PH digital competitiveness drops

The Philippines' digital competitiveness has fallen for a second straight year based on an annual ranking released on Thursday by Switzerland's Institute for Management Development (IMD).

The country was 61st out of 67 economies in the 2024 list, produced by the IMD's World Competitiveness Center (WCC). This was down from 59th last year when it lost three spots from 56th in 2022.

It was next to last among 14 Asia-Pacific countries, unchanged since 2020, and 25th among 30 economies with populations of more than 20 million, also the same as last year.

Singapore continued to lead the list while the United States experienced a three-place drop to fourth. Switzerland and Denmark took second and third, respectively.

Singapore's top ranking was said to reflect its advanced city management, prolific high-tech patent grants, and robust banking and financial sectors.

Switzerland, meanwhile, improved in terms of high-tech exports and cybersecurity, and Denmark was strong in the areas of employee training, e-governance and secure internet servers.

In contrast, the US saw declines in its attitude to globalization, international managerial experience and increasing fears of failure among entrepreneurs.

The IMD ranking measures digital competitiveness using three main factors — knowledge, technology and future readiness — and the Philippines lost places with regard to the first two.

It was 64th in terms of knowledge, 56th in terms of technology — down from last year's 59th and 63rd, respectively. It edged up, however, to 58th from 59th in the area of future readiness.

Broken down further, the Philippines' rankings also slipped with regard to sub-factors under the three main categories.

It fell to 60th from 56th in terms of talent, 61st from 58th in scientific concentration, and remained 62nd in training and education — all under the knowledge pillar.

Sub-factor rankings under technology all fell: 66th from 63rd for regulatory framework, 45th from 41st for capital and 53rd from 43rd in the area of technological framework.

Improvements, however, came in the future readiness sub-factors of adaptive attitudes (52nd from 59th) and IT integration, 58th from 60th, although a drip to 54th from 50th was seen in the area of business agility.

There were some bright spots for the country: it was second overall in terms of female researchers (under scientific concentration) and high-tech exports (technological framework).

It was 22nd with regard to science graduates (training and education), 9th in telecommunication invest ments (capital), and 19th in flexibility and adaptability (adaptive attitudes).

The biggest weaknesses, meanwhile, were in the areas of artificial intelligence (AI) articles (66th, scientific concentration), secure internet servers and communications technology (64th and 66th, respectively, under technological framework), and starting a business and enforcing contracts (65th and 64th, regulatory framework).

The country's main challenges, according to IMD partner the Rizalino Navarro Policy Center for Competitiveness of the Asian Institute of Management, are:

– sustaining job-generating investments;

– ensuring food security to temper inflation and keep prices affordable;

– addressing learning gaps to improve the education system;

– building sustainable infrastructure to reduce climate change vulnerability; and

– resolving the Philippines' territorial rights to the West Philippine Sea diplomatically and peacefully.

Jose Caballero, senior economist at the WCC, said that geopolitical rivalries — particularly between the US and China — were fragmenting the global digital landscape.

Geopolitical tensions have also become a defining feature in shaping digital competitiveness, the IMD said.

Economies, the business school said, will have to grapple with the pace of technological change and capability requirements.

Countries that effectively exploit the power of new technologies such as AI, blockchain and quantum computing, it added, "are likely to enhance their digital competitive advantage, leading to sustained economic growth, improved productivity and greater global influence.

Source: Manila Times

PHL competitiveness to depend on pace of infra upgrades

The Philippines’ ambitions for attracting investment will hinge on improvements to its digital and physical infrastructure, according to the Asian Institute of Management’s (AIM) competitiveness policy center.

Jamil Paolo S. Francisco, executive director of the AIM Rizalino S. Navarro Policy Center for Competitiveness, said that the Philippines will have to do better in indicators like annual global competitiveness rankings, parts of which measure infrastructure quality.

Asked for his recommendations, he said: “I guess the most basic one is really infrastructure. Not just physical infrastructure, but also digital and human infrastructure.”

