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Global competitiveness: Phl up six notches to 59th

Louella Desiderio - The Philippine Star

MANILA, Philippines - The Philippines’ competitiveness ranking has improved by six notches to 59th spot from last year’s 65th, according to the World Economic Forum (WEF).

Among the 10 Southeast Asian countries included in the report, the Philippines placed sixth in terms of competitiveness, ahead of Vietnam, Lao People’s Democratic Republic, Cambodia and Myanmar.

“We attribute this to enhanced competition, which fosters creativity, and high morale of an increasingly empowered citizenry, sustained by the prospects of our future and the positive feeling about our country’s direction,” presidential spokesman Edwin Lacierda said in reaction to the report.

The country, however, trailed behind Singapore, Malaysia, Brunei Darussalam, Thailand and Indonesia.

The WEF’s Global Competitiveness Report released yesterday measures productivity and competitiveness based on over 100 factors grouped into 12 pillars. The report covers 148 countries.

The WEF report showed that out of 148 countries covered, Switzerland got the top spot for the fifth year running.

Singapore and Finland, meanwhile, remained in second and third spots, respectively.

National Competitiveness Council private sector co-chair Guillermo Luz said during the report’s launch yesterday that based on the Philippines’ latest ranking, the country’s competitiveness has improved by a total of 26 places since it ranked 85th in 2010.

“The Philippines’ ranking improved as we posted gains in nine out of 12 pillars,” Luz said.

Finance Secretary Cesar Purisima attributed the improvement to the “gains of good governance” under President Aquino’s administration.

“This is a significant jump from our ranking of 87th in the report in 2009. Truly, the gains of good governance under President Aquino have resounded to the business community, as investors in the Philippines now enjoy a playing field that is more stable, more transparent, and more level than it has ever been,” Purisima said.

The key drivers, he noted, were the innovation pillar which went up 25 places to 69th spot, institutions pillar which rose by 15 notches to 79th, and the financial market development pillar which climbed 10 places to 48th.

Other pillars which posted gains were goods market efficiency which placed 82nd from 86th spot last year; labor market efficiency which went up to 100th place from 103rd; infrastructure, 96th from 98th; health and primary education up by two places to 96th spot; technological readiness which placed 77th from 79th; and market size which improved by two places to 33rd.

Purisima likewise noted the significant jump in the country’s ranking on the “institutions pillar,” the key marker of governance, rising 15 notches to 79th place.

“This ranking is a sign that our partners have observed less diversion of public funds, less wasteful spending, and more efficient legal and administrative frameworks that support business in the Philippines,” Purisima said.

In the innovations pillar, the Philippines’ ranking rose 25 places to settle at the 69th slot.

“This is an indicator that we have made progress in driving business with the inherent talent, creativity, and ingenuity of our people,” Purisima pointed out.

Purisima gave assurance that government would continue to set the necessary foundation to achieve sustained inclusive growth.

“As we make progress in further solidifying the gains of good governance, I fully expect to see the Philippine business environment become even more vibrant, more dynamic and, most importantly, more open and welcoming of opportunity. No doubt we will see even greater rises in the Global Competitiveness rankings in the future,” he said.

Decline

On the other hand, the country saw its rankings decline in the macroeconomic environment pillar to 40th spot from the previous year’s 36th amid the slightly higher budget deficit and lower national savings rate.

The Philippines’ ranking in terms of higher education and training was also down three places to 67th spot, due to the poor performance in gross secondary and tertiary enrollment ratios as well as in Internet access in schools.

In terms of business sophistication, the Philippines remained at 49th place due to deteriorating local supplier quantity, state of cluster development and nature of competitive advantage.

Makati Business Club chairman Ramon del Rosario Jr. said  that out of the 119 indicators listed by the report, the Philippines placed 50th and below in 33 indicators.

The country still needs to improve in areas where it ranked 100th or even higher such as: number of procedures to start a business, burden of customs procedures, business costs of terrorism, number of days to start a business, hiring and firing practices, quality of port infrastructure, quality of air transport infrastructure, among others.

Improvements are also needed in areas such as flexibility of wage determination, fixed telephone lines, primary education enrollment, strength of investor protection, total tax rate, irregular payments and bribes, extent of market dominance, exports as percentage of GDP, mobile broadband subscriptions, life expectancy, business costs of crime and violence, and legal rights index.

MBC co-vice chairman Roberto de Ocampo said that based on the latest Executive Opinion Survey of the WEF, inadequate supply on infrastructure emerged as the top in the list of five problematic factors for doing business in the Philippines, displacing corruption which has been number one since 2003, to second place.

The WEF said there are signs the government’s efforts against corruption are producing results.

Other problematic factors identified were inefficient government bureaucracy, tax regulations and restrictive labor regulations.

“Of these problems, only tax regulations remain unique to the Philippines in ASEAN (Association of Southeast Asian Nations). The rest are common within ASEAN among the top five problematic factors for doing business,” De Ocampo said.

Del Rosario said that while the Philippines has seen improvement in its competitiveness ranking, it is important to sustain the gains.

“The substantial advance of the country in WEF’s competitiveness rankings over the past three years should be sustained further to get to the top third ranking of the most competitive economies in the world by 2016,” he said. “We can’t be complacent. We need to move faster to close the gap,” he said.

Anti-corruption factor

At Malacañang, Lacierda said the “upward trajectory” in the country’s rankings can be “credited heavily to the Aquino administration’s battle against corruption.”

He said the administration’s achievements are “seen in the significant improvements in the benchmarking scores of the ‘Institutions’ pillar that covers such governance challenges as corruption and public sector competence.”

 â€œThe ‘institutions’ pillar of the Philippines jumped from 125th in 2010 to 79th, a rally of 46 places,” he said quoting the report.

“In the ethics and corruption category, the Philippines now ranks 87th compared to 135th in 2010, while government efficiency and other public sector variables have also steadily advanced,” Lacierda added.

“Another pillar where we posted heady growth was in ‘innovation,’ an improvement of 42 places to 69th this year from 111th in 2010,” he added.

“Further, amidst the backdrop of a particularly difficult period for developing economies, this international affirmation serves as an endorsement of the President, the brand of transparent and accountable leadership he espouses, and the hard-fought reforms he and his allies have tirelessly pursued,” Lacierda stated. – With Delon Porcalla

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