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PHL improves ranking in trade sustainability study

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PHILSTAR

THE Philippines was 10th in a ranking of 20 countries — including the United States and 19 Asian economies — in a measure of long-term trade sustainability, the 2018 Hinrich Foundation Sustainable Trade Index.

The Philippine ranking was three places higher than the previous survey in 2016.

The Hinrich Foundation is a nonprofit organization that undertakes trade-related policy research and development work in Asia. It commissioned The Economist Intelligence Unit (EIU) to build the Sustainable Trade Index.

“The Philippines was a top performer among the low-income economies in the 2018 Index, outperforming the middle-income economies of Malaysia and Thailand in overall scores,” according to the Hinrich Foundation’s profile report on the Philippines which was distributed Tuesday in Makati City.

“The Philippines saw a major improvement in its social pillar ranking in 2018, which was partially offset by a substantial decrease in the economic pillar,” it added.

The index assess economies based on three pillars it deemed essential for sustainability: economic growth, social capital, and environmental protection.

Of these, the Philippines fared worst in the economic pillar, placing 15th and falling six notches from the 2016 Index.

The economic pillar factors in 14 indicators: current account liberalization; tariffs and non-tariff barriers to trade; foreign direct investment; technological infrastructure; growth in per capita GDP; exchange rate volatility; and foreign trade and payments risk.

Other indicators include export product concentration; gross fixed capital formation; financial sector depth; export market concentration; technological innovation; trade costs; and growth in labor force.

“While the Philippines demonstrates an openness to trade in some areas, the country is also home to some of the highest trade costs in the region,” the report said.

The index’ trade costs indicator recognizes four factors — infrastructure, logistics, corruption and legal system.

“Of the four indicators used to determine the trade costs score, the Philippines scored best in legal system (=11) and worst in corruption (=17),” the report read.

Meanwhile, the Philippines placed sixth in the environmental protection category, maintaining its 2016 standing.

The environment-based metric evaluated air pollution, environmental standards in trade; transfer emissions; deforestation; share of natural resources in trade; and water pollution.

“The Philippines’ best scores were in air pollution and environmental standards in trade, demonstrating a commitment to environmental sustainability at a national level,” it said.

The country’s air pollution levels were second-lowest in the region while the country’s membership in or ratification of international environmental agreements was also taken into account — the Philippines is a signatory to six of the seven international environmental agreements used to measure this indicator.

Meanwhile, the Philippines improved in the transfer emissions indicator, where progress was “largely due to worsening performances by other countries rather than a better performance by the Philippines.”

Among the environment indicators, the Philippines ranked lowest in water pollution.

Meanwhile, the Philippines was most improved in the social pillar, advancing eight positions to 11th overall and outperforming all middle-income economies.

This came despite “an overall stagnation across all economies in the social pillar.”

“Inequality and political instability are on the rise across the region, a trend that transcends wealth and development status. The Philippines, however, was one of the few economies to increase its ranking on the social pillar in 2018,” the report noted.

“The country even outperformed middle-income countries like China, Thailand and Malaysia on the social pillar, outperforming its income-weighted position to deliver an impressive social pillar performance.”

In the 2018 index, Hong Kong placed first, replacing Singapore, which was number one two years ago. — Janina C. Lim