“We are lagging there. So, we have to make it faster, and we have to do more,” he added.

Citing the 2024 World Competitiveness Ranking (WCR) by Switzerland’s International Institute for Management Development, he said infrastructure can be classified into four parts: basic, human, scientific, and social.

The index placed the Philippines 52nd out of 67 economies, retaining its spot from last year. In terms of the components of the rankings, the country ranked the lowest in infrastructure at 61st, down from 58th last year.

“10 or 15 years ago, there was already a long list of things we had to check in the infrastructure pillar,” said Mr. Francisco. “Now, it not only involves hardware but also software.”

He said that previously, the Philippines had to deal with basic infrastructure like roads and bridges, but now the country has to also build the digital infrastructure needed to facilitate e-commerce, among others.

“So, the list that we have to fulfill just keeps getting longer. Unfortunately, we’re still lagging on that long list,” he added.

In the 2024 WCR, the Philippines ranked 62nd in basic infrastructure, 55th in technological infrastructure, and 60th in scientific infrastructure.

“If we fare low in these indicators, then we are not as competitive. Because increasingly, remember, it’s a perception game.”

He said that investors will also weigh these factors when choosing the countries they will be investing in.

Citing cybersecurity as an example, he said that it is a component of the technological infrastructure pillar, in which the Philippines ranked 58th.

“Unfortunately, maybe in the Philippines, we haven’t been able to prioritize cybersecurity, and we are just still trying to address it,” Mr. Franscisco said.

“In other countries, they are more advanced in terms of their awareness and their appreciation of the need to address it, and investors will expect that of countries where they invest, and so if we fare low there, then we are perceived as less competitive,” he added.

Besides improving infrastructure, he said that the Philippines will also have to work on the “right messaging.”

“We keep saying that competitiveness rankings are partly based on perception surveys, and that’s important because, as an investor, you make a decision based on data. But you also make a decision based on gut feel and your perception of a country,” he said.

“So, we need to do an even better job of communicating clearly why it makes sense to do this in the Philippines. Communicating our commitment to reform, to the promises that we’ve made, to investments in basic infrastructure, and whatnot,” he added.

Source: Business World

PH competitiveness unchanged

The Philippines saw its ranking in an annual global competitiveness report remain unchanged and continued to be one of the laggards in the Asia-Pacific region amid a drop in business efficiency.

In its 2024 World Competitiveness Ranking (WCR) by the Switzerland-based International Institute for Management Development (IMD), the Philippines ranked 52nd out of 67 economies, unchanged from last year.

It also marked the seventh year that the Philippines remained in 13th place out of the 14 Asia-Pacific economies included in the report.

Singapore topped this year’s list, followed by Switzerland, Denmark, Ireland and Hong Kong.

This year, the index expanded its scope to include Ghana, Nigeria and Puerto Rico. In 2023, there were only 64 economies covered by the index.

IMD ranked the economies using 336 indicators spread across four competitiveness factors: economic performance, government efficiency, business efficiency, and infrastructure.

José Caballero, senior economist at the IMD World Competitiveness Center, said that the factors that have diminished the Philippines’ competitiveness this year are related to government and business efficiency.

Mr. Caballero said that the country saw a decline in measures of business legislation such as the protection of foreign investors (65th), the transparency of public sector contracts (56th), the impact of state-owned enterprises (46th), and new business density (62nd).

Asian Institute of Management (AIM) Rizalino S. Navarro Policy Center for Competitiveness Executive Director Jamil Paolo S. Francisco said the Philippines remained in 52nd place despite a decline in two factors — business efficiency and infrastructure.

The Philippines fell three spots to 43rd on business efficiency this year from 40th in 2023. Significant declines were seen in labor market, finance, management practices, and attitudes and values.

“The drop in business efficiency is particularly worrisome because this was a factor that the Philippines performed relatively well at 10 years ago, and we have observed a steady decline in this factor since 2019,” Mr. Francisco said in an e-mailed statement.

For the infrastructure factor, the Philippines slipped three places to 61st in 2024 from 58th last year. This as challenges persist in basic infrastructure, technological infrastructure and education.

