The National Competitiveness Council is pleased to report that for the third year in a row, the Philippines has moved up the roster of competitive economies. In The Global Competitiveness Report 2013-2014 of the World Economic Forum released earlier today, the country was ranked 59^th of 148 economies, up six places from last year for a total gain of 26 places from 85^th in 2010.

The Global Competitiveness Report is an annual publication that measures productivity and competitiveness by gathering statistical and survey data on over 100 factors grouped into 12 pillars. The Philippines boosted its rankings in nine of the 12 pillars. The key drivers are innovation (up 25, from 94^th to 69^th); institutions (up 15, from 94^th to 79^th); and financial market development (up 10, from 58^th to 48^th). The rest were goods market efficiency (up 4, from 86^th to 82^nd); labor market efficiency (up 3, from 103^rd to 100^th); infrastructure (up 2, from 98^th to 96^th); health and primary education (up 2, from 98^th to 96^th); technological readiness (up 2, from 79^th to 77^th); and market size (up 2, from 35^th to 33^rd).

Similar to the previous report, the country recorded big jumps on institutions, which studies the legal and administrative environment and covers government attitudes and efficiency. The local legal system is now perceived to be more efficient in settling disputes for private businesses (107^th to 76^th). It is also perceived to be easier to challenge government actions through the legal system (102^nd to 71^st).  Government is also perceived to be more efficient in spending public revenue (86^th to 63^rd) and the diversion of public funds due to corruption is now perceived to occur less often (100^th to 79^th).

On the other hand, macroeconomic environment, which was one of the key drivers last year (54^th to 36^th), eased back four spots from 36^th to 40^th. The country also dropped three spots on higher education and training (64^th to 67^th). Declines were recorded in government budget balance (36^th to 42^nd) and gross national savings (47^th to 59^th) as percentage of GDP. Inadequate supply of infrastructure, corruption, and inefficient government bureaucracy were listed as the top three most problematic factors for doing business.

The WEF report named the Philippines as one of “the most dynamic and rapidly improving economies in terms of competitiveness”. It is ranked 6^th out of 10 in the ASEAN and has now overtaken India. While the report recognized that the country still has a lot of ground to cover since it started from a low base, it also stated that “the recent successes of the government in tackling some of the most pressing structural issues are encouraging and proof that bold reforms and measures can yield positive results.” As the country inches closer to the top third of the overall rankings, the pressure is on to sustain development and continue increasing the rate of development.

HIGHLIGHTS OF RESULTS

• The Philippines improved its overall ranking by 6 notches from 65^th out of 144 economies in 2012 to 59^th out of 148 economies in 2013. We are now up 26 positions since 2010 and within the top 40% in the world. Our goal is to get to the top-third in the next two years.

• The Philippines is ranked No. 6 in ASEAN following the addition of Laos (81^st) and Myanmar (139^th) to the list this year. Singapore maintained its previous world ranking of No. 2. Apart from Cambodia which dropped 3 notches from 85^th to 88^th, all the others in ASEAN improved in their rankings. Indonesia is the biggest gainer, rising 12 notches from 46^th to 38^th.

• OUR KEY DRIVERS
• Innovation – #69 (+25 from #94)
  • Capacity for innovation – #48 (+38 from #86)
  • Government procurement of advanced tech products – #85 (+22 from #107)

• Institutions – #79 (+15 from #94)
  • This category is defined as the legal and administrative framework within which individuals, firms, and governments interact to generate wealth. It is the key measure of Governance in the report.
  • Diversion of public funds – #79 (+21 from #100) – indicating less diversion of funds.
  • Wastefulness of government spending – #63 (+23 from #86) – indicating less wastefulness of government spending.
  • Efficiency of legal framework in settling disputes – #76 (+31 from #107)
  • Efficiency of legal framework in challenging regulations – #71 (+31 from #102)

• Financial market development – #48 (+10 from  #58)
  • Availability of financial services – #40 (+10 from #50)
  • Venture capital availability – #40 (+22 from #62)

• NEGLIBLE CHANGE

• Macroeconomic environment - #40 (-4 from #36)

From a sharp rise from #68 in 2010 to #36 in 2012, the ranking eased back to #40 in 2013. Unusually, the country’s ranking for government budget balance (-6), gross national savings as a percentage of GDP (-12), and country credit rating (no change) were negative. One explanation could be that improvements such as credit rating upgrades occurred after the data collection period.

• Goods market efficiency – #82 (+4 from #86)

Although the ranking for Goods market Efficiency marginally improved, problems persisted in the area of intensity of local competition (-13), ease of doing business (-8), business impact of rules on FDI (-17), imports as a percentage of GDP (-23), and agricultural policy costs (-4).

• Labor market efficiency – #100 (+3 from #103)

While we continue to make modest gains in Labor Market Efficiency, we continue to struggle with hiring and firing practices (-9) and redundancy costs (-4).

• Infrastructure – #96 (+2 from #98)

The quality of overall infrastructure (#98) and road infrastructure (#87) has retained its ranking from last year while air transport infrastructure has dropped from #112 to #113. Port infrastructure has risen from #120 to #116 but still remains low.

• Health and primary education – #96 (+2 from #98)

In spite of the minimal improvement in ranking, country rankings for malaria (-2 to #97), tuberculosis (-4 to #130), business impact of HIV/AIDS (-6 to #89), and life expectancy (-2 to #104) all dropped. In the area of primary education, the rank for enrollment dropped to #108 from #101. Our early analysis of data sources indicates that information used from international sources may be dated.

• Technological readiness – #77 (+2 from #79)

Gains on the technology front have been modest. However, we have dropped in rank in FDI and technology transfer (-2), broadband internet subscriptions (-6), international internet bandwidth (-10), and mobile broadband subscriptions (-11).

• Market size – #33 (+2 from #35)

• KEY CONSTRAINTS

Out of 114 indicators, the Philippines now has 56 indicators ranked 73^rd or higher (at the upper half of world rankings). Only 7 are at the bottom 20%.

• Business costs of terrorism – #124
• Tuberculosis cases/100,000 pop – #130
• Number of procedures to start a business – #145
• Number of days to start a business – #118
• Burden of customs procedures – #130
• Imports as a percentage of GDP – #120
• Redundancy costs, weeks of salary – #124