The Philippines placed 56th globally among 140 countries in the latest Global Competitiveness Report 2018-2019 of the World Economic Forum.
It also showed the Philippines as the fifth most competitive economy among the nine economies of the Association of Southeast Asian Nations (ASEAN).
WEF’s Global Competitiveness Index released by partner institute Makati Business Club (MBC) on Tuesday, October 16, measures a country’s standing using a set of criteria that determine levels of productivity.
According to WEF, the Philippines ranked lower than Singapore, which placed first in ASEAN and second globally; Malaysia, 25th globally; Thailand, 38th; and Indonesia, 45th. The country was ahead of Brunei Darussalam, 62nd; Vietnam, 77th; Cambodia, 110th; and Lao People’s Democratic Republic, 112th, however.
This year, the United States topped the index, followed by Singapore, while Germany cinched the third spot.
WEF said that the latest report is not comparable to the previous ones as it has transitioned to a new methodology.
About 60% of the indicators used in the new index “are brand new, as we increasingly believe factors such as workforce diversity, labor rights, e-government and disruptive businesses are driving competitiveness,” it said.
The index looked at 12 pillars — institutions, infrastructure, information and communication technology adoption, macroeconomic stability, health, education and skills, product market, labor market, financial system, market size, business dynamism, and innovation capability for the rankings.
Of the 12, the Philippines was found competitive in its market size, placing in the 32nd spot. Its labor market, financial system, and business dynamism all nabbed a spot in the the top 40 globally, as well.
Business dynamism includes the time to start a business as well as the cost of starting a business and insolvency rates, as reported by Philstar.
MBC chairman Edgar Chua, in a statement, said that the Philippines’ business dynamism noted in the report was primarily driven by the private sector’s mindset, in finding innovative ways to become more efficient and productive.
“We see companies integrating sustainability and innovation into their business models and harnessing the potential of technology to increase productivity — and this drives the continued growth of the Philippine economy,” he said.
“Hopefully, we will see more business-government-academe linkages to support the growth of priority sectors. This type of dynamic ecosystem has been pursued by other economies which can be improved in the Philippines,” he added.
Chua also noted that the country ranked high in e-participation, or the use of online platforms to link government information to citizens despite time and cost of starting a business remaining problematic factors for the business community.
“With the recently passed Ease of Doing Business Act, we remain optimistic that the government will be able to sustain these gains and address the concerns of efficiency in doing business,” he said.
Signed into law by President Rodrigo Duterte in May, the Republic Act 11032 or the Ease of Doing Business Act provides a required number of days for processing government transactions to address bureaucratic red tape.
The Philippines’ biggest challenges lie fixing its institutions, ranking 101st; health, 101st; and infrastructures, 92nd.
In institutions, the country’s weakest pillar, critical indicators where the country ranked poorly include terrorism incidence, homicide rate, organized crime and reliability of police services.
Meanwhile, in infrastructures, the country lagged in road connectivity, exposure to unsafe drinking water, efficiency of train services, and electrification rate.
“With WEF’s new competitiveness index, policy-makers and business leaders are guided to focus on long-term development,” Chua said.
“While we continuously build on our strong pillars, it is equally important to address our weak spots. The business community remains committed to work with the government to address these gaps, especially in our weakest links in ease of doing business, corruption incidence, and infrastructure, particularly in road connectivity,” he added.