Rising through the ranks (Business World)

The Philippines finally moved up in nearly all competitiveness rankings last year, recording significant gains after years of languishing at the bottom.


“Out of eight major competitiveness reports released in the last year, we recorded gains in seven of them and held ground in one. This is the first year this has been done,” said Guillermo M. Luz, private sector co-chairman of the National Competitiveness Council (NCC), the public-private agency tasked to promote and develop national competitiveness strategies.


Business World Rising through Ranks


According to its Web site, the NCC aims to raise the country’s position from the bottom third of competitiveness rankings to the top third by 2016. It is co-headed by Mr. Luz and, for the public sector, Department of Trade and Industry (DTI) Secretary Gregory L. Domingo.


Among the seven competitiveness rankings where the Philippines improved, it was in the Ease of Doing Business Report — produced annually by the World Bank (WB) and International Finance Corp. — where the country advanced the most last year.


From 138th place, the Philippines moved up 30 spots to be 108th out of 189 economies on this year’s list, which tracks changes in regulations on domestic small and medium-sized companies.


The country, according to WB Philippines Country Director Motoo Konishi, had accomplished “more than any other country —than Doing Business measure[d]” last year.


“This is the first major improvement for the Philippines in the Doing Business ranking since the report started 11 years ago,” Mr. Konishi added.


The other competitiveness rankings where the Philippines clinched higher positions were:

• the World Economic Forum’s (WEF) Global Competitiveness Index (up six places to 59th out of 148 economies);

• the International Institute for Management and Development’s 2013 World Competitiveness Yearbook (up six places to 38th out of 60);

• Transparency International’s Corruption Perception Index (up 11 places to 94th out of 177);

• the Heritage Foundation’s Index of Economic Freedom (up five places to 97th out of 177);

• the WEF’s Travel and Tourism Competitiveness Report (up 12 places to 82nd out of 140); and

• the World Intellectual Property Organization’s Global Innovation Index (up five places to 90th out of 142).


The Philippines, however, did not move in the WEF’S Global Information Technology Report; the country stayed in 86th place among 144 economies.


Mr. Luz said much of the gains were the result of joint efforts by the public and private sector over the last three years.


“For instance, we partnered with Social Weather Stations, Asia Foundation, AusAID (Australian Agency for International Development), Integrity Initiative, Makati Business Club, and the Management Association of the Philippines to revive and continue the Annual Enterprise Survey on Corruption,” he said.


“This allowed us to closely track perceptions and experiences of corruption in key business areas [across the country].... Tighter monitoring of local governments and regional offices of national government agencies has proven useful and enlightening.”


With the jumps in the rankings, the DTI’s Mr. Domingo said the goal to be in the top third by 2016 “is something that is not a stretch target anymore.”


“This target has become quite achievable, and we may even surpass this target significantly. We are now in a position to take off because of our infrastructure, business procedures and legal system. We are still behind developed countries, but we are significantly ahead of many of our peers,” he said.


Businessmen, however, have said that much still needs to be done to sustain the gains and boost the country’s competitiveness.


John D. Forbes, senior adviser at the American Chamber of Commerce of the Philippines, said: “The substantial rises in competitiveness rankings last year reflect recognition that the country is walking the talk much more to reform those poorly ranked indicators that reduce competitiveness.”


Still, he identified areas that need improvement, including cutting red tape, building infrastructure, reducing costs for employers, improving education, and speeding up the delivery of justice.


Miguel B. Varela, president of the Philippine Chamber of Commerce and Industry, held a similar view: “We need to continue working on improving the investment climate, especially in assuring stable and consistent implementation of laws and policies and streamlining business permits and licenses. These continue to be barriers to attracting investments.”


The government, for its part, has assured investors that it will continue to do its job to make the process of doing business much easier in the country.


Deputy Presidential Spokesperson Abigail F. Valte has said: “The next step is when it comes to regulations; we want to make sure that when you come in to do business here, the rules don’t change midway.”


Better competitiveness rankings are hoped to boost the Philippines’ image among investors. Mr. Luz said: “The more competitive you are, the greater the chances for attracting foreign direct investments (FDI), and from there you grow your economy.”


He added that “better competitiveness also means higher and more sustainable growth as measured in GDP (gross domestic product), better job generation, and better chances of reducing poverty and achieving inclusive growth.”


The Philippine economy has so far expanded above its 6%-7% target, averaging 7.4% in the first three quarters of the year. For 2014 and 2015, the government is targeting GDP growth rates of 6.5%-7.5% and 7%-8%, respectively.


Higher competitiveness rankings, which are thought to promote a better business environment, will also place the Philippines in a better position come the planned economic integration of the ten member Association of Southeast Asian Nations (ASEAN) in 2015, Mr. Domingo said, since the country is already more competitive now than some of its neighbors.


By Daryll Edisonn D. Saclag

As published in the Business World Yearend Report dated January 20, 2014