RP now the least competitive in Asia-Pac: survey

MANILA – The Philippines has become the least competitive country in the Pacific region, lagging behind its neighbors in economic performance, government efficiency, and infrastructure, the 2009 World Competitiveness Ranking showed.

The Philippines’ ranking slid by 3 notches to 43 in 2003 from 40 in 2008  out of the 57 economies included in the World Competitiveness Yearbook (WCY) and lagged behind its neighbors in the Asia Pacific region.

“The Philippines is in the bottom among the 13 countries in Asia-Pacific region,” said Felipe Alfonso, interim president of the Asian Institute of Management (AIM), during the presentation of the results at the State of Philippine Competitiveness National Conference in Pasay City on Monday.

Asia Pacific countries that performed better than the Philippines included: Hong Kong (2nd), Singapore (3rd), Australia (7th), Qatar (14th), Japan (17th), Malaysia (18th), China (20th), and Taiwan (23rd). Thailand landed on the 26th spot while Indonesia ended one notch higher than the Philippines at the 42nd spot.

“We have not been able to get out of the bottom third,” Alfonso added.

The rankings, however, did not include some Asian countries like Vietnam, Cambodia, Myanmar, Brunei and Papua New Guinea but included Kazakhstan and Qatar for the first time.

Leading the rankings were the United States, Hong Kong, Singapore. Switzerland, Denmark, Sweden, Australia, Canada, Finland and Netherlands. Occupying the bottom spots are Venezuela, Ukraine, Argentina, Romania, Croatia, Greece, Colombia, Italy, Russia, South Africa and Turkey.

“The results are largely based on data from early 2008. The effects of the global economic crisis came at different times so the rankings may not adequately reflect the impact of the crisis last year,” Alfonso said.

The 2009 World Competitiveness Scoreboard of the Swiss-based International Institute for Management Development (IIMD) ranks 57 economies from the most to the least competitive using four criteria: economic performance, government efficiency, business efficiency, and infrastructure. The four categories are further broken down into different sub-factors.

AIM serves as the local partner of IIMD.

Four criteria

The criterion economic performance includes macroeconomic evaluation of the domestic economy while government efficiency measures the conduciveness of government policies to competitiveness.

Meanwhile, business efficiency tackles whether the national environment encourages enterprise to perform and infrastructure analyzes whether basic resources meet the needs of the business.

The Philippines ranked 51st in economic performance, 42nd in government efficiency, 32nd in business efficiency and 56th in infrastructure.

“Our relative weaknesses are in international investment (56th), public finance (54th), business legislation (50th), productivity and efficiency (53rd), education (54th) basic infrastructure (57th) and scientific infrastructure (56th),” Alfonso said.

Alfonso said that economic performance went down by 9 notches because of decline in exports in the fourth quarter of 2008, slump in direct investments and the impact of high prices of oil and food last year.

“The Philippines is hit especially being the world’s largest rice importer,” he added.

Government efficiency, he added, declined because of continuous difficulty in doing business while the infrastructure ranking went down because of high dependency ratio, lack of energy infrastructure and issues affecting future energy supply.

“The Philippines has the worst distribution infrastructure in Asia,” Joseph Lim, a professor of economics at the Ateneo de Manila University said, adding that together with India and Indonesia, the country has the worst water transport system.

Lim said more taxes should be spent for infrastructure development and more projects should be placed in poorer communities and provinces. He added that there is also a need to address wastage in infrastructure due to corruption, kickbacks and inefficiencies.

High pupil-teacher ratio

The study also showed that the Philippines had the highest pupil-teacher ratio in secondary education among 57 countries, and the second-highest pupil-teacher ratio in primary schools. It also showed that the country, along with Indonesia, had the worst secondary enrolment rate among Asian countries.

“More quality schools in primary, secondary and tertiary level will have to be built in poorer, more backward and congested areas,” said Ma. Lourdes Sereno, executive director of the AIM Policy Center.

“Increased incomes, higher employment and lower poverty incidence are crucial to prevent dropouts from elementary and secondary enrolment and to encourage entry into tertiary schools,” she added.

Alfonso, for his part, said that improving the quality of education in the country could reduce the incidence of job-skills mismatch, which also contributes to unemployment and underemployment.

Investments

Reacting to the results of the competitiveness survey, Meneleo Carlos Jr., chairman of the Federation of Philippine Industries, said the government should exert more effort to address the country’s lack of competitiveness, particularly in critical areas like infrastructure and business efficiency because these are responsible for the flow of investments into the economy.

“Competitiveness is vital to investments and economic growth,” he noted.

Department of Trade and Industry Undersecretary and Board of Investments Managing Head Elmer Hernandez, on the other hand, assured that the public sector is doing its best to increase the competitiveness as well as attractiveness of the Philippines to foreign investors.

On infrastructure, for instance, Hernandez said the government has a number of projects lined up under its Comprehensive and Integrated Infrastructure Program, which is expected to contribute greatly to economic growth.

While citing this, he raised doubts over results of the IIMD survey, saying those interviewed could have been “unaware” or “very skeptical” of the government’s economic plans.

“The economy is afloat and doing good. There have been a lot of improvements in different sectors,” he told reporters.

Philippine Economic Zone Authority Director-General Lilia De Lima, who also attended the State of Philippine Competitiveness National Conference at the SMX Convention Center, echoed Hernandez’s view. “They interviewed respondents in only one city out of 135 cities in the Philippines. That is not representative of the country.”

“They should have gone to the PEZA, BOI, Subic and Clark areas where a lot of investments and developments are happening,” she added, noting that investments in PEZA alone have improved in the previous months.

De Lima also said that the country’s labor force, among others, remains competitive as evidenced by the fact that more companies are moving their operations here.

“From the feedback we are getting from multinationals here, Filipinos have high productivity. Our workers have a competitive edge.”

De Lima clarified, however, that she was not really contesting the survey results.

“These are just some comments. Surveys are good. They vary most of the time, but we still want to know.” –Jesus F. Llanto with Judith Balea, abs-cbnNEWS.com