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PHL competitiveness still lags in Asia

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The Philippines continues to face challenges in containing the coronavirus disease 2019, as lockdown restrictions ease in Metro Manila. — REUTERS

By Jenina P. Ibañez, Reporter

THE Philippines inched just one notch higher in an annual global competitiveness report that placed the country among the lowest in Asia and the Pacific, as it showed no improvement in any of four key factors studied.

Switzerland-based business school International Institute for Management Development’s (IMD) 2020 World Competitiveness Report ranked the Philippines 45th out of 63 economies, up one spot from last year’s 46th. In 2019, the Philippines’ ranking rose four spots.

The country remained at 13th place among the 14 Asia-Pacific economies in the report. Singapore retained the top spot overall, followed by Denmark, Switzerland, and the Netherlands.

IMD attributed Singapore’s success to its “robust international trade and investment, employment and labor market measures,” alongside its stable educational system and technological infrastructure.

Hong Kong fell to fifth place globally from second the previous year, as its economy took a hit from widespread anti-government protests.

Taiwan bagged the 11th spot, followed by Malaysia (27th), Thailand (29th), and Indonesia (40th). Mongolia was the only Asia-Pacific economy behind the Philippines, coming in at 61st.

The prolonged trade war hurt the economies of both the United States and China. The United States slumped to 10th place from 3rd last year, while China slipped to 20th spot from 14th last year.

The study ranked each country’s competitiveness using 235 indicators grouped under four factors: economic performance, government efficiency, business efficiency, and infrastructure.

The Philippine ranking declined in three of the factors, falling six places to 44th from 38th in economic performance. The country slipped one spot to 42nd in government efficiency and one spot to 33rd in business efficiency.

The Philippine infrastructure ranking remained at 59th. Under this sub-factor, the country’s biggest weaknesses were in secondary school enrolment, communications technology, and number of patents in force, where it ranked 62nd in each.

The Philippines also had a poor showing for broadband subscribers, pollution problems, internet bandwidth, and public expenditure on education.

Legislative-Executive Development Advisory Council (LEDAC) private sector representative George T. Barcelon said in a phone interview the poor showing was caused in part by problems with ease of doing business and tax reform last year.

But he believes there is cause for optimism, if the government passes an improved tax incentives program and if the US-China trade war would result in investments shifting from China.

“Maybe this competitiveness (ranking) may not weigh heavily but… at the bottom line para sa mga negosyante, mag-i-invest kami ng negosyo, maasahan ba namin ’yung mga labor law, ’yung mga infrastructure, ’yung kuryente bababa ba? (The bottom line for businessmen is if we invest, can we rely on labor laws, infrastructure and lower cost of electricity?),” Mr. Barcelon said.

PhilExport President Sergio R. Ortiz-Luis, Jr. said Philippine competitiveness has been improving, and wondered if the new report may have been “factoring in 2020 too much.”

But he also believes the delays in the government budget and the infrastructure program last year may have caused problems.

“To improve from last year is about how to get out without too much stress from COVID-19. Medyo mabagal tayo — slower than the others,” Mr. Ortiz-Luis said.

The Asian Institute of Management’s (AIM) Rizalino S. Navarro Policy Center for Competitiveness, IMD’s Philippine partner, said in a press statement the IMD results reflect the immediate impact of the US-China trade war last year, as well as the shifts in executive opinion that it believes were shaped by the coronavirus disease 2019 (COVID-19).

“However, the full impact of the pandemic on macroeconomic factors are not captured in the results since the latest statistical data used in the study are from 2019.”

IMD said the ranking results are based on data from 2019, and responses to an executive survey in the first quarter of 2020. The group said that the impact of the pandemic is partially captured by these executives’ opinions on the effectiveness of the health system.

Philippine health infrastructure ranked 49th, dropping four places from the previous year’s 45th. In comparison, Singapore remained at fourth place, while Thailand improved to 22nd from 28th.

The AIM Center said the Philippines this year will face challenges in mitigating the economic impact of the pandemic, preparing the healthcare system, and offering aid to households and businesses. It said that the country will look to resuming the government infrastructure program in addition to business and consumer confidence.

IMD has been releasing its competitiveness ranking report for 32 years.

World competitiveness ranking 2020





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