PH ranks 13th out of 20 countries in new trade sustainability index

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THE Philippines ranked 13th out of 20 countries in a new index that gauges the long-term trade sustainability of Asian economies, performing best in environmental sustainability and doing fair in the economic category but underachieving in the social aspect.

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While the Philippines ranked relatively high on the trade and environmental pillars, its low score in the social pillar pulled down its overall ranking to13th, with the report highlighting the relative lack of a manufacturing sector in the country to boost job creation.

The inaugural Hinrich Foundation Sustainable Trade Index 2016 measures 19 Asian nations plus the United States across three recognized pillars of sustainability­—economic (profit), social (people) and environmental (planet).

At the top of the trade index were Singapore, South Korea, Japan, and the US, followed by Hong Kong and Taiwan. Malaysia was in the seventh spot, followed by Thailand, Brunei, Sri Lanka, Vietnam, China, the Philippines (13th), Indonesia, India, Cambodia, Laos, Bangladesh, Pakistan and Myanmar.

The Philippines was sixth on the environment aspect. The report said countries that score best on the environmental pillar avoid over-reliance on natural resource exports, limit pollution and have low carbon emissions in trade, and pursue high-environmental standards in international and regional agreements.

“China and India are both in the bottom quartile of this pillar, scoring poorly on water and air pollution, in particular,” it said.

On the economic pillar the Philippines ranked ninth. Countries scoring best on the economic pillar have low barriers to trade, a diversified export mix, open current accounts, and invest in technology, among other traits.

Asian Tigers Singapore, Hong Kong, South Korea, and Taiwan scored highest here, with Malaysia as the best performer from emerging Asia, tying with Japan for sixth in this category.

Highlighted in the economic pillar is the importance of low trade costs, and for this indicator the Philippines was in 14th place while for technological innovation it came in at 16th.

PH ‘skipped’ manufacturing step

On the social pillar the Philippines did poorly, taking the 19th spot just above Myanmar. South Korea and the US ranked at the top.

Those with high scores in this category are countries that have lower inequality, high levels of educational attainment, strong labor standards, and are politically stable, the report said.

The report noted that the Philippines is “somewhat unique in its relative lack of a manufacturing sector,” the mainstay of most Asian economies climbing up the development ladder.

Instead of going the traditional path of moving from agriculture-based to manufacturing to services, the
Philippines “skipped the manufacturing step, which means there’s still a lot of low-productivity agriculture and a lot of poverty,” said the report.

“The service sector is productive, but as a percent of total employment it’s low. There are not a lot of options in rural areas-[workers there]can’t work in [business process outsourcing]or anything like that,” said the paper.

The report added that trade cannot be sustainably pursued without responsible environmental stewardship and a commitment to fully developing social capital.

The index was produced by The Economist Intelligence Unit and commissioned by The Hinrich Foundation, a Hong Kong-based philan- thropic institution.

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