PH Competitiveness Ranking Advances (Manila Bulletin)

MANILA, Philippines — Out of 144 economies around the world, the Philippines’ global competitiveness ranking improved by double digits in the latest World Economic Forum’s (WEF) Global Competitiveness Report 2012-2013, one of only 15 economies in a similar performance which measured the microeconomic and macroeconomic level that determine national competitiveness.

The country ranked 65th in the latest competitiveness rankings from 75th in 2011, the second straight year that rankings moved up 10 places, said Makati Business Club chairman Ramon del Rosario Jr. at yesterday’s launch of the Global Competitiveness Report.

In 2010 the ranking was 85 from 87 in 2009. The ranking history showed that it has advanced 22 places since its lowest mark in 2009. The WEF defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country based on 12  key categories that together make up for the comprehensive picture of a country’s competitiveness.

Del Rosario and Guillermo Luz, co-chair of the National Competitiveness Council told reporters that by 2016, they expect to be in the top one-third competitiveness ranking in the world. This is just about 20 paces up and del Rosario said this achievable.

By 2016, the administration will still be under the leadership of President Aquino and del Rosario and Luz expressed confidence that the ranking goal will be achieved as targeted.

“It’s not a coincidence, (it’s) cause and effect. I think it’s his determination to governance and to fight corruption and he’s not just uttering words but (he’s) acting on it. He has done a lot in improving the judiciary and (all his doing) is pointing to the right direction and instituting real and long-term reforms,” said del Rosario. “I think the public is giving him continued positive rating. The business community is rooting for the president we’re impressed at how he’s determined in pursuing his reform agenda.”

Based on the latest report, the Philippines’ global competitiveness index score was 4.23 which parked the country in the upper 45 percentile of economies in the rankings from its place in the high 53 percentile in 2011. According to the report, the Philippines makes “important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions (94th, up 23 places).”

The report detailed said that trust in politicians has made considerable progress from 95th, up 33 places, but it noted that there are “significant room for improvement.” Corruption perception also improved to 108th, up 11 and red tape moved to 108, up 18. These issues are finally being addressed “decisively (even) though they remain pervasive.”

The report said macroeconomic environment likewise showed improvement at 36th, up 18 and is “one of the strongest aspects of the Philippines’ performance” along with the market size pillar at 35th. The financial sector was also noted as more efficient and increasingly supportive of business activity at 58th, up 13 places.

According to del Rosario, “the sustained and rapid advance of the Philippines in the global competitiveness index owes a lot to improvements in 11 out of the 12 pillars of competitivness considered by the Global Competitiveness Report.”

By institutions ranking, this rose 23 places to no. 94. Infrastructure at no.98 was seven places up while macroeconomic environment rose 18 places to no. 36. Higher education and training went up seven places to no. 64, goods market efficiency went up two places to no. 86. and labor market efficiency increased 10 places to no. 103. Financial market development, in the meantime, improved 13 places to no. 58. Technological readiness went up four places to no. 79 while market size went up one place to no. 35. As for business sophistication, this landed at no. 49, up eight places.

The only category in which the Philippines’ ranking did not improve was in the health and primary education pillar. “None of the 10 indicators falling under health and primary education posted an improvement in ranking. Some of them are part of our commitments under the Millennium Development Goals of the United Nations,” noted del Rosario. The Philippine ranking in HIV prevalence, in particular, notably dropped from no. 1 to no. 12.

Of the country’s strengths, out of 111 indicators listed by the Global Competitiveness Report, the Philippines ranked no. 50 and below in 25 indicators.

Indicators that were considered as the country’s competitive advantages are HIV prevalence, available airline seat kilometers, degree of customer orientation, willingness to delegate authority, domestic market size, extent of staff training, affordability of financial services, government budget balance, financing through local equity market, cooperation in labor employer relations, reliance on professional management, state of cluster development, quality of management schools, FDI and technology transfer, foreign market size, soundness of banks, extent of marketing, quality of the educational system, ease of access to loans, regulation of securities exchanges, firm level technology adoption, gross national savings, local supplier quantity, intensity of local competition, and availability of financial services.

As for the country’s weaknesses, del Rosario said infrastructure is still in “a dire state” particularly with respect to sea (120th) and air transport (112th), with “little or no progress achieved to date,” he said. “Various market inefficiencies and rigidities continue, most notably in the labor market.”

Luz pointed out that judiciary and security concerns also remained a prevalent issue and concern in as far as doing business in the Philippines. “There’s a need for the judiciary to improve perfornance and image, and hopefully there will be stability in their decisions, and speed by which decisions are made and way justice is dispensed.”

The report also noted that the country ranked no. 100 or worse in the following indicators: number of procedures to start a business, burden of customs procedures, business costs of terrorism, tuberculosis cases, redundancy costs, quality of port infrastructure, flexibility of wage determination, business impact of tuberculosis, quality of air transport infrastructure, number of days to start a business, strength of investor protection, ratio of women in labor force to men, burden of government regulation, hiring and firing practices, irregular payments and bribes, business costs of crime and violence, efficiency of legal framework in settling disputes, government procurement of advanced technological products, fixed telephone lines, business impact of malaria, efficiency of legal framework in challenging regulations, life expectancy, total tax rate, quality of scientific research institutions, diversion of public funds, net primary education enrolment, and reliability of police services.

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