Mr. Francisco said that the country’s drop in the infrastructure factor was a concern, as this has been the Philippines’ weakest area for a very long time.

“This is also worrisome because this means we are really lagging behind in terms of providing the physical, human, technological, and social infrastructure needed by private enterprises to generate employment and create business value,” he added.

The Philippines maintained its 40th rank on economic performance, while it climbed three spots to 49th on government efficiency.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said the country should address basic and transport infrastructure in order to be competitive.

“When you want to be competitive, especially in the industry and service side, you need to have some of the basic infrastructure, such as availability of quality and affordable power,” Mr. Barcelon said in a phone interview.

“The other one is the availability of mobility or connectivity like roads, seaports, airports, and main corridors for the agriculture sector, which we don’t have,” he added.

The government should also address the decline in the skills of the country’s workforce.

“We are not giving them the proper tools… The technology that’s required now for higher value-added jobs requires more, such as in information technology and in the fourth industrial revolution,” Mr. Barcelon said. “There are some shortcomings in that. But that can be easily addressed if we beef up more specific or targeted skill sets for certain industries.”

According to IMD, the Philippines was less competitive in the areas of business legislation (60th), basic infrastructure (62nd), and education (63rd).

“In 2024, the Philippines faces significant challenges, including revitalizing economic dynamism and growth trajectory, managing inflation expectations, building sustainable physical, social, and technological infrastructure to improve productivity and reduce vulnerabilities, and addressing territorial disputes in the West Philippine Sea to mitigate economic disruptions,” the AIM center said.

Meanwhile, the Management Association of the Philippines (MAP) views the country’s unchanged competitiveness ranking as both good news and a challenge.

“Infrastructure is a major consideration, so we all understand our rank, knowing the need to improve our infrastructure, which the administration of President Marcos is working on,” said MAP President Rene D. Almendras in a Viber message.

“The other consideration is labor productivity, which is a function of the education and development of the Filipino workforce,” he added.

Meanwhile, the National Economic Development Authority (NEDA) and the Anti-Red Tape Authority (ARTA) are hopeful that the country will improve its ranking next year as the government ramps up its infrastructure projects.

“With the strict implementation of this Executive Order No. 59 as well as related government programs, we expect our ranking to improve next year,” ARTA Secretary Ernesto V. Perez said.

On Tuesday, ARTA launched the implementing guidelines of EO 59, which aim to streamline the permitting process for the government’s infrastructure flagship projects.

“Hopefully, with the full implementation of EO 59, we could notch a bit higher in the next round. In addition to permitting and processes, I think what is also included are right-of-way (ROW) issues,” said NEDA Undersecretary Joseph J. Capuno.

He said that these issues could be addressed by the ROW bill, which is one of the priority bills of Frederick D. Go, the special assistant to the President in charge of investment and economic affairs.

For Foundation for Economic Freedom President Calixto V. Chikiamco, the Philippines will be able to achieve a better ranking in the world competitiveness index if it removes protectionism, especially in relation to agricultural products.

“Protecting the agriculture sector signals no need to improve competitiveness and productivity,” said Mr. Chikiamco in a Viber message.

He added that the country must forge more bilateral free trade agreements, amend the Labor Code, improve education, and reduce bureaucratic regulations, especially in the grant of mining concessions.

According to IMD’s Mr. Caballero, economies that reach high levels of competitiveness have focused on strengthening their public and private institutions, entrepreneurship, and innovative capabilities.

For the Philippines, he said that the country must strengthen its education system to “facilitate the effectiveness of talent development,” as it will also ensure alignment between the country’s available talent and socioeconomic objectives.

In the report, the country ranked 55th in total public expenditure on education, 60th in the quality of primary education, and 63rd in secondary education in terms of pupil-teacher ratio.

“Furthermore, the Philippines’ performance in research and development is feeble,” he added, citing that the country ranked deficiently in all measures of expenditure and the total number of researchers and personnel.

Source: Business World