Philippine global competitiveness

August 30, 2011 at 11:51

This is a re-posted opinion piece.

On the challenges of global economic competitiveness, i.e., being the kind of country (or city) that attracts investments, we lag behind many of our Southeast Asian neighbors in practically all measures. For some time now we have been part of a Global Competitiveness Survey coordinated by the Switzerland-based IMD, with the Asian Institute of Management’s (AIM) Policy Center as the Philippine cooperating organization.

The survey as it is applied in the country looks at a cluster of seven sets of factors that drive competitiveness. These are:

1. The cost of doing business: Businesses will want to locate in places where they can make money. While they look at the market potential of any place, they also look at the cost of doing business in such a place. In the case of cities, they will want to know how much it will cost to locate in one city versus another. Clearly, between two places of similar populations and population characteristics, they are more likely to locate in the place where the operating costs — land/lease/rents, labor, telecommunications, water power and other operating costs — are lower.

2. The dynamism of the local economy: This is a fundamental to attracting investments. A small but vibrant economy with great prospects for growth is likely to attract businesses more than a bigger but now sluggish community with no immediate prospect of being invigorated.

3. Linkages and accessibility: This is one of the most significant determinants of competitiveness. When a country or a city can be seen as part of a network of countries (hence the attempt at establishing growth poles like BIMP-EAGA) or cities (the metropolitan areas of Manila, Cebu, and Davao which cover more than the host city the area is named after) or such areas as Calabarzon, it becomes more attractive because they represent larger potential markets, possibly bigger sources of raw materials and other production or service inputs and may already have the necessary network of government and business support services. Areas that have good multi-nodal and global transport links prove to be highly attractive.

4. Human resources and training: Investors look for places where there are human resources in the right quantity and quality. They also look at whether the place or places have the needed network of education and training institutions, to ensure the supply of appropriate manpower not only now but also in the future. For technology-driven companies, adequate research capabilities resident in these institutions will be at the very least a plus. In some instances, it will be a “must.”

5. Infrastructure: This will include both hard and soft infrastructure. The former will include the right kind of roads, bridges, airports, seaports, telecommunications (especially global IT connections), and other technological infrastructure. It will include the quantity and quality of mass media available, the presence of desired health services, schools and universities, and entertainment and amusement outlets.

6. The responsiveness of local government units to the needs of business: Some places are more business friendly than others. Many local governments encourage businesses to come and invest by making the process very easy for them and not subjecting them to what may be kindly called “extra-legal” fees and levies. Many places like Hong Kong and Singapore ensure that the government agencies remain sensitive to the evolving realities of business competition and constantly adjust their legal framework to make their states hospitable to investors and locators.

7. “Quality of Life”: This measure is difficult to pin down, but it addresses the question, “How is this place like, not only as a place to do business in but as a place for families to live?” It is almost a composite of most of the other drivers earlier mentioned. Yet it is increasingly important as an attractor. The prestigious international magazine MONOCLE has its annual ratings of the world’s most livable cities. It is not a coincidence that many of the cities cited by MONOCLE are also prime investor destinations.

In this last driver, the quality of the ecology is a primary consideration. How “green” and place is, and the relative absence of the physical and social ills of modernization are some of the indicators.

All of these seven clusters are, to be sure, complex. Each of them has at least seven qualitative and quantitative components to measure. Some have as many as 14. Many of the components present us with moving targets as a function of evolving market dynamics and market preferences.

Where do we expect to find the Philippines in all these? It is a sad commentary that we seem to be unable to take off as some of our neighbors like Vietnam have. In fact, it may overtake us sooner than we think. Already Indonesia is ahead of us. Thailand, Singapore, and Malaysia left us behind long ago.

A quick look at our infrastructure, starting with our airports and seaports and the road network tells us already how far behind we are. It does not help that we have not made as deep an inroad in our anti-corruption programs as we would want, if the thousands of missing container vans are the right indicator.

The litany of weaknesses can be discouraging. We have a globally competitive seaport in Batangas City that seems unable to take off because there does not seem to be good coordination between national and local governments. Our power generating and distribution infrastructure provides expensive and still unreliable power compared to those of our neighbors.

Our school system has deteriorated from Asia’s paragon to the laggard in Asia, save for a few outstanding schools that unfortunately serve no more than a few percent of the population. And to add further injury, many of the graduates of these institutions are often ahead in the emigration lines.

Still, there is the hope that because the measures, imperfect as they are, do provide us with the needed list of actions to take, that sooner rather than later, we shall see business and industry on one side, the government — nation, regional, and local — on another side, and academe on another, finally converging to work, together with select communities, to pilot working arrangements that will serve as the template for how we can bring the country up one city at a time, one zone at time, in a tempo that will increase in speed as we learn valuable lessons.

To achieve this, we shall need political will, and changes of hearts and minds, the kind of changes that allow us to finally make real the slogan of the National Competitiveness Council that goes, “We have already been able to say, Magaling ang PILIPINO! Now, let us work to ensure that soon, we will be able to say, MAGALING ANG PILIPINAS!”
By: Mario Antonio G. Lopez – To Take A Stand
Source: Business World, Aug. 29, 2011
To view the original article, click here.

  All rights to the stock images are owned by Getty Images and its image partners and are protected by United States copyright laws, international treaty provisions and other applicable laws.
Getty Images and its image partners retain all rights and are available for purchase by visiting gettyimages website.

Arangkada Philippines: A Business Perspective — Move Twice As Fast | Joint Foreign Chambers of the Philippines