THE Philippines rose five notches to 47th place among 140 competitive economies ranked by the World Economic Forum (WEF) in its Global Competitiveness Report 2015-2016 released Wednesday.
The Philippines ranked 52nd in 2014.
Since 2010, the country has cleared 38 places, making it one of the world’s most improved economies during the period, the report said.
The Philippines placed fifth out of the nine countries in Southeast Asia included in the survey.
The report also highlighted the fact that while Vietnam ranks 68th overall and sixth in Asean, it has been steadily gaining ground among the Asean-5, recording the highest jump among Southeast Asian countries with a 12-place improvement. Meanwhile, the Philippines ranks 16th out of the 19 covered APEC economies.
Referring to the two countries, the report said: “These should provide the impetus to rapidly enact the needed reforms to sustain the momentum.”
From last year, the Philippines has moved up in the index’s 10 out of 12 pillars, with the largest improvements seen in labor market efficiency (up by nine places to land at 82nd), health and primary education (up six places to 86th) and market size (climbing five places to 68th).
More noteworthy about the country, the WEF said, is that since 2010, the strongest performing pillars for the Philippines are innovation (rising 63 places to 48th), institutions (up 48 places at 77th) and macroeconomic environment (up 44 places at 24th)—pillars that lay the ground for long-term, sustainable growth.
Business group reaction
“With this achievement, the Philippines has come much closer to its goal of being in the top third of the global rankings. Congratulations are in order for all government agencies that have tangibly contributed to this milestone,” the Makati Business Club (MBC) said in a statement.
At the same time, the MBC also recognized that inefficient government bureaucracy, inadequate supply of infrastructure and corruption are the most problematic factors in doing business in the Philippines.
The group’s observation is supported by a poor performance in terms of the burden of government regulation, where the Philippines slid 28 places to 101st; efficiency of legal framework in challenging regulations (down by 24 places to 80th), quality of overall infrastructure (down by 11 to 106th), and prevalence of diversion of public funds (down by 22 to 100th), among others. In terms of information technology infrastructure, dropping in ranks were the availability of the latest technology (down by 20 to 78th) and international internet bandwidth (down by 30 to 76th).
The above three factors were among the priority areas of focus for the Philippine Business Groups and Joint Foreign Chambers (PBG-JFC) mentioned in their letter sent to President Benigno Aquino 3rd in May.
To address such concerns, the PBG-JFC recommended the nationwide implementation of a National Competitiveness Council initiative to reduce the number of steps in establishing a business, more intensified efforts to implement critical infrastructure projects, as well as the enactment of the Department of Information and Technology Act, Freedom of Information Act and the PPP Act, among others.
While the MBC believes that the achievements of the last five years are certainly worth celebrating, “nevertheless, as the Philippines continues to improve, other economies are likewise moving and are either rapidly catching up or overtaking the country. Moving forward, especially toward a change in administration, MBC, through the Philippine Business Groups and Joint Foreign Chambers, commit to support all efforts aimed at further improving the country’s competitiveness,” the group added in the statement.
The MBC has been the partner institute of the World Economic Forum in the Philippines since 1994.
Areas of concern
Private economists monitoring the rankings said they have seen how the Philippines has climbed up several notches over the past years.
“We’ve generated scaled rankings in order to factor in for the different survey sample sizes over the years and we can see how the Philippines stacks up against our peers,” Nicholas Antonio Mapa, associate economist at BPI Global Markets, said.
Despite the improvements in the competitiveness rankings, however, Mapa enumerated five most troubling problem areas that investors see in terms of doing business in the Philippines: inefficient government bureaucracy; inadequate supply of infrastructure; corruption; complexity of tax regulations; and tax rates, in that order.
One of the vital criteria in the rankings where the country appears to struggle most despite its recent strides is infrastructure, he said.
The Philippines continues to have one of the worst rated infrastructure facilities in the region, garnering the lowest ranking in terms of roads and ports, as well as the second worst for airports, railroads and electric supply.
“No doubt the next administration would be wise to address these backlogs in infrastructure development as we’ve relied heavily on the private sector to carry our growth story,” Mapa added.