Better than expected economic expansion and an improved image moved the Philippines up five notches to 40th place in a yearly ranking of 55 economies based on competitiveness, the country’s best performance since joining the listing over a decade ago.

Philippine scores rose across the board - economic performance, government efficiency, business efficiency, and infrastructure – with the robust domestic economy and improved state finances being the main factors for the country’s improved ranking, said Ronald A. Rodriguez of the Asian Institute of Management (AIM) Policy Center, the IMD’s local partner for the yearly report. The Philippines was in fact given credit for improved tax collections, which has led to a surge in infrastructure spending, Rodriguez stressed.

“Policies have become more predictable, and the impression by the business sector is that the government can now manage the economy better,” Rodriguez said.

The domestic economy grew by 7.3% last year, the fastest in 31 years, while the government achieved the narrowest budget deficit in ten years at P9.4 billion, or only 0.1% of gross domestic product. This year, the government is set on balancing the budget although economic growth will obviously be tempered by a US-led global slowdown.

The 20th edition of the yearly ranking by Europe’s top business school, the Institute for Management Development (IMD) in Switzerland, saw all Southeast Asian countries on the list improving their rankings. The Philippines surpassed countries such as Italy, Russia, and Greece but still lagged behind regional neighbors Thailand and Malaysia and economic powerhouses India and China. Indonesia lagged behind the Philippines although another regional peer, Vietnam, was not included in the ranking.

The World Competitiveness Yearbook is focused mainly on hard data, with two-thirds of indicators from international, regional, and national sources. A third of data is based on perception, through an opinion survey of expatriate and local managers.
Sergio R. Ortiz-Luis, Jr. head of the Philippine Exporters’ Confederation, agreed that the government had made headway in terms of infrastructure.

Examples are the opening of the Subic-Clark-Tarlac Expressway, the country’s longest tollway which connects two major economic zones in Luzon, and the “nautical highway” of roll-on, roll-off ports.

The Philippines’ goal is to make it to the upper third of the rankings by 2010, and the public-private sector National Competitiveness Council was created in 2006 to map out and undertake an action program responsive to such an objective by focusing on six action areas: Competitive Human Resources, Efficient Public and Private Sector Management, Effective Access to Financing, Improved Transaction Flows and Costs, Seamless Infrastructure Network and Energy Cost Effectiveness and Self-Sufficiency.

“We are just barely scratching the surface and yet we have already produced results,” noted Mr. Ortiz-Luis, one of the task force’s “private sector champions.”