Business World, 2 June 2015


Philippine authorities boast that the Philippines is the fastest growing country in ASEAN-5. True, but the reality is that it is easier to grow rapidly when one is starting from a low base. And the inconvenient truth is that the Philippines was, and remains, the poorest among its ASEAN-5 peers.

he Philippines has a long way to go before it can catch up with its ASEAN-5 peers, according to the recently released results of the IMD World Competitiveness Yearbook.

The results show that the Philippines has the worst unemployment and underemployment problem among ASEAN-5 economies. Last year, the Philippines’ unemployment rate was 6.8%, much higher than Indonesia’s 5.94%, Malaysia’s 2.9%, Singapore’s 2% and Thailand’s 0.84%.

Compared to 2014, the 2015 IMD competitiveness survey results are mixed for ASEAN-5. Indonesia (37 to 42), Malaysia (12 to 14) and Thailand (29 to 30) moved down. Singapore at 3 was unchanged while the Philippines (42 to 41) inched up slightly in ranking. But from a medium-term perspective, from 2011 to 2015, the results give a different picture: Malaysia (16 to 14) moved up while there was no change in ranking for the Philippines (41) and Singapore (3). Thailand (27 to 30) moved down, but that was because of the series of civil disturbances in the country, which led to martial rule.

In any event, the Philippines remained the poorest performing ASEAN-5 country at 41 out of 144 economies.

Studies show that the quality of public infrastructure is a major constraint to long-term, sustainable growth. In terms of overall public infrastructure and compared to 2014, the results are also mixed. Indonesia (54 to 56) and Malaysia (25 to 27) moved down. The rest — Philippines (59 to 57), Singapore (10 to 7) and Thailand — improved slightly in ranking.

But from a medium-term perspective, from 2011 to 2015, the results give a different story: Indonesia (55 to 56) moved down; Malaysia (27) and the Philippines (57) were unchanged in rank; Singapore (10 to 7) and Thailand (47 to 46) moved up in ranking.

Again, the Philippines ranked the poorest among ASEAN-5 countries in terms of overall public infrastructure.

In the Executive Opinion Survey, respondents were asked to select five that they perceived as key attractiveness factors for the economy. Below are the top five key attractiveness indicators for Singapore, a first-world economy, in percent. In parenthesis are the corresponding answers for the Philippines, a third-world country.

The incumbent President promised first-world status for the Philippines. But what does it take to reach first-world status? The stark contrast of key attractiveness indicators for Singapore and the Philippines should be instructive for both present and future policy makers:

• Policy stability and predictability, 80.5% (for the Philippines, 12.1%)
• Reliable infrastructure, 61.0% (5.6%)
• Competency of the government, 61% (7.5%)
• Business-friendly environment, 56.1% (23.4%)
• Competitive tax regime, 51.2% (4.7%)

In Singapore, 80.5% of respondents see policy stability and predictability as the most attractive factor for the economy. By contrast, only 12.1% of the respondents see that as a factor for the Philippines. By inference, a great majority of respondents find policies in the Philippines as unstable and unpredictable.

In Singapore, 60.1% of respondents identified reliable infrastructure as an attractive factor for the economy, compared to the Philippines’ 5.6%. By inference, a super majority of respondents from the Philippines opined that infrastructure in the country is deficient and unreliable.

In fact, the report cited that one the key challenges for the Philippine government this year is infrastructure development. The report concluded: “roads transportation, airports and energy supply are sub-optimal.” Given the huge infrastructure gap between the Philippines and its ASEAN-5 peers, this major challenge will preoccupy not only the outgoing Aquino administration but future administrations as well.

In Singapore, 60.1% of respondents find the competency of government as an attractive indicator for the economy. By contrast, only 7.5% of the respondents in the Philippines found it attractive. Once more, by inference, a supermajority of respondents opined that the present administration was incompetent.

A business-friendly environment is an attractive indicator for the economy, said a majority (56.1%) of respondents in Singapore. By contrast, less than one in four (23.4%) respondents in the Philippines found it an attractive indicator for the economy. By inference, a great majority of respondents opined that the Philippines is not a business-friendly country.

In Singapore, a majority (51.2%) of respondents find a competitive tax regime as an attractive indicator for its economy. By contrast, only a puny 4.7% of respondents in the Philippines found the tax regime as an attractive indicator for the economy. The harsh truth is that the existing Philippine tax system is unattractive and uncompetitive compared to its ASEAN-5 peers.

The results of the IMD world competitive survey are a grim reminder that all’s not well with the Philippine economy. Not surprisingly, it has attracted the least foreign direct investments.

Boasting that the economy’s growth in recent years is higher than its historical average has a good ring to it. But it not a guarantee that the economy might not suffer a reversal in the future unless existing problems such as policy inconsistency, unreliable infrastructure, government incompetence, an unfriendly business environment, an uncompetitive tax regime, and others are fully addressed by policy makers.

The challenges for the Philippines are formidable. To mention a few, we have severe poverty, unemployment, crumbling infrastructure, an incompetent government, and an unfriendly business regime. In order to meet these challenges, the next President should be experienced and should have a demonstrated ability to get things done. He should have the welfare of the 100 million Filipinos in mind rather than the interests of a privileged few.

He should be more of a doer than a boaster. (He can be a boaster too, why not? But he should be a doer first, boaster last).

He should be man enough to admit that he is not a one-man band, that he would need the help of competent, seasoned and honest men and women to run the affairs of government. Necessarily he should have the ability to assemble such a group of senior officials.

But, at the same time, he should be self-confident enough to empower his men to do their assigned duties and responsibilities. And with the empowerment, he should also have the will to dismiss dishonest and incompetent government officials.

Remember Ralph Waldo Emerson’s famous words: “Great men, great nations have not been boasters and buffoons, but perceivers of the terror of life and have manner themselves to face it.”