AFTER figuring as one of the most-improved economies last year, the Philippines fell eight notches to 64th out of 141 economies in the World Economic Forum’s Global Competitiveness Report 2019, the Makati Business Club (MBC) said in a press release on Tuesday.
The MBC is the forum’s Philippine partner for the 2019 Executive Opinion Survey conducted March 15-April 30 which is a key component of the yearly report.
The country also slid to sixth place from fifth among the nine Southeast Asian countries covered.
According to the report, each country’s score is based on 12 “pillars of competitiveness,” namely: institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labor market, financial system, market size, business dynamism and innovation capability.
The MBC said in its statement that this drop was a result of the Philippines’ overall score falling to 61.9 from 62.1 last year.
“In the global ranking, Singapore took the top spot this year, with an overall competitiveness score of 84.8, outranking last year’s top performer, the United States,” MBC said.
For American Chamber of Commerce of the Philippines Senior Adviser John D. Forbes, “these results show that the country’s competition never sleeps.”
“The Philippines will need to move faster to reverse the downturn and return to an upward trend,” he said. “We suggest the NEDA (National Economic and Development Authority) and DTI (Department of Trade and Industry) identify several key short-term strategies to improve next year’s rankings.”
The country’s biggest drops this year were in the fields of ICT adoption and macroeconomic stability.
In terms of ICT adoption, the Philippines dropped 21 spots to 88th globally from 67th, with its score dropping to 49.7 from 54.8.
In terms of macroeconomic stability, the country’s rank fell to 55th from 43rd despite maintaining a score of 90. MBC noted that this pillar includes inflation rate, which has nevertheless been dropping to within the central bank’s 2-4% target from 2018’s successive multi-year highs. In terms of inflation, the Philippines placed third in Southeast Asia.
The Philippines was also the least competitive in terms of health, in which it placed 102nd as life expectancy slipped to 65.6 years from 67.6 years in 2018.
The country’s highest rankings among the 12 pillars were in market size (31st), labor market (39th), financial system (43rd), business dynamism (44th), and product market (52nd).
In terms of specific indicators, the country’s best rankings were in internal labour mobility (7th), insolvency regulatory framework (9th), diversity of workforce (9th) and companies embracing disruptive ideas (10th).
“We would like to stress the need to foster investments in human capital and matching the benefits of innovation with talent development and a well-functioning labor market,” MBC Chairman Edgar O. Chua said in the statement.
“Innovation in education is key. We should use technology in classrooms and in training grounds. Furthermore, upskilling of workers will help us meet the changing demands of industries.”
Socioeconomic Planning Secretary Ernesto M. Pernia said that the country’s competitiveness can improve with better information and communications technology infrastructure.
“This ranking is comparative, so countries that are better in terms of communications technological advancement would rank higher,” he said by phone.
“We need to adopt the latest advancements in communication technology. DICT (Department of Information and Communications Technology) needs to exert more effort in improving our infrastructure in communications technology and software.”
The European Chamber of Commerce of the Philippines (ECCP) President Nabil Francis recommended policies to improve the Philippine ranking.
“While the Philippines has made great strides, its regional peers have improved by leaps and bounds in terms of creating a more conducive business environment. Moving forward, it is crucial to put in place sound economic policies that will further boost the investor confidence of European businesses,” Mr. Francis said when sought for comment.
“The ECCP believes that reforms such as the amendments to the Public Services Act and the Open Access Bill are crucial to improve the ICT landscape. Lastly, the chamber remains committed to working closely with the government to create a level playing field, foster competition and further improve the investment and business climate here in the Philippines.”
The proposed Open Access in Data Transmission act now awaiting legislative approval aims to improve data transmission services through the sharing of infrastructure among service providers, while the Public Services Act amendment aims to open the telecommunications and transport sectors to foreign investors. — with Beatrice M. Laforga