Philippine Competitiveness


By Andrew James Masigan – President Aquino was elected with the highest mandate in Philippine history and still enjoys relatively high approval ratings today.

More than anyone else, P-Noy is in the position to effect the necessary but extremely difficult reforms to make the economy more competitive.

The enactment of such economic reforms is arguably the most pressing need of the country today. Without it, the nation runs the risk of falling further behind its neighbors economically and consigning the majority of our countrymen to poverty for yet another generation.

A strong, competitive economy would be the best legacy P-Noy could ever leave the country. It is the solid foundation on which our children can build better lives for themselves.

The World EconomicForum Report

In its latest report, the World Economic Forum (WEF) ranked the Philippines 85th out of 139 nations in terms of economic competitiveness. To put context to this, Indonesia was ranked 44, Thailand 38, and Malaysia 26.

The WEF determines economic competitiveness by three sets of measures. The first set, called “The Basic Requirements of an Economy,” is composed of five sub-categories: the strength and integrity of a nation’s Government Institutions; the quality of its Infrastructure; the stability of its Macroeconomic Environment; the quality of its Primary Education and Healthcare; and the quality of its Higher Education. The Philippines’ average score on these sub-categories put it at 99th place.

The second set of measures, called “Efficiency Enhancers of an Economy,” is also composed of five sub-categories. The efficiency by which Goods Reach Markets; the effectiveness of Labor Laws; the development level of Financial Institutions; the level of Technological Advancement; and Market Size. The Philippines ranked 78 in this set.

“Business Sophistication & Innovation” is the third set, and the Philippines was placed in 70th position.

Problematic Areas

Our economy scored very low in all three sets of measures. But among all the sub-categories, the abysmal placing of our Government Institutions (ranked at 125th place) pulled our entire score down. It is deemed the single most problematic aspect of our economy and the main impediment to our development as a nation. Hence, the urgent need for reform in this area.

The WEF report further goes on to identify the eight facets within our government institutions that need fixing. They are Graft and Corruption, Bureaucratic Red Tape, Policy Instability, Tax Regulations, Labor Regulations, Justice

System, Political Instability, and Criminality.

Clearly, we need to go back to the basics. The need to repair the flawed structure, inefficient processes and damaged core values of our institutions is now more pronounced than ever. Only by fixing the basics will we be in a position to improve our Efficiency Enhancers and rise in the ladder of Business Sophistication and Innovation.

Where We Stand

Government has established the National Competitiveness Council (NCC) precisely to address the issues surrounding economic competitiveness. Headed by Department of Trade and Industry (DTI) Sec. Greg Domingo and Guillermo Luz, the NCC aims to elevate our rank from the bottom third to the top third of the world by 2016.

It’s too early to assess how well NCC is faring under the Aquino administration. We will only know how effective they have been when the WEF releases its next report this October. All indications show, however, that a slight bump-up in rank can be expected from our current 85th position to 75th at best.

The country has done very well in its Macroeconomic Environment. We’ve managed to realize decent growth amid an environment of low inflation and low budget deficits. This should auger well on our overall rankings.

In infrastructure, a dramatic improvement can be realized if P-Noy’s Public-Private-Partnership program gets off the ground. The PPP Law and its implementing rules are still awaiting final validation.

The same goes for healthcare. There will be no improvement in our standing until P-Noy’s Universal Healthcare Program is implemented. Unfortunately, it will not be ready until 2014 at the earliest.

While the Philippines has always been the one with the greatest potentials, it will never find its inner-greatness until it puts its government institutions in order. It is, after all, the enabler that allows our greatness to blossom in the first place. P-Noy has the opportunity to make it happen. If he does this, he will go down in history as being the greatest President this country ever had.

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