Progress report on competitiveness
SINCE I took up the post of National Competitiveness Council (NCC) co-chairman about two-and-a-half months ago, I have made a number of presentations on the state of our competitive position before different audiences. As I wrote in my May 21 column, we closely track the World Economic Forum’s Global Competitiveness Report, IMD’s World Competitiveness Report, IFC’s Doing Business Report, and FutureBrand’s Country Brand Index. These indices are not meant to encompass the breadth and depth of an entire economy, but they do track many indicators that are seen as important by domestic and foreign investors. Because investments are the key driver for creating jobs, wealth and growth, it then becomes important for us to see how we stack up against the rest of the world.
The bottom-line is that we are ranked poorly in many of these reports: low on a global basis (usually at the bottom one-third of the list) and at the bottom or near-bottom among the Asean countries also covered in these reports. While we don’t do badly in all the indicators—there are hundreds of indicators in these four indices—we tend to do poorly in certain sectors. For instance, we fall toward the lowest 20 percent of the rankings in aspects of Infrastructure, Transaction Processes (i.e., permits and licenses issuance), Governance and Transparency, and Education (including Technological Readiness and Innovation). We not only rank poorly in these areas, we have also moved backward, in relative terms over the last three years, in most of these indicators. Our rankings have actually dropped since 2008.
One caveat about these studies is that they are composed of a combination of available statistics and perception surveys. This combination leads to results which are occasionally puzzling. In some indicators, the Philippines ends up ranking lower than we would like to believe. This tells us that perception (and communication to correct any misperception) is an element that we are not paying close enough attention to.
The other qualification I’d like to make is that these surveys focus on ranking, not on absolute standards. One country’s performance is measured relative to an entire group of countries or economies (139 in the case of WEF and 184 in the case of IFC). Thus, they do not prescribe what it takes to achieve a specified rank. However, it does challenge us to figure out what that “gold standard” or “best in class” is for a specific indicator. And since presumably all others are trying for the same improvements in rank, we can assume that the “gold standard” or “best in class” performance will inch up constantly.
The implication for us is that we can focus on a few indicators to improve, identify the “best in class” performance we want to emulate, formulate solutions, and—not to be forgotten—communicate our plans and progress toward the solution.
Update. I’d like to give a quick update on what we’ve worked on these past few months. The first thing we did was to analyze where we are weak in these indicators (we picked the lowest 20 percent ranking in the world as our cut-off point) and informed all Cabinet departments of their respective rankings. We also asked them to develop a program or set of projects that would address these issues. Next, we began discussions with Neda to include these indicators in the upcoming Philippine Development Plan for 2011-2016, basically as a reference point for tracking how we perform over time in certain sectors. As the plan is divided into 10 chapters, we broke up the indicators according to their respective chapters for easy referencing.
Third, we convened our working groups to meetings to address the specific issues or projects assigned to them. The NCC has seven working groups—(1) Education and Human Resources, (2) Governance and Balanced Scorecard System, (3) Infrastructure, (4) Transaction Flows, (5) Power and Energy, (6) Import/Export Clearance Processes, and (7) Transparent Budget Processes—which correspond to the four key categories where we have been low-ranking (i.e., Infrastructure, Governance and Transparency, Transaction Flows, and Education). We are working to add an additional three working groups on Anti-Corruption, the Judicial System, and the Government’s ICT Strategy and Framework.
The first seven groups have been working on their projects well before I joined NCC, and I am pleased to report that some of their results will be reported out in a few weeks’ time once their respective projects have undergone their run-throughs and testing. You can expect to see some progress on several fronts, namely: in Balanced Scorecards for several national government agencies; a roll-out of an early phase on Budget Transparency which will allow citizens to review budget allocations for pork barrel, public works and school buildings in their congressional district or province; online processing for imports and exports; and more streamlined processes for registering a business.
Over time, more programs or projects will be rolled out and improvements will be continuously made on the earlier ones mentioned. The important thing to note is there is movement in the right direction and that more can be expected. I am also pleased that we have received more commitments from people to volunteer to join the working groups which help provide the solutions to improving our competitive position.
In sum, while the indicators look low now, I am rather optimistic about the future because more attention is being paid to this issue. More importantly, I am seeing more people are stepping up to be a part of the solution.
Guillermo M. Luz is the private sector co-chairman of the National Competitiveness Council.
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