PH competitiveness bounces back after 3 years of slide

The Philippines’ ranking soared to its highest in 17 years in the Global Competitiveness Report 2011-12 of the World Economic Forum.

The Philippines 10-notch jump to 75th place was the biggest improvement among 142 countries ranked in the report.

The Philippines improved in 9 out of 12 pillars of the competitiveness index, a reversal of a decline in ranking in the previous three years.

The Philippines is aiming to catch up with its Asean neighbors.

"My hope is that the Philippines be at par with Southeast Asian countries like Vietnam, which is ranked 65th, Indonesia 46th and Thailand 39th.

It is reasonable to aspire within the same range as these countries," said Ramon del Rosario, chairman of the Makati Business Club.

The ultimate goal is to be in the top 30 competitive countries, he said.

The report was released yesterday by MBC, WEF’s country partner.

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

"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," the report said.

"(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," the report of the Geneva-based WEF said.

"The sheer size of the domestic market (36th) confers a notable competitive advantage," the report said.

Despite the improvement, the country continues to face challenges in public institutions in the management of public funds, counter-corruption, legal framework, and transparency in government decisions.

Infrastructure remained low in ranking, particularly in the areas of port infrastructure (number 123) and air transport infrastructure (115)

Health and primary education was also listed as an area in need of improvement, along with quality of science and math education, which fell from 112 to number 115.

Peter Perfecto, executive director of the MBC, said part of the improvement is a reflection of the positive sentiment under the new administration, specifically for its anti-corruption drive and the rollout of the private-public partnership projects.

"We’re sure that if we improve our infrastructure, we will improve our ranking in competitiveness. Since corruption is a big issue, a major concern, if that’s being addressed, it will impact on everything else. It’s an issue of perception," said Perfecto.

This 10-step jump was the highest for the Philippines since it joined the ranking in 1994.

The country’s best ranking was in the mid-70s over a smaller base of 122 countries in 2006.

WEF lists 17 out of 111 indicators as competitive advantages of the Philippines: available airline seat (28th), interest rate spread (50th), HIV prevalence (1st), extent of staff training (34th), intensity of local competition (47th), trade tariffs (47th), degree of customer orientation (46th), reliance on professional management (50th), availability of financial services (50th), affordability of financial services (42nd), financing through local equity market (44th), soundness of banks (46th), domestic market size (31th), foreign market size (40th), control of international distribution (47th), extent of marketing (40th), and willingness to delegate authority (33rd).

"The country can build on these advantages and endeavor to expand its list of positive indicators," the MBC said.

Among the 12 pillars that form the basis of the global competitiveness index, however, MBC noted 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 (127th), physical security (117th), quality of seaport (123rd), quality of airport infrastructure (115th), inefficient labor market (113th), and quality of primary education (110th).

Around 90 respondents participated from the Philippines. The country’s survey sample was taken from among the members of the MBC, the Management Association of the Philippines, the Business Processing Association of the Philippines and the Semiconductor and Electronics Industries in the Philippines from March to April 2011.

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