Building blocks for competitiveness in 2017

Over the last six years, we have tracked the country’s competitiveness ranking across a series of global competitiveness reports to see how we compare against other countries. These reports range from well-known ones like the World Economic Forum’s Global Competitiveness Index, the World Bank-IFC’s Ease of Doing Business Report, Transparency International’s Corruption Perceptions Index, and the Heritage Foundation’s Economic Freedom Index to the less well-known like the Failed States Index and Logistics Performance Index.

 When many of these reports were first established, some of them as far back as the 1990s, the Philippines ranked deep in the bottom 20 percent of world rankings. Even as recently as 2011, we ranked in the bottom 30 percent of virtually all major reports, with the only exception I know being the Gender Gap Report (where we currently rank seventh in the world).  Our modest goal in 2011 was to move the country into the top-third of world tables.

 Looking back at our performance and the annual data releases, we have indeed improved—but we haven’t made it into the top-third yet. We have managed, though, to get out of the bottom 30 percent and move into the middle-third for most of these indices. Our performance in 2016 indicates continuous improvement across most indices, though not all.

Being more competitive essentially makes the country more attractive for investments and new business generation. Most countries which rank higher than us in the region generate much more direct investments than we do, sometimes five or six times as much.

 In order for us to create a business-friendly environment, we need to focus on a number of themes: process improvement, local governments and regulatory reforms, among others. We are basically trying to build a competitive structure on these foundations.

 In the area of process improvement, our Ease of Doing Business project works with agencies to smoothen out business transactions with government such as incorporation, land registry, obtaining permits and other common business transactions. Our goal is to simplify and streamline these procedures and to eventually automate them so people can transact with government online. Anybody who has had to obtain a permit knows how much trouble and inconvenience any process has been. We need to automate. Working with new agencies such as DICT and others, we should see some new projects roll out early in 2017.

 We believe that local competitiveness is a building block of national competitiveness. Thus, we have expanded our Cities/Municipalities Competitiveness Index to now cover almost 1,400 LGUs across the country in just four years. This index measures local government performance in the economy, infrastructure and governance. In 2017, we will add a fourth criterion and set of indicators on resilience and sustainability. Our experience with typhoons and storms, including the latest Typhoon “Nina” (international name: Nock-Ten)  which hit on Christmas Day, tells us that this is so necessary.

 Our newest project is focused on regulatory reform. Project Repeal targets outdated rules and regulations which no longer serve their purpose or are no longer necessary (or are even detrimental) for the economy. Over 80 executive agencies have signed on and submitted almost 35,000 rules for review. After some review, 4,839 have been repealed. We expect this pace and breadth to grow. Our next steps include learning how to cost out the savings generated through a standard cost model as well as expansion into reviewing laws in Congress and Local Government Units.

 Aside from these projects, certain policy reforms will also form part of investor expectations for the upcoming year. These reforms would include the proposed tax reform program and the lifting of restrictions on foreign investments through the easing of the Foreign Investment Negative List. On the part of the National Competitiveness Council, other legislative reforms we are looking forward to (and closely working on with Congress) are the amendment of the Corporation Code and the passage of the Ease of Doing Business Act.

It’s going to be a busy 2017.

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Guillermo M. Luz (gm [dot] luz [at] competitive [dot] org [dot] ph) is the private-sector cochair of the National Competitiveness Council.

Original published 
12:10 AM December 31, 2016