Philippine climbs two notches in Sustainable Trade Index

MANILA, Philippines — The Philippines moved up two places to rank eighth out of 20 economies in this year’s Hinrich Foundation Sustainable Trade Index.

The index looks at a country’s capacity to participate in international trade while promoting economic growth, environmental protection and social benefits. It ranks the economies’ readiness for sustainable trade based on three pillars: economic, social and environmental.

In the previous edition of the bi-annual index developed by the Economist Intelligence Unit and released in 2018, the Philippines placed 10th out of 20 economies.

Within Southeast Asia, the Philippines ranked higher than Thailand (ninth), Malaysia (11th), Brunei (13th), Cambodia (14th), Vietnam (15th), Indonesia (17th), Laos (18th) and Myanmar (20th) in the latest edition of the index.

The Philippines, however, was behind Singapore which placed third.

Japan and South Korea tied at first place.

Other economies ahead of the Philippines were Hong Kong, Taiwan, the United States and China.

The Philippines improved in two out of three pillars tracked by the index.

In the economic pillar, the Philippines was among the biggest movers as it improved to ninth place from 15th in 2018.

While the Philippines’ ranking in the economic pillar went up, Hinrich Foundation said it just held steady in indicators where it needs to make gains such as export market concentration (15th), trade costs (16th) and technological innovation (15th).

Other indicators covered by the economic pillar are growth in per capita gross domestic product, current account liberalization, tariff and non-tariff barriers, exchange rate volatility, financial sector

depth, foreign trade and payments risk, export product concentration, foreign direct investment, gross fixed capital formation, technological infrastructure, growth in labor force and currency manipulation.

For social pillar, the Philippines jumped to sixth place from 11th in 2018.

Hinrich Foundation said while the volume of goods produced by forced labor is relatively low, there is little gender discrimination in hiring and the right to association is high in the Philippines, the list of goods produced by child labor is long and varied, ranging from fruits and vegetables, rice and meat, precious metals and manufactured goods.

“That needs to change, and not just for sustainable trade,” Hinrich Foundation said.

Indicators covered by social pillar are inequality, educational attainment, labor standards, political stability, and human trafficking.

In terms of environmental pillar, the Philippines declined to ninth place from sixth in 2018.

The environmental pillar looks at indicators such as air pollution, deforestation, water pollution, environmental standards in trade, transfer emission, share of natural resources in trade and carbon pricing.

Stephen Olson, research fellow at Hinrich Foundation, said the coronavirus disease 2019 pandemic is a reminder of why the principles of sustainable trade are so critical.

“Sustainable trade is all about striking a balance between the pursuit of economic efficiencies and economic gains on the one hand and the need to strengthen social capital and environmental stewardship. The coronavirus disease pandemic has shined a very bright spotlight on the fact many countries are not doing a good enough job in attempting to strike that balance and the pendulum appears to have swung a little bit too far in the direction of economic efficiencies and economic gains at the expense of social capital and environmentalism,” he said.

He said he is hopeful the index could be used by the different economies to look at what works and what they can apply.