Making the regions more competitive

National Competitiveness Council (NCC) co-chairman Guillermo Luz, representing the private sector, said that it is difficult to imagine the Philippines as globally competitive if it were built on only a few economic hubs. He said that for the Philippines to become more competitive it would have to build economic hubs or development corridors throughout the different island groups, with each making full use of their strengths and natural attributes. These hubs would provide options not only for investors to locate but also for Filipinos to choose where to live and work, Luz added.

Realizing the dearth of economic hubs in the country that could attract more investments for the country to grow faster, the NCC encourages the different regions to set up their own regional competitiveness committees.

The last Global Competitiveness Index made by the Davos-based World Economic Forum placed the Philippines’ competitiveness only at number 75 among the 142 countries included in its study. The WEF study showed that the Philippines was very weak in the most basic requirements for a nation to be competitive including the quality of its institutions, infrastructure, macroeconomic environment and the condition of its people in terms of health and primary education. The country scored high in macroeconomic environment (54th) but very low in institutions (117th) and health and primary education (92th).

Ten regions responded positively to the NCC’s call. This resulted in the holding of the first Regional Competitiveness Committees Dialogue early this week in Cebu where more than 60 people representing the business, academe and government came. The main objective of the dialogue was to agree on what specific metrics to use to measure regional competitiveness, their data sources and other things to be done to come out with the regional competitiveness index of each region. It is hoped that with this index, the different regions will know where they are weak or strong and what they have to do to raise their level of competitiveness, particularly in the availability and quality of infrastructure and labor force, cost of doing business in their respective local governments units, and presence of the much needed social services and amenities.

The WEF defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of any place which is also what determines the level of level of prosperity that it can achieve. It is also productivity that determines the rate of return obtained by investments and the more investments there are in a place the more rapidly it will grow economically, leading to more employment, higher income and an elevated standard of living for its people. Needless to say, the Philippines’ low level of competitiveness resulted in its low ranking in terms of GDP size as of 2010 despite the fact that the country has the 12th biggest in population, which also resulted in our per capita income being placed only at number 123 among all the countries in the world.

I fully agree with the need to build more economic hubs or investment centers in the country which presently is dominated by the National Capital Region, Calabarzon and the Subic-Clark Axis in Luzon, with Cebu and Davao playing only secondary roles to the first three in the Visayas and Mindanao.

The more economic hubs we have the more spatially dispersed would be our development which in turn implies more inclusive or shared growth.

It is not only now with the NCC that the need for dispersing development away from the center in Metro Manila is being thought of. The 1972 Integrated Reorganization Plan of the National Government which was put into action through Presidential Decree No. 1 after Martial Law was declared, already thought of this when in Part VII of the Plan it called for the creation of the Regional Development Council in each of the region of the country to spearhead its development.

In the mid 1970s when the RDCs were established, Metro Manila which had less than one percent of the total area of the country accounted for 31.6 percent of the country’s Gross Domestic Product.

The rest of Luzon had 32.59 percent, giving a total share of 64.19 percent for the whole of Luzon whereas the Visayas only had 18.88 percent and Mindanao, 16.93 percent. In the Visayas, Region VI or Western Visayas had 9.34 percent, Region VII or Central Visayas, 68.0 percent and Region VIII or Eastern Visayas, 2.74 percent.

More than 35 years have passed since the RDCs were established but unfortunately nothing much happened to correct the economic imbalance or the dominance of the NCR in development and the paucity of development in the other regions of the country.

It even got worse with the NCR increasing its share of the GDP from 31.6 in 1975 to 33.0 percent in 2009 (the latest year for which GDP by region is available). In the same year, the share of the Visayas went down from 18.88 percent in 1975 to 16.5 percent although that of Mindanao improved from 16.93 percent to 17.5 percent.

Now is the time for the regions to demand more action and development. This means more meaningful and activist RDCs which are empowered not only to plan but also give the budget to implement their plans. Today, RDCs must endorse first their projects for approval and funding in Manila which makes regional planning just a futile exercise.

By Fernando Fajardo, Cebu Daily News

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