Focusing On The Country’s Competitiveness (Manila Bulletin)

I recently spoke to Guillermo “Bill” Luz, co-chairman of the National Competitiveness Council (NCC), the agency responsible for advancing the country’s competitiveness within a global context. I’ve been wanting to speak to Bill for some time now, not only to congratulate him for our 10-notch advancement in global competitiveness (as rated by the World Economic Forum), but also to ask him about NCC’s strategic directions in the next three years.

For those unaware, the NCC is a government and private sector initiative that rallies government institutions towards greater efficiency. They set quantitative goals, recommend policy reforms, and regularly monitor them to ensure that programs are rolled out on a timely basis.

I am personally happy with NCC’s work so far. They’ve played a pivotal role in advancing the country’s global competitiveness rank by 22 notches since 2009. No easy feat! We are now 65th out of 144 economies, and one among only two countries that advanced by double-digit for two consecutive years. We’ve overtaken Vietnam, who has dropped 10 places to 75th position, and are closing in on Indonesia who also dropped by four notches to 50th place. For this, the NCC deserves a big kudos from a grateful nation. Bill singles out the DTI, DBM, BSP, DPWH, DOLE and the DepEd as being the most cooperative and the most improved among the lot.

By 2016, the NCC aims to firmly establish the country in the upper third of the WEF rankings (that’s 45th place or lower). But aside from the WEF survey, the NCC also manages the country’s position in other global indices. Among them, the World Bank’s ranking for “Ease in Doing Business” where we rank a poor 136th out of 186 nations. The goal is to put us at 50th place, or better. They also manage the country’s performance in the Futurebrand Country Brand Index, an assessment of 113 countries in terms of 26 image attributes including overall awareness, familiarity, preference and active decisions to visit or establish a commercial relationship with. The Philippines ranks 78th but aspires to be at 30th place, or better, by 2016. Then there is the IMD World Competitiveness Yearbook where we are 43rd out of 59 countries. The goal is to advance to 20th place.

All this has made the NCC a 24/7 job for Bill, even if he is still well entrenched in private business. The man has complete dedication to his advocacy, which explains why we’ve gained considerable traction in all international surveys.

Gains And Losses

We’ve made great advances in the WEF ranking in the last two years. The sub-categories where the country improved most are in the areas of “Trust in Politicians”, where we surged 33 places. Clearly, this has everything to do with this administration’s tenet of “Daang Matuwid” and how it manifests itself in the more efficient disbursement of public funds. We’ve also advanced 23 places in “Respect for Public Institutions” for the same reason. We’ve improved 18 places each in “Red Tape in the Bureaucracy” and “Overall Macroeconomic Environment.” Credit for easing red tape goes to the NCC, as well as the DTI, and to a lesser degree, the local government units for making it easier to get paperwork done. As for our macroeconomic environment, the BSP and DOF have done an exceptional job in managing our fiscal position. They’ve primed us to our best economic health since our post-liberation years. Government reserves are at a historical high at $81 billion, while budget deficits are maintained at just around 2.6 percent of gross national product. The fact that this was achieved in an environment of global recession only underlines how big an accomplishment it is. Of course, credit also goes to our OFWs, our exporters, the BPO industry and the folks at the Department of Tourism for keeping our forex revenues flowing.

Unfortunately, we find ourselves at 120th place in infrastructure, specifically for our airport and seaport facilities. Under former DOTC Chief Mar Roxas, hardly a dent was made to improve the conditions of our airports. You would think that even the “low-hanging fruit” like the repair and upgrade of NAIA 1, the installation of lights and night-capable instrumentation in provincial airports, and the acquisition of urgently needed radar system would have been accomplished…but it has not. It lay in a perpetual state of review, along with dozens of other projects, including a definitive roadmap as to how we will meet the country’s aviation needs for the future.

We take solace in that the DOTC now has new Chief in Rep. Jun Abaya, a man said to be competent and able to work with a sense of urgency. Let’s hope that decisive solutions to our aviation problems are forthcoming.

As for our seaports—again, no significant improvement under Roxas. However, Bill explains that while the ports of Manila are bursting at the seams, the island of Luzon still has much capacity to spare. The sea ports in Batangas and Subic are largely underutilized. He believes the Port of Manila can be decongested, simply by imposing more expensive tariffs for its use. Makes sense.

