PHL markedly improves competitiveness ranking to 75 from 85

MANILA — The country’s competitiveness ranking among 142 countries has significantly improved to 75, up 10 places from 85 last year, the largest improvements in this year’s rankings of the Global Competitiveness Report prepared by the World Economic Forum (WEF).

“Up 10 places to 75th, the Philippines posts one of the largest improvements in this year’s rankings. The vast majority of individual indicators composing the GCI [Global Competitiveness Index] improved, sometimes markedly,” the WEF said.

The unprecedented recovery in the country’s overall competitiveness ranking can be attributed to the following categories: institutions (up 8 places), macroeconomic environment (up 14 places), higher education and training (up 2 places), goods market efficiency (up 9 places), financial market development (up 4 places), technological readiness (up 12 places), market size (up 1 place), business sophistication (up 3 places), and innovation (up 3 places).

WEF further reported that “the macroeconomic situation of the Philippines is more positive: the country is up 14 places to 54th in the macroeconomic environment pillar, thanks to slightly lower public deficit and debt, an improved country credit rating, and inflation that remains under control” and the country “ranks a good 57th in the business sophistication category, thanks to a large quantity of local suppliers, the existence of numerous and well-developed clusters, and an increased presence of Filipino businesses in the higher segments of the value chain.”

It also highlighted “the sheer size of the domestic market (36th) confers a notable competitive advantage.”

The Report also lists 17 out of 111 indicators as competitive advantages of the Philippines: available airline seat (No. 28), interest rate spread (No. 50), HIV prevalence (No. 1), extent of staff training (No. 34), intensity of local competition (No. 47), trade tariffs (No. 47), degree of customer orientation (No. 46), reliance on professional management (No. 50), availability of financial services (No. 50), affordability of financial services (No. 42), financing through local equity market (No. 44), soundness of banks (No. 46), domestic market size (No. 31), foreign market size (No. 40), control of international distribution (No. 47), extent of marketing (No. 40), and willingness to delegate authority (No. 33).

The country can build on these advantages and endeavor to expand its list of positive indicators.

Among the 12 pillars that form the basis of the global competitiveness index, however, MBC notes with concern that the Philippines ranks the worst among eight Southeast Asian countries covered by the survey in terms of institutions and labor market efficiency. Corruption, inefficient government bureaucracy, and inadequate supply of infrastructure have remained the top three problematic factors for doing business in the Philippines, based on the World Economic Forum’s Executive Opinion Survey in the last four years.

More specifically, the Report cites major areas of competitiveness that the Philippines must address, including corruption (No. 127), physical security (No. 117), quality of seaport (No. 123), quality of airport infrastructure (No. 115), inefficient labor market (No. 113), and quality of primary education (No. 110).

The Makati Business Club, the WEF country partner institute, said it recognized that the National Competitiveness Council’s current programs aim precisely to address these problematic factors. Together with the larger business community, we have already committed and will continue to support the NCC’s objectives to make the country more globally competitive.

Makati Business Club chairman Ramon del Rosario Jr. cited the government’s efforts at fighting corruption and addressing governance issues as the main factors for the improved ranking. MBC is the WEF partner in this survey.

“We are on track with our targets,” said National Competitiveness Council co-chairman Guillermo Luz, noting that the target is to be in the top 30 in the Global Competitiveness ranking in five years.

“Nobody stands still in this competition because everyone is working hard to keep their ranking,” said Luz.

“Notwithstanding these challenges, we are pleased with the progress made thus far and the significant jump in our ranking to No. 75. We have reorganized and revitalized 10 working groups or task forces who are concentrating on finding solutions to the challenges and we are confident that solutions can be delivered in our time,” Luz said.

The Geneva-based World Economic Forum is an independent and impartial not-for-profit international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional, and industry agendas. For more than three decades, the Forum’s annual flagship publication, the Global Competitiveness Reports, have studied and benchmarked the many factors underpinning national competitiveness.

Since 2005, WEF has based its competitiveness analysis on the Global Competitiveness Index, a comprehensive tool that measures the microeconomic and macroeconomic foundations of national competitiveness.

The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of Partner Institutes.

The survey is designed to capture a broad range of factors affecting an economy’s business climate.

Out of 14,000 business leaders polled around the world this year, around 90 respondents participated from the Philippines.

The country’s survey sample was taken from among the members of the Makati Business Club, the Management Association of the Philippines, the Business Processing Association of the Philippines and the Semiconductor and Electronics Industries in the Philippines Inc. from March to April 2011.