Infrastructure, unemployment remain country’s top challenges

Except for infrastructure, the Philippines has improved in the three other measures of competitiveness - economic performance, government efficiency and business efficiency, in the latest World Competitiveness Yearbook (WCY).

The Philippines moved up 5 places in the latest International Institute for Management Development's (IMD) World Competitiveness Report from No. 43 in 2012 to No. 38 in 2013. A total of 60 economies around the world were reviewed for the 2013 report.

Based on the country report under the 2013 WCY, infrastructure is the only factor where the Philippines experienced a decline -from 55th to 57th. Overall,

"Many roads remain unpaved and the main airport is operating beyond capacity," said the report. Other challenges in 2013 faced by the Philippines are corruption, unemployment, undeveloped financial system and natural disasters.

On corruption, the report noted that the Philippines ranked 105th of the 174 country by Transparency Institutional. On unemployment, the Philippines is among the highest of the ASEAN 5 group. The country has also an undeveloped financial system and access to finance making access to finance one of the greatest challenges facing SMEs. Natural disasters also affect the country's competitiveness as the average 20 typhoon visits annually cause billions of damages.

The highest improvement was posted in economic performance, which improved 11 places to 31st from 42nd. This is backed by the 6.6 percent real GDP growth in 2012, the second highest in WCY, controlled inflation of 3.2 percent, and an 8.8 percent increase in exports of goods and services.

Government efficiency hardly moved but improved from 32nd to 31st. Although total tax revenues increased by 13.2 percent, budget deficit increased from P197.8 billion in 2011 to P242.8 billion in 2012. The debt-to-GDP ratio of 51.4 percent in 2012 is slightly higher than the 50.9 percent in 2011.

Business efficiency improved seven places from 26th to 19th, mostly because of the soaring stock market.

Other big improvements in the 15 criteria set by the WCY are on the country's image abroad or branding, investment in telecommunications, direct investment flows, social cohesion, government subsidies, consumer price inflation, interest rate spread, protectionism, researchers and scientists.

The Philippines, however, has to improve in 15 other areas where it posted the biggest declines. These are on real short-term interest rate, high-tech exports, employer's social security contribution rate, water transportation, government budget, relocation threats of production, direct investment stocks abroad, communications technology, current account balance, state ownership of enterprises, foreign investors, employe training, social responsibility, investment risk and start-up procedures.

In terms of the most attractive key indicators, the Philippines ranked high in skilled workforce with 89 percent of respondents followed by high educational level with 67.1 percent and dynamism of the economy with 61.6 percent.

The Philippines also ranked high for open and positive attitudes with 56.2 percent, cost competitiveness with 53.4 percent, quality of corporate governance with 27.4 percent and competency of government with 23.3 percent.

The areas where the Philippines ranked lowest are on effective legal environment, strong research and development culture, competitive tax regime, reliable infrastructure, effective labor relations, policy stability and predictability, access to financing and business-friendly environment.

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