A laggard in the race

With the slew of so many structural reforms aimed at increasing the international competitiveness of our country’s goods and services, the Philippines still lagged and even fell from the ranking of attractiveness in the global investment market. Despite remarkable improvements in its economic performance, the Philippines dropped four rungs in this year’s World Competitiveness Yearbook (WCY).

Denmark ranked as the top competitive economy in the 2023 WCY rankings. This was followed by Ireland ranking second and Switzerland ranking third. In the Asia-Pacific region, the top three most competitive economies are Singapore (4th), Taiwan (6th), and Hong Kong (7th).

These were based from the results of the 2023 WCY assessments done by the International Institute of Management Development (IMD). In the IMD’s WCY, the Philippines ranked a dismal 52nd out of 64 economies. However, the Philippines surged 13 notches higher in the economic performance factor ranking 40th from 53rd last year.

Among the sub-factors under the economic performance factor that saw improvements include domestic economy (from 48th in 2022 to 30th in 2023); employment (from 19th in 2022 to 9th in 2023); and prices (from 58th in 2022 to 39th in 2023). The years in review coincided with the government pump priming during the immediate administration of President Rodrigo Duterte to get the country out of the economic slowdown due to the impact of the COVID-19 pandemic.

The worst part of this WCY report showed the Philippines’ competitiveness ranking sharply declined in three out of the four main factors, or dimensions of competitiveness. The infrastructure, government, and business efficiency factors notably, supposedly pulled down the country’s competitiveness.

This is lower than its 48th position in last year’s competitiveness ranking. The country posted its largest decline in the government efficiency factor dropping four steps to 52nd from 48th in the previous year.

Likewise, the Philippines posted declines in all the sub-factors under government efficiency that included public finance (from 51st in 2022 to 55th in 2023); tax policy (from 13th in 2022 to 14th in 2023); institutional framework (from 53rd in 2022 to 56th in 2023); business legislation (from 52nd in 2022 to 57th in 2023); and, societal framework (from 50th in 2022 to 53rd in 2023). The country also posted a decline in the business efficiency factor ranking 40th from 39th, as well as the infrastructure factor to 58th from 57th in the previous year.

Ironically, many of these structural reforms were embedded in so many laws approved by our own Congress in most recent years.

Apparently, the effectiveness of these structural reform laws got gauged on the basis of perceptions or opinions.

For sure, it would surely not sit well for our lawmakers who have passionately pushed landmark structural reform bills that went through the gauntlet of Congress before being passed into law. What say you, Albay Rep.Joey Salceda, regarded as the resident economist at the House of Representatives, who shepherded many of these tax and fiscal reform laws from the TRAIN Law to CREATE, Public Service Act, etc?

What is this IMD that ranked the “business legislation” done by our Congress?

From Google search, it says the IMD is an independent academic institution with Swiss roots and global reach, founded over 75 years ago by business leaders for business leaders. It is a private business graduate school in Lausanne, Switzerland that specializes in executive education and offer open enrollment programs for senior executives of companies. The IMD’s Philippine partner institute is the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness that produced this year’s WCY.

The IMD’s WCY ranked economies using 255 rated criteria that are spread across on these four competitiveness factors. A total of 162 of the indicators are based on hard data gathered from national sources. Presumably, in our country’s case, the data should come from our National Economic Development Authority (NEDA) and the Philippine Statistics Authority (PSA), among the official sources that can be accessed by the public.

The rest of the WCY data, according to them, are perception-based indicators derived from an Executive Opinion Survey (EOS) of mid- and upper-level managers in each country covered but did not identify the survey takers.

Various businessmen’s organizations here in our country conduct their own respective perception/opinion surveys such as the Makati Business Club (MBC); the Management Association of the Philippines; the Philippine Chamber of Commerce and Industry (PCCI); just to name some. Even foreign chambers, do engage their own opinion polling among its members composed of the chief executive officers (CEOs) of various multinational companies operating here in the Philippines.

We also have a number of professional opinion pollsters, mostly catering to politics-driven, especially those that are commissioned, or paid for by the party that supply the specific questions to be asked. But they also do their own non-commissioned opinion surveys that they either share freely – or not – to media. Even marketing pollsters offer the same opinion survey taking for specific new or improved products they wish to sell to targeted population.

In the Philippines, the most popular polling firms include the likes of the Social Weather Station (SWS); the Pulse Asia; and lately the OCTA Research. The SWS pioneered the conduct of opinion surveys on trust and performance satisfaction rating of government officials in our country. The SWS, along with Pulse and OCTA expanded their survey topics to include self-rated hunger and self-rated poverty; perceptions about the quality of life and the economy; joblessness, etc. on regular basis.

But before the bars of public opinion surveys in the international business community, the Philippines remains a laggard in the competitiveness race. That is what the IMD survey says.