More Competitive

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Up four spots from last year, the Philippines was ranked 71st this year in the World Economic Forum (WEF)'s annual Global Competitiveness Index, released on November 1.



According to the WEF, "The Philippines [..] derives competitive advantages from its market size, where it ranks 24th in domestic size and 25th in foreign market size. [...The rise was] driven largely by gains in macroeconomic stability, with a measured decrease in the inflation rate and interest rate spread and lower government deficit and debt."



Of the 12 measurable indices that make up the Global Competitiveness Index (GCI), the Philippines ranked 24th among the 131 economies in market size, 55th in business sophistication, 62nd in higher education and training and 64th in goods market efficiency.



Of the other countries that are members of the Association of Southeast Asian Nations, five finished ahead of the Philippines in the rankings. They were: Singapore (7th), Malaysia (21st), Thailand (28th) Indonesia (54th) and Vietnam (68th).



The Switzerland-based think tank released the information as part of the Global Competitiveness Report. It is based on a broad array of indicators for most industrialised and developing economies. The GCI is based on 12 pillars providing a comprehensive picture of the level of competitiveness in countries around the world in all stages of development. This year the report covered 131 economies, accounting for more than 98% of the world's GDP.



Produced in collaboration with leading academics and a global network of research institutes, the rankings are two-thirds based on an Executive Opinion Survey and the rest on publicly available sources such as the United Nations.



The Makati Business Club has been the official partner institute of the WEF since 1994. Its members were some of the 11,000 business leaders worldwide who participated in the Executive Opinion Survey. The survey provides qualitative data on which the report is partially based. Quantitative statistics from international agencies and institutions are also used to prepare the report.



A second part of the report provides a more detailed examination of the microeconomic aspects of competitiveness, presented in the Business Competitiveness Index (BCI). Essentially, it reflects the performance of the private sector and is based on the sophistication of company operations and the strategy and quality of the national business environment.



In the business index, the Philippines was ranked 66 overall out of 127 countries, which was two spots higher than last year. Improvements in the quality of the national business environment drove this change as well as a relatively high ranking (46) in sophistication of company operations and strategy.



More impressively the Philippines was among only two countries in South East Asia who performed better this year. South Korea jumped 12 spots while Indonesia and Thailand maintained their previous rankings. Taiwan, Singapore, Hong Kong and Malaysia all had minimal setbacks while Vietnam had the poorest margin finishing four places lower than in 2006.



While the Philippines are heading in the right direction there were still a number of areas of concern.



"Its overall competitiveness performance is dragged lower by its position in four key pillars: labour market, efficiency, institutions and health and primary education. On the labour markets, the country is ranked 100th, with a severe brain drain problem... The country also receives poor assessments on the quality of its public and private institutions (95), with high business costs of terrorism, low public trust of politicians, excessive red tape and concerns related to the diversion of public funds and the wastefulness of government spending. The quality of infrastructure is another major source of disadvantage as the country receives poor marks for its transportation and communication infrastructure," said a WEF statement.



This was echoed in a survey taken by the WEF, which listed 14 problematic factors for doing business and asked business leaders to rank them. Corruption was at the top of the list with 22% of respondents listing it in the first place. Meanwhile, inadequate infrastructure, policy instability, inefficient government bureaucracy and government instability rounded out the top five.



Speaking at the World Economic Forum on East Asia this summer, President Gloria Macapagal Arroyo, said the real issue is how the region will handle the future.



"I am bullish on Asia, what we have accomplished and what we will achieve in the next 20 years. Our time has come. Asia will be up to the task of leading our people and our region into a more dominant role in world economic and political affairs," she said.

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