Introducing the City/Municipality Competitiveness Index

How competitive are our cities and municipalities? How easy is it to start a business in a city? What is the cost of doing business in a city? It is surprisingly difficult to get such data on a per-city or -municipality basis in the Philippines. For this reason, the National Competitiveness Council (NCC) embarked on a project last year to organize regional competitiveness committees. Our intention was to create a systematic way of collecting and organizing data on cities and municipalities across the country for purposes of determining their competitiveness and business environment, for comparing with each other, and, eventually, comparing against other cities in Asean.

The effort is not a totally new or original effort. It has been done in the past, for instance through the Asian Institute of Management’s City Competitiveness Reports and the International Finance Corporation’s Sub-National Ease of Doing Business Report. The only problem was that those earlier efforts were not sustained and that they were carried out only once every three years when grant funds were available to finance such a project. I have long argued that for this type of report to be useful, it must be produced every year to provide a basis for comparison and analysis on an annual basis. At the same time, I felt that the data collection effort should be institutionalized and internally financed at the national and local-government level and embedded in the regular data collection cycle so information can be religiously collected at little or no extra cost.

We created regional competitiveness committees last year by inviting a combination of government agencies, local government units, the private sector, and the academic community to form each committee per region. Originally, we thought we would be happy to get six regions to commit to this voluntary program, but in the end we were pleased that 15 regions had signed up. This has been a truly public-private collaboration, with half of the members from the public sector and the other half from the private sector. The committees are also typically cochaired by a government official and a private businessperson.

Through a series of meetings and workshops, both regionally and nationally, we eventually decided on an initial template of competitiveness indicators which focused on economic dynamism, government efficiency, and infrastructure on a local basis. Basically, the data cover the cost of doing business, the ease of doing business, and the overall business environment of a place. We also decided that data would be collected on an annual basis starting with 2012 data and on a per-LGU basis starting with all cities in a region plus the largest Class 1 municipalities. Because we did not create a regional competitiveness committee for Metro Manila (which is actually composed of 17 cities), we relied on the regional offices of the Department of Trade and Industry as well as each individual LGU to supply the data. In all other regions, the committee called on the public sector, business clubs and chambers, and universities to collect and compile the data.

This first phase has now been completed and I am pleased to announce that we shall be able to release our first City/Municipality Competitiveness Index report on Tuesday, July 30, when we hold our first regional competitiveness committee summit in Manila. To arrive at the list, we processed data sets from over 285 cities and municipalities across the country, covering 30 indicators. From this list, we will be able to rank local government units across a set of key attributes important for attracting investments and creating new businesses and jobs. Over the long run, we will continue to collect data and rank cities and municipalities on an annual basis. As this is a first attempt, we will review the list of indicators and probably make a few adjustments and improvements in future lists. We also hope to add more LGUs into the coverage so businesses and entrepreneurs will have a better basis for making decisions where to locate their businesses.

I believe this exercise will, aside from providing businessmen with information about a city or municipality, also transform the way LGUs will manage themselves. Data collection will now provide cities with a means of regularly measuring their performance. Measurement, in turn, will enable local governments to better manage themselves. It will enable them to focus on the things that matter to their constituents and to develop ways of improving city performance. Finally, it will enable cities to compare themselves against each other along a broad front of indicators and to eventually benchmark themselves against other, similarly-sized cities in Asean.

Putting the index together was a collective effort of people across the country. Each regional committee did the heavy lifting and collected most of the data. The NCC staff painstakingly compiled the data and collected additional data. Finally, with help from USAID’s Project Invest—in particular project head Ofie Templo and Dr. Alvin Ang—the project benefited from expert advice ranging from the preparation of the template of the indicators to the formulation of the index.

I look forward to announcing the long-awaited results on July 30.

Guillermo M. Luz is private-sector cochair of the National Competitiveness Council. Comments and questions may be sent to gm.luz@competitive.org.ph.