PHL competitiveness down 2 notches – study

The Philippines slipped to the 41st place in the Institute for Management and Development's (IMD) 2011 ranking of 59 world economies in terms of global competitiveness, down two notches from last year’s rankings. Despite marked improvements in economic performance driven by the high GDP growth rate and a strong rebound in exports, the Philippines suffered terribly in terms of government efficiency, falling to 37th place from last year's 31st, or a six-notch decline, according to the IMD in its World Competitive Yearbook released on Wednesday. The country also performed poorly in such indicators as international investments (56th), business legislation (51st), basic infrastructure (57th), scientific infrastructure (58th) and education (57th). It showed strong performance, however, in areas such as fiscal policy (13th), prices (12th) and the labor market (5th). Still, the Philippines garnered a score of 63.291 in the 2011 year book, up more than six points from last year's 56.526. However, the country ranked last among the 13 Asia-Pacific nations surveyed for the study. In contrast, the United States and Hong Kong, the two highest ranked nations in the IMD study, received perfect scores of 100 each. While the Philippines' business efficiency indicator hiked up a notch to 31st place, its wide six-place gap vis-a-vis government efficiency is a cause for concern, according to the report’s proponents. "The Philippines already has very strong foundations for a competitive business environment, especially in the strong performance of its SMEs," said IDM deputy director Suzanne Rosselet-McCauley. "But the gap of six places means business efficiency is outpacing government efficiency. If the two were synchronized, the potential for increasing competitiveness is much greater," she added. Narrowing the gap Officials commenting on the report said the government should focus on narrowing the gap. "Unfortunately, there are no quick fixes, but we all know the problems: education, science and technology, as well as infrastructure," said Professor Benjamin Diokno of the University of the Philippines School of Economics. One thing the government could do, Diokno said, is raise business confidence by showing the industry a roadmap of what it intends to achieve in improving the lcoal business environment in the next six years. "The government has to show clear policy rules, and they must also have a consistent policy. I think that's very important," he added. Sergio Ortiz-Luis, president of the Philippine Exporters Confederation Inc., meanwhile, lamented on government's efforts at improving local trade facilitation. "While we expect the dismantling of tariff barriers (through free trade agreements) to bring in more exchanges to the country, we may not experience significant improvement in trade flows unless there is an improvement in trade facilitation," he said. While local businesses are placing a high premium on speed and reliability in delivering goods, poor trade facilitation comes at their disadvantage, he added. Key reforms in government processes pushed by the administration of President Benigno Aquino III, however, are expected to boost the country's competitiveness in the coming years. "The Department of Budget & Management's efforts to open up the budget process to the private sector is an example of good reforms by this government," noted Professor Ron Mendoza, executive director of the Asian Institute of Management Policy Center, IDM‘s local partner for the study. For the reforms to take effect, however, they must be institutionalized so that the next administration cannot overturn them easily, the professor emphasized. "There is a lot of faith and goodwill shared in the present administration. They should be leveraged, not simply squandered," he added. — VS, GMA News