency, from 32nd in 2010 to 31st this year and economic performance, from 34th to 29th.
On the level of infrastructure development, the Philippines was ranked second to the last or 57th from 56th last year.
The IMD listed the strengths of the country as long term employment, terms of trade and cost of living under the economic performance criteria; ageing of society, collected total tax revenues and government subsidies in government efficiency; remuneration in services professions and compensation levels in the business efficiency category; and high technology exports and fixed telephone tariffs for the infrastructure development level.
It was weak in gross domestic product (GDP) per capita, start-up procedures for businesses, overall productivity and labor productivity, pupil to teacher ratio and the proliferation of the use of the Internet.
An executive opinion survey that accompanied the IMD report stated that the key attractiveness factors for the country are its skilled workforce, competent managers, high educational level, productivity of workforce and low operating costs.
IMD’s local partner, the Asian Institute of Management (AIM) Policy Center (APC) stated that the Philippines improved in terms of economic performance and business efficiency under the same report called the World Competitiveness Yearbook (WCY) 2011.
“The focus of the WCY report is on data from 2010, and it analyzed and ranked how nations and enterprises manage the totality of their competencies to achieve prosperity,” it said.
It noted that the study is based on combined hard facts taken from international and regional organizations and private institutes, and results of an expert opinion survey of local businessmen.
The study looks into four general factors, namely, economic performance, government efficiency, business efficiency, and infrastructure.
“The biggest improvements [in the Philippines] can be found in economic performance,” Suzanne Rosselet, deputy director of IMD, said.
These improvements are attributed to the 7.3 percent growth in GDP, which just the other day Aquino claimed was upgraded to 7.6 percent, and a strong rebound in exports last year.
In addition, improvements in the stock market index and the perceived availability of skilled labor have driven the business efficiency indicator of the country one notch up.
“Still, the country has its work cut out. Looking at the other major components of competitiveness, much needs to be done in terms of the government efficiency and infrastructure. Based on the results of the study, these are among the factors that acted as a drag on the country’s over-all ranking,” the APC statement read.
Economists at APC also noted that the figures need to be interpreted carefully.
The country’s recent robust economic performance partially masks persistent challenges, such as a massive jobs deficit and persistent governance, poverty and inequality challenges, it added.
The APC said while the transition from the previous administration to the current administration may have buoyed business perceptions, this will only be sustained through actual meaningful reforms on the ground that promote a more inclusive growth process.
The ranking placed the US and Hong Kong as the most competitive countries, both slightly ahead of last year’s winner, Singapore.
In 2010, the US ranked third, losing the top ranking for the first time in decades.
Also in the rankings, Sweden jumps to 4th place, highlighting the competitiveness of the Nordic model. Germany shines and gains six ranks to 10th position thanks to buoyant exports and a more flexible labor market. Qatar, Korea and Turkey continue their ascent in competitiveness.
The recession highlighted the “resistant” (Switzerland) and the “resilient” (Taiwan). Only 4 big economies are in the top 20.
“The world of competitiveness becomes more national. ‘World Competitiveness 2.0’ is thus characterized by a greater self-reliance of countries. It increasingly emphasizes re-industrialization, exports, and a more critical look at delocalization,” IMD Professor Stéphane Garelli, director of IMD’s World Competitiveness Center, said.
“This trend is triggered by the rise in commodity and transport prices and higher labor costs in emerging economies,” Garelli added. –Daily Tribune
