PH slightly improves in competitiveness index but behind VN, Brunei

The Philippines improved one spot to 56^th place out of 137 economies worldwide ranked in the World Economic Forum’s (WEF) Global Competitiveness Report (GCR) 2017-2018, but fell behind Brunei Darussalam and Vietnam which made big strides this year. The Philippines also maintained a score of 4.4 on a scale of 7.

This year’s slight improvement for the Philippines follows last year’s climb to 57^th place, which was the first improvement in seven years that saw the country dropping in the rankings.

The annual GCR provides a comprehensive picture of the productivity and competitiveness of economies by gathering statistical and survey data on indicators grouped into 12 pillars across 137 countries. The report series remains the most widely read comprehensive assessment of national competitiveness worldwide.

Ranking by category

According to the latest report, of the 12 pillars, the country dropped ranks in eight and gained in four.

The Philippines posted the highest improvement in the category higher education and training, jumping three places to 55^th from 58^th previously. It also made gains in labor market efficiency (from 86^th to 84^th) and in market size (from 31^st to 27^th), which reflects both an increase in population and consumer power.

In the financial markets category, the country was also cited for its soundness of banks (35^th) and regulation of securities exchanges (36^th). However, despite its sound banking system, the country received moderate downgrades in the areas of financing through local equity markets (from 30^th  to 38^th), ease of access to loans (from 46^th to 54^th), and venture capital availability (from 65^th to 70^th).

In the technological readiness category, the country remained in 83^rd place but was cited for improvements in the number of internet users as a percentage of the population (from 92^nd to 75^th) and the number of fixed broadband internet subscribers as a percentage of population (from 92^nd to 88^th). However, service levels have been challenged by the growing user base with indicators on internet bandwidth, mobile-broadband subscriptions, and mobile-cellular telephone subscriptions all being ranked lower this year versus last year.

The country recorded declines in ranks in the categories institution (from 91^st to 94^th), infrastructure (from 95^th to 97^th), macroeconomic environment (from 20^th to 22^nd), health and primary education (from 81^st to 82^nd), goods market efficiency (from 99^th to 103^rd), financial market development (from 48^th to 52^nd), business sophistication (from 52^nd to 58^th), and innovation (from 62^nd to 65^th).

The Philippines also showed declines in specific indicators, which include quality of port infrastructure (from 113^th to 114^th), airports (from 116^th to 124^th), and rail (from 89^th to 91^st). Only the quality of roads improved to 104^th from 106^th last year.

Also recording decreases were burden of customs procedures, which fell to 125^th from 121^st, prevalence of non-tariff barriers (from 60^th to 64^th), and imports (from 100^th to 88^th).

For investors surveyed by WEF, the key challenges associated with the Philippines continue to be the inefficient government bureaucracy, inadequate infrastructure, corruption, tax regulation, and tax rates.

Overtaken by peers

The National Competitiveness Council (NCC), in a statement, noted that different government programs in the administration’s 0-10 Point Priority Program are currently addressing these issues.

NCC noted, however, that one concern “should be that two countries in ASEAN (Association of Southeast Asian Nations)—Brunei and Vietnam—have now overtaken the Philippines to take the fifth and sixth positions in the region.”

Brunei improved its ranking by 12 spots this year, while Indonesia improved by five. This lowers the Philippines’ standing to seventh out of nine ASEAN countries ranked by WEF.

“This basically illustrates the intensity of the competition in the region, with six countries all improving their performances in the last year,” said NCC private sector co-chairman Guillermo M. Luz.

“We simply cannot afford to let up in our efforts to improve processes, introduce reforms, and make the country more competitive because other countries are also working hard,” he added.

According to NCC, the WEF GCR provides one framework for analyzing areas for improvement to make the country more competitive and attractive for investments. In the short term (one to two years), areas which can contribute to improved competitiveness are institutions (which refers to governance and bureaucracy improvements), infrastructure, and health and primary education.

Over the medium term (three to five years), areas such as technological readiness, higher education, innovation, and science and technology will play a bigger role in country’s competiveness, NCC noted.

“Investments will need to be made in these areas today in order to reap the benefits over the next three to five years,” NCC said. – Roumina Pablo

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