The country also scored alarmingly low in basic healthcare and education, especially for the marginalized sector. Bill clarified that there was a reportorial error in this field. The WEF apparently uses statistics from UNESCO as their basis of evaluation, even if it is time-lagged. Stats from the DepEd reveal that primary enrollment has already improved, as with quality of instruction in science and math. Bill assures that this will be corrected in next year’s survey.

Filipino Labor Is Our Strength?

I found it odd that the country ranked quite low in “Labor Efficiency” at 103rd position. I was always under the impression that our workforce was our competitive advantage. In fact, last month I wrote about a study commissioned by the Japan External Trade Organization (JETRO) which said, in a nutshell, that the Philippines is today’s preferred investment destination of most Japanese companies primarily because of its labor availability, competence and affordability.

A study made by the People Management Association of the Philippines (PMAP) provides some insights on this. It affirms that there is indeed a disconnect between the skill sets that are common to the Filipino and the skills that are required by industry. While the Filipino excels in the humanities, he still lags behind in math and the sciences. In fact, the study goes on to reveal that the Filipino worker needs to further improve in oral communication, analytical thinking, problem solving, work ethics, flexibility and adaptability, and leadership.

The good news is that the government and the private sector are both addressing this problem in earnest. The NCC confirms that the DepEd, CHED and TESDA are in close coordination with various industry organizations to fill the skills gap. For instance, there was a clamor by industry to bring up the country’s educational standards to international levels. This led the DepEd to implement the K to 12 program. For its part, TESDA has been working with the BPO industry (which is fast becoming the country’s biggest employer) to make even undergraduates eligible for hiring. College dropouts can now be trained in customer service, English proficiency and problem solving skills to prepare them for a career in the BPO sector. Government has invested P416 million in the TESDA program.

CHED was given a supplemental budget of R125 million to finance courses in information technology and to add 21 units in Service Management in state university curricula. Note that this is the first time government and the private sector are working together on such a massive scale in the realm of education.

We may not see the fruits of these efforts in the next few years, but at least the process of rectification has began. 

Our Country Brand

One important matter that has yet to be addressed by the NCC is the rollout of our country brand for new investments. Bill explained it is still in the works and will follow the lines of our tourism brand, “It’s More Fun In the Philippines.” The campaign will also be handled by BBDO-Guerrero, the agency responsible for our tourism campaign. The guidelines for our investment ads will soon be disseminated to the respective business agencies (PEZA, Board of Investments, CITEM, etc.) for customized application. Media buying, however, will remain centralized under the DOT to take advantage of bulk-buying discounts.

I reckon this is one area that the NCC has been a little late in responding to. It would have been perfect to have our country ads run in networks like CNN, BBC, Bloomberg and CNBC in the second and third quarter of this year, just as good news on the Philippines were flowing. Having our ads run parallel with positive news would have cemented our image as the world’s new breakout economy. Its impact on new investments and our country image would have been enormous. Unfortunately, it was Indonesia’s beautifully produced investment ads that dominated the airwaves. We missed the opportunity on this one.

Bill assures me, however, that our country brand will eventually hit the airwaves. I hope it comes sooner than later. After all, how often is it that the economy grows from strength to strength in such a short span of time? We should be taking advantage of it—using it as a springboard to overhaul our image.

Future Thrusts

In the next few months, the NCC will focus on helping the Bureau of Customs, the Bureau of Internal Revenue and other problematic agencies improve their systems and procedures. These two agencies in particular have terribly low scores in efficiency assessments.

Also top of Bill’s agenda is getting our infrastructure programs moving, especially the PPP programs that have been bouncing back and forth the DOTC, NEDA and the DOF.

Bill also hopes to help government settle its differences with the mining sector on the Implementing Rules and Regulations (IRR) of the mining law. Not only will this auger well for our scores in overall governance, it will also pave the way for billions of dollars in new investments.

All things taken into account, the NCC is looking towards a three-peat double-digit jump in the country’s competitiveness standing next year. Should we find ourselves in 55th place or better, Bill’s 24/7 commitment to the NCC would have been all worth it.


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