Competitiveness: Are we getting there?

When we started work on competitiveness earlier in the year, we set stretch targets to raise our competitiveness rankings to the top one-third of the world by 2016 from its current position of bottom one-third. This is important because there is a strong connection between a country’s ranking and its ability to attract investments, raise its per capita GDP, and create jobs and wealth.

How have we done? I am pleased to say we have made some gains. Moreover, we have identified a number of new areas for improvement which we did not originally cover in our list of priorities. These will need to be attended to in the New Year.

The good news is that we have made great strides in such rankings as the WEF Global Competitiveness Index and Financial Development Index. In the GCI, we jumped 10 positions to No. 75 out of 142 in the last year. We were one of only a handful of countries to make a jump of this magnitude. In the Financial Development Index,  we jumped six positions to No. 44, recording the second highest increase in score (after Norway).

In Transparency International’s Corruption Perception Index we also moved up five positions to No. 129 over the last year. And in the United States’ Millennium Challenge Account annual review, we received  a passing score after being moved up an economic category.

The bad news is that we slipped marginally by two positions to No. 136 in the IFC Doing Business Report.

The major constraints to our growth are our bureaucratic processes, governance, cost of doing business, and weak infrastructure. For this reason, we have stressed that transparency, accountability,  governance and streamlining of our bureaucracy can have an impact on our competitiveness. Transparency builds up trust in a society and system. As trust builds up, so too does our ability to attract investments and more players into our economy. It also builds up our ability to attract more competitive bidding in public projects, for instance, which, in turn, can result in better projects and better public services. Good governance should be good for the economy.

At the National Competitiveness Council, seven of our 10 Working Groups touch on some aspect of transparency and governance in their programs. Several work on streamlining government transactions like business permits and licenses, creating an online Philippine business registry, and a national single window for customs transactions. Others focus on judicial reforms to break court delay, anti-corruption programs, establish budget transparency by posting budget release data online, and use balanced scorecard systems to help government agencies track strategic initiatives against key performance indicators. We believe that creating more transparency and accountability and streamlining the bureaucracy will have an effect on lowering the cost of doing business and reducing corruption.

What’s in store for  2012? Adding to our basic building blocks which we strengthened this year, the NCC will do the following:

First, since the greatest weights and emphasis on our competitiveness rankings lie in the areas of governance and bureaucracy, infrastructure, and basic sectors such as health and education, we will maintain more focus on these areas.

Second, the IFC Doing Business Report indicates other potential areas of improvement outside of local business permits and licenses. These include construction, sanitation, and fire permits at the local government level and online business registration at the national level. Areas needing improvement also include implementing rules and regulations governing credit information and business insolvency.

Third, a basic building block of national competitiveness is local competitiveness. Thus, we plan to work with Regional Development Councils which are typically co-chaired by a governor and a private sector representative. We plan to build a template of indicators so that regions can track their competitiveness for comparison with national and global standards.

Fourth, another basic building block for national competitiveness is industry. We will work with the Board of Investments to prepare 10-year industry roadmaps. Each industry will be asked to map out growth prospects as well as the policy, regulatory, infrastructure and human resource environment needed to succeed.

Finally, we will prepare a detailed National Competitiveness Assessment and Plan. While the national assessment will be made on an annual basis, our proposal is for the plan to look ahead 20 years with periodic reviews. While it will be linked to the six-year Philippine Development Plan, the importance of looking out 20 years is that a plan must be prepared with a strategic long-term perspective.

While the hallmark of the National Competitiveness Council has been its strong public-private sector collaboration, I am pleased to report that the government has expanded this further to now include more agencies outside the Economic Cluster. The government has also agreed to permanently designate undersecretaries or assistant secretaries from appropriate agencies to the NCC working groups.

In sum, we have moved in the right direction in the last year. More importantly, by focusing on the metrics, we are able to measure where exactly we have made gains and losses. Over time, I am confident that we will have more gains than losses.

Guillermo M. Luz is co-chairman of the National Competitiveness Council. He can be reached at [email protected].