As we move into the second half of the year, let me step back and review where the Philippines is thus far in terms of competitiveness. The National Competitiveness Council tracks at least 12 international reports on competitiveness, and the first four have released their findings.
First, the good news. The Philippines has improved its rankings modestly in all four. It moved up eight positions in the Heritage Foundation’s Economic Freedom Index to No. 76 (out of 178). It also moved up two positions to No. 76 (out of 143) in the World Economic Forum’s Global Information Technology Report; up eight to No. 74 (out of 141) in the WEF Travel and Tourism Report; and up one to No. 41 (out of 60) in the IMD World Competitiveness Yearbook.
From 2011 to 2014, the Philippines has been the most improved country in four important rankings: up 53 spots in the Ease of Doing Business Report; up 49 in Transparency International’s Corruption Perception Index; up 39 in the Heritage Foundation’s Economic Freedom Index; and up 33 in the WEF Global Competitiveness Index.
Now for the reality check. While it has comfortably moved out of the bottom-third of most world rankings, the Philippines is still quite a ways from its target of moving into the top-third by 2016. On a global basis (and also within Asean), it is now around the middle of the pack, usually between the 45th and 55th centile of the world rankings. This reflects the challenge and the deep hole from which it had to climb at the start of this journey.
Nonetheless, I am optimistic that continuous improvement will take place, mainly because I see higher levels of collaboration and cooperation across government agencies and between the public and private sectors. Let me just cite some examples.
For years, we struggled in the Ease of Doing Business Report published by the International Finance Corporation and World Bank. This is a measure of the ease or difficulty of going through 10 very basic business-related processes with government—basically licenses and permits at the national and local levels. Just a few years ago, the Philippines ranked No. 148 in the world—a pretty dismal record considering that only 148 economies were on the list. Since we started our Gameplan series in 2013, we have been able to get more agencies involved and committed to working together to streamline processes and make these more business-friendly.
Among the most dramatic of improvements is in starting a business (or incorporating). While registration for single proprietorships had been vastly improved through the Philippine Business Registry, incorporating continued to be a tedious process—a minimum of 16 steps and 34 days—that discouraged investors. Now, thanks to an integrated system put together by the Securities and Exchange Commission, Bureau of Internal Revenue, Social Security System, Pag-Ibig and PhilHealth, the process at SEC now takes one day for about 80 percent of applicants. By linking up to local government units, we hope to also streamline the process and complete incorporation within six to eight days. Through full (from partial) automation, we hope to take the process completely online next year and reduce the steps and time further.
Other examples are in processes, such as paying contributions to the SSS, PhilHealth and Pag-Ibig and taxes to the BIR; obtaining construction permits from City Hall; getting electricity connections; and going through commercial courts (in Quezon City for now). All these improvements would not have been possible without collaboration between agencies (including the Supreme Court in the case of court processes and insolvency filing processes) and LGUs. The private sector also played an important role in recommending and implementing some of the changes.
My second example is in our Cities/Municipalities Competitiveness Index project. We started this three years ago because we wanted to measure LGU competitiveness. We believe cities and municipalities are regional growth engines and building blocks of national competitiveness. The only problem was that we had no way of measuring that competitiveness. Today, using a network of national government agencies, LGUs, the private sector, and the academe, we collect data annually on LGUs which allow us to measure competitiveness on three fronts: economic dynamism, infrastructure and governance. It is a massive effort in data collection and validation.
There are two key trends I’d like to highlight. The first is that there are more cities and municipalities participating in the project, reflecting their interest in and appreciation of being measured. From a starting point of zero, we ranked 285 LGUs in 2013. The following year, we basically doubled that figure to 535. This year, we have doubled that figure again to 1,120.
The second trend is that LGUs, particularly municipalities, are now more conscious of maintaining and collecting data. In 2013, most of them could barely collect 50 percent of the data required to make the listing. Today, in spite of higher data requirements, LGUs as a group are able to collect about 80 percent of the data needed. They now appreciate the value of data as part of their diagnostic toolbox for measuring their competitiveness.
The quest for competitiveness is neither easy nor quick. But the collaborative process will make it less difficult and time-consuming. The thing about collaboration is that the more you practice it, the better you get at it. If the practice and experience of the last few years are any indicator, then there is cause to be optimistic. But only if we keep at it.
Guillermo M. Luz ([email protected]) is the private-sector cochair of the National Competitiveness Council.
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