The Philippines climbed four places to rank 46th out of 63 economies in the IMD World Competitiveness Rankings 2019.
Trade Secretary Ramon Lopez said the improvement in the country’s ranking was a precursor to more positive results from other competitiveness surveys.
“For the past year, the entire government—executive, legislative, judiciary —has been working as one to promote national and regional competitiveness. With the latest results of the IMD competitiveness rankings, we underscore the initial outcomes from this whole of government approach and increased private-public sector collaboration,” Lopez said.
The International Institute for Management Development, a Swiss business school, said the Philippines improved from its 2018 ranking of 50th, on the back of fast economic growth and expanding labor force.
It said the gross domestic product of the Philippines grew 6.2 percent in 2018 to reach $330.8 billion. The country’s GDP (PPP) per capita amounted to $8,936.
The Philippines recorded significant improvements on all four indicators measured in the report. Its ranking on economic performance rose 12 notches from 50th to 38th; government efficiency, up 3 notches from 44th to 41st; business efficiency, up 6 notches from 38th to 32nd; and infrastructure, up 1 notch from 60th to 59th.
The report also noted upgrades in government budget surplus/deficit; effective personal income tax rate; gross fixed capital formation – real growth; tourism receipts and protectionism.
It showed, however, that the country suffered declines in the current account balance; consumer price inflation; collected total tax revenues; compensation levels; and exchange rate stability.
The country received lower rankings on indicators such as basic infrastructure (61st), health and environment (56th), education (58th), scientific infrastructure (59th), business legislation (54th) and international trade (54th).
Economists regard competitiveness as vital for the long-term health of an economy as it empowers businesses to achieve sustainable growth, generates jobs and enhances the welfare of citizens.
The IMD report, established in 1989, incorporates 235 indicators such as unemployment, GDP and government spending on health and education and data from an executive opinion survey covering topics such as social cohesion, globalization and corruption. The ranking was based on four categories—economic performance, infrastructure, government efficiency and business efficiency.
IMD said the Philippines faces five major challenges in 2019, including the need to speed up and sustain investments in physical infrastructure; inadequate investment in human capital; poor digital competitiveness and future-readiness; need to sustain investor and consumer confidence and persistent political risks.
Lopez said the government would continue to be more aggressive in its efforts to improve competitiveness and ease of doing business. He said that competitiveness and ease of doing business are top priorities in the socio-economic agenda of the government.
“We are changing the way the government is providing public services—such as streamlining and automating licensing procedures. Our ‘Build, Build, Build’ program is currently on track. We are gearing up our industries, enterprises and the government to maximize the opportunities of the digital economy combined with a huge domestic market of the Philippines,” Lopez said.
Singapore topped the global competitiveness ranking, followed by Hong Kong and the United States while Venezuela was at the bottom of the list.
Among Southeast Asian economies, the Philippines ranked behind Singapore (first), Malaysia (22nd), Thailand (25th) and Indonesia (32nd).
Indonesia jumped eleven places to 32nd, enjoying the region’s biggest improvement while Thailand, advanced five places to 25th position. Japan fell five places to 30th hampered by a sluggish economy, government debt and a weakening business environment.
IMD said the Asia-Pacific region emerged as a beacon for competitiveness, with 11 out of 14 economies either improving or holding their ground, led by Singapore and Hong Kong.
IMD said the United States slipped from the top spot, while economic uncertainty took its toll on conditions in Europe.
IMD said the effects of rising fuel prices influenced the ranking, with inflation reducing competitiveness in some countries.
Venezuela was at the bottom of the ranking, hit by inflation, poor access to credit and a weak economy.
Singapore’s rise to the top was driven by its advanced technological infrastructure, the availability of skilled labor, favorable immigration laws and efficient ways to set up new businesses. Hong Kong held on to second place, helped by a benign tax and business policy environment and access to business finance.
“In a year of high uncertainty in global markets due to rapid changes in the international political landscape as well as trade relations, the quality of institutions seem to be the unifying element for increasing prosperity. A strong institutional framework provides the stability for business to invest and innovate, ensuring a higher quality of life for citizens,” said IMD Prof. Arturo Bris who is also the director of IMD World Competitiveness Center.