Business Matters



OVER THE last several years, the Philippines has fared poorly in international surveys and studies which measure a country’s competitiveness vis-à-vis other countries across the world. At the National Competitiveness Council (NCC), our mission is to raise the competitiveness score and ranking through a combination of policy reforms, project implementation, institution-building, performance monitoring and goal-setting.

Let’s start first with what the data tell us:

In the World Economic Forum’s Global Competitiveness Report, we currently rank No. 85 out of 139 countries or economies. Over the last three years, our rankings have dropped. Moreover, we rank seventh out of eight Asean countries covered in the survey, ahead only of Cambodia.

In the IMD World Competitiveness Report released last May 18, our ranking for 2010 performance dropped from No. 39 to No. 41 out of 59 economies covered. We rank lowest among the five Asean countries included in the survey.

In the IFC Doing Business Survey, we presently rank No. 148 out of 184 countries covered, down from No. 141 and No. 144 in previous years. We are also ranked at the bottom of eight Asean countries measured.

And in FutureBrand’s Country Brand Index, we ranked No. 65 out of 110 countries in 2010, and 14th out of 17 countries in Asia-Pacific.

We track these four surveys in particular (from the many out there) because they analyze the macroeconomic picture, transaction or permitting processes, and the country’s image attributes. The WEF and IMD studies cover the macro issues well; IFC studies transactional flows and processes in detail; and the Country Brand Index handles image attributes such as heritage and culture, tourism, quality of life, safety, and “liveability” of a place. The combination of these four gives us a reliably good picture of what works and what doesn’t from a competitiveness and business standpoint, including from the tourism and travel angle.

These reports study various aspects of the ability of a country to compete for investments and business such as its infrastructure, institutions, bureaucratic processes, court system, budget and decision-making processes, business practices, health and education system, macroeconomic environment, and other requirements of doing business competitively in a global business environment. Tracking these surveys and improving our rankings in them are important in the sense that major investors use some of the data in helping them decide where to look before making an investment decision. This is not the only data investors look at, but these surveys are acknowledged to be widely tracked or followed by business decision-makers.

Tracking our performance and raising competitiveness must of course go beyond merely raising one’s standing in global surveys. The improved ranking must translate to better economic performance, higher investments, more exports, more jobs and lower unemployment. At the end of the day, we must all connect this to lower poverty incidence through jobs and wealth-creation and the rise of a larger middle-class. That is our ultimate mission and challenge.

We plan to accomplish this by first closely tracking how we perform on indicators covered in each of these reports. Because there are so many issues to grapple with, we’ve opted to focus on those areas where we are ranked among the lowest 20 percent in the world. Typically, these areas are infrastructure (e.g., roads, rail, ports, airports, Internet access); institutional weaknesses (e.g., budget processes, transparency in decision-making, corruption, court delays, other governance issues); and bureaucracy and transaction flows (e.g., business permits and licensing, construction permits, customs clearing). They also cover issues such as educational quality—specifically the quality of Science and Mathematics education.

As we track all indicators, we then map each of them to the agency or agencies responsible for that sector and ask them to identify and implement solutions to improve that indicator. As we do this, we also closely track city competitiveness indicators to make sure we are aligned at both local government and national government levels. In order to carry out the program, the NCC has organized a number of working groups composed of both private and public sector representatives organized around key issues and projects. So far, the working groups organized are for Education and Competitive Human Resources, Philippine Governance System and Balanced Scorecards, Infrastructure for Competitiveness, Improving and Simplifying Transaction Costs and Flows, Import/Export Clearance Processes and the Single Window, Energy Costs and Availability, and Transparency in Budget Delivery. From time to time, special projects will be established to address specific issues.

Building up the competitiveness position of a country takes time and one can expect progress to move at a modest pace at the outset. On the other hand, it is possible to make relatively quick improvements in some indicators, especially if there is consensus on which items to focus on, and if the proper resources are put to bear on the problem. The fact that other countries in the region—most notably Vietnam and Indonesia—have been able to make big gains in the rankings in a single year shows that improvements are not impossible. All it takes is focus, commitment and the perseverance to solve problems. At the NCC, we hope to do exactly that. We hope we can count on your support.

Guillermo M. Luz is private sector co-chairman of the NCC and can be contacted at gm.luz@competitive.org.ph. Updates on the NCC and its work program will soon be available on Facebook.

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