PH up 6 places in global competitiveness

MANILA, Philippines—Given significant improvements in governance, innovation and drive against corruption, the Philippines has moved up six notches in the global competitiveness ranking to the 59th place this year, out of 148 economies.

Although the climb this year was slower than 2012 when the country jumped 10 notches to the 65th spot, the Philippines was still regarded among “the most dynamic and rapidly improving economies in terms of competitiveness,” said the Global Competitiveness Report 2013-2014. The World Economic Forum (WEF) released the report on Wednesday.

The Philippines has also overtaken India, which took the 60th spot.

Singapore remained the highest ranking among Asian countries and has taken the second spot, next to Switzerland, which the WEF again named as the most competitive country in the world. Taking the third to fifth spots are Finland, Germany and the United States.

Presidential spokesperson Edwin Lacierda hailed the report, saying that it noted the country’s “impressive performance” despite what administration critics describe as a jobless growth.

“The sustained improvement was credited heavily to the Aquino administration’s battle against corruption, which is seen in the significant improvements in the benchmarking scores of the ‘institutions’ pillar that covers such governance challenges such as corruption and public sector competence,” Lacierda said.

In the ethics and corruption category, the Philippines now ranks 87th compared with 135th in 2010, while government efficiency and other public sector variables have also steadily advanced, he said.

Man in street

While the ranking looked promising, the “man in the street will not appreciate these numbers until we see the impact, which is never immediate,” said Guillermo M. Luz, National Competitiveness Council cochair for the private sector.

Unfortunately, it takes time for these things to happen, Luz said in a phone interview yesterday.

Over time however, ranking high in competitiveness surveys will help improve the country’s ability to attract and stimulate investments, which in turn will generate more value-added job opportunities for Filipinos.

Luz said this was the only way to fight poverty, which remained prevalent in the country.

Without its improved performance in these rankings, the Philippines may have had lower job creation numbers over the past years, he said.

Government performance

In a text message, Peter Angelo V. Perfecto, executive director of the Makati Business Club (MBC), shared the sentiment of Luz, saying that global competitiveness rankings are a gauge of how a government is performing.

“Improved rankings mean that government is doing its job better. Also, global competitiveness rankings are monitored by potential investors. Improved rankings can mean more investments and more investments mean more jobs,” Perfecto said.

The WEF’s Global Competitiveness Report is an annual publication that measures productivity and competitiveness by gathering data on 119 factors that are grouped into 12 pillars or categories.

The 12 pillars are institutions (governance); infrastructure; macroeconomic environment; health and primary education; higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.

Based on these pillars, the Philippines recorded an overall score of 4.3, up from last year’s 4.2.

“The trends are positive across most dimensions…. The current government, which came into power in 2010, has made the fight against corruption an absolute priority; corruption had historically been one of the country’s biggest drags on competitiveness,” the WEF said in the report.

It noted that the “recent successes of the government in tackling some of the most pressing structural issues are encouraging and proof that bold reforms and measures can yield positive results.”

Low base

The WEF, however, cautioned that “improvements are coming from such a low base that the country cannot afford to be complacent.”

In a briefing, Luz said the country was able to boost its rankings in nine out of the 12 pillars, identifying these as innovation, which rose 25 notches to 69th from 94th; institutions, which include governance, up 15 places to 79th; and financial market development, up 10 spots to 48th place.

The rest of the pillars where the country posted improvements were goods market efficiency (up four notches to 82); labor market efficiency (100th from 103rd); infrastructure (96th from 98th); health and primary education (96th from 98th); technological readiness (77th from 79th); and, market size (33rd from 35th).

“Over the years, the biggest contributors include the institutions pillar, which has really improved every year for the past three years. Actually, macroeconomic environment has been a driver except for this year when it slid back a little bit. But if you take a look at the macroeconomic performance of the country, it is well within the top third,” Luz said.

The country’s ranking in macroeconomic environment eased back to No. 40 this year from last year’s No. 36.

High education fell

The National Competitiveness Council attributed this to the fact that improvements such as the country’s credit rating upgrades occurred after the data collection period. The high education and training pillar fell three spots to 67th place, while the country’s ranking in terms of business sophistication remained the same in 49th place.

Dragging the country’s competitiveness over the past year used to be infrastructure and education, but according to Luz, the country has managed to “reverse” this given the gains in the nine pillars.

In the same briefing, MBC chair Ramon del Rosario reported that of the 119 indicators listed in the Global Competitiveness Report, the Philippines ranked among the top 50 countries in 33 areas.

These included financing through local equity market, domestic market size index, affordability of financial services, GDP in purchasing power parity dollars, reliance on professional management, cooperation in labor-employer relations, soundness of banks and ease of access to loans.

The Philippines, according to del Rosario will need to improve in certain areas where it ranked No. 100 or even worse.

These include the number of procedures to start a business, burden of customs procedures, business costs of terrorism, number of days to start a business, hiring and firing practices, quality of port infrastructure, quality of air transport infrastructure, flexibility of wage determination, strength of investor protection, total tax rate, irregular payments and bribes, and business costs of crime and violence.

Primary education worst

“As chair of the Philippine Business for Education, let me express my particular concern over the low primary education enrollment rate in our country, which remains the only indicator where the Philippines rated the worst in Asean. It must be noted, however, that figures used to rank the Philippines in this indicator were derived by the WEF from Unesco,” Del Rosario said.

Luz, however, expressed confidence that the Philippines would further improve its competitiveness ranking and be included in the top third quartile within the next two to three years.

“We want to [rank] 48th or higher and we’re getting close. We used to be at the 85th place in 2010 when this administration took over and now we’re at 59th. The 48th rank is well within our target within the next two years,” Luz added.

Closing gap

Among the 10 member states of the Asean, the Philippines ranked sixth, but Luz was quick to note that the country was “closing the gap” with its neighbors.

“[The other countries] have had such a big lead on us like Singapore, Malaysia, Thailand and Brunei. We’ve been closing the gap as we’ve overtaken Vietnam, and increased the gap with Cambodia. We’ve also narrowed the gap with Thailand, while Singapore has been remarkably consistent and it’s a tough competitor to go against,” Luz said.

“If you take the broader Asian region, across say 15 economies including India and China, we’re holding our own. But we can’t be complacent so we need to move faster, more aggressively. But remember, over a three-year span, we are still one of the fastest moving economies.

“When this administration came in 2010, we’re at 85th place and today were 59th and that’s a whole different neighborhood, a tougher neighborhood. We need to rise up to the challenge,” Luz added.

Finance Secretary Cesar Purisima has expressed confidence that the country’s remarkable performance would be sustained over the next years.

“As we make progress in further solidifying the gains of good governance, I fully expect to see the Philippine business environment become even more vibrant, more dynamic, and, most importantly, more open and welcoming of opportunity,” he said. –Amy R. Remo, Philippine Daily Inquirer with a report from Michael Lim Ubac and Michelle V. Remo

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