The Department of Trade and Industry (DTI) called for faster reforms to improve its competitiveness ranking in the World Economic Forum (WEF) Global Competitiveness Report. The Philippines’ score– or its distance to frontier– was relatively flat at 61.9 from 62.1, while other countries scored better and improved their ranking relative to Philippines. The WEF released its Global Competitiveness Index 4.0 (2019 edition) that showed the Philippines’ ranking drop 8 notches, from 56th to 64th out of 141 countries.

The country has to redefine its National Competitiveness Agenda consistent with the WEF indicators covering enabling environment, human capital, markets, and innovation ecosystem, as well as the 4 pillars of DTI’s Cities and Municipalities Competitiveness Index (CMCI) on economic dynamism, government efficiency, infrastructure, and resilience.

In 2018, WEF introduced a refined Global Competitiveness Index (GCI) 4.0, a ‘composite indicator’ with 98 indicators distributed across 12 pillars, namely: Institutions, Infrastructure, ICT adoption, Macroeconomic, Health, Skills, Product Market, Labour Market, Financial System Market Size, Business Dynamism, and Innovation Capability.

In the 2019 Global Competitiveness Report, the Philippines posted improvement on Pillar 1: Institutions where the survey showed an increase in rank from 101st to 87th or +14 notches. Notable was the improvement on the sub indicator “future orientation of government,” which rose from 77th to 60th. Sec. Lopez said this increase shows the significant headway made by government in terms of readiness towards digital economy and the challenges of Fourth Industrial revolution.

The impact of RA 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act, the Philippine Innovation Act, and the Innovative Start-up Act should result to even higher ranking in the succeeding cycles. We are updating the Philippine eCommerce roadmap to maximize the potential that e-commerce brings,” said Sec. Lopez.

Aside from Pillar 1: Institutions, the Philippines also improved its ranks on Pillar 7: Product Market from 60th to 52nd (+8) and Pillar 10: Market Size from 32nd to 31st (+1).

Meanwhile, The Philippines‘ ranking declined in the following pillars:

Pillar 2: Infrastructure from 92nd to 96th

Pillar 3: ICT Adoption from 67th to 88th

Pillar 4: Macroeconomic from 43rd to 55th

Pillar 5: Health from 101st to 102nd

Pillar 8: Labour Market from 36th to 39th

Pillar 9: Financial System from 39th to 43rd

Pillar 11: Business Dynamism from 39th to 44th

Pillar 12: Innovation Capability from 67th to 72nd

Reforms have to be sustained to always make the country move forward relative to others,” said Sec. Lopez.

The drop in the Philippines’ ranking on ICT adoption from 67th to 88th is expected to rebound with the implementation of the EODB Act mandating government automation in frontline services. DTI has initiated an end-to-end registration under its Business Name Registration Next Generation System, which now provides more online payment facilities for fast and efficient online government transactions.

There are also ongoing efforts to expand the online government transaction to include end-to-end processes from the Securities and Exchange Commission (SEC) to the Mayor’s permit and the Bureau of Internal Revenue (BIR) business registration.

The recent signing of our Memorandum of Agreement with Skills Future Singapore– the 2019 GCI Most Competitive Economy– is also expected to improve the quantity and quality of our skilled workforce for our priority industries,” said the Trade Secretary.

On macroeconomic stability, we expect a major improvement since inflation, after soaring last year, has been addressed by an effective combination of fiscal and monetary policy actions. This has resulted to an immediate reversal, registering at 0.9% as of September and is expected to remain low for the next 2 to 3 years,” added Sec. Lopez.

The DTI Secretary reported that he recently issued a Department Order stating the DTI Policy on National Competitiveness anchored on Regional Competitiveness. The DTI Competitiveness and Innovation Group (CIG) has been directed to develop a competitiveness agenda guided by global competitiveness indices. It also mandates the strengthening of Regional Competitiveness Committees and to use the CMCI as tool to improve competitiveness on the local level since building local competitiveness is critical to long-term national competitiveness, according to DTI.

Sec. Lopez also mentioned that DTI has turned over the monitoring of Ease of Doing Business (EODB) reforms to the newly-organized Anti-Red Tape Authority (ARTA) with the enactment of the EODB Act. “This will now allow DTI to focus on other horizontal issues to improve national competitiveness,” he added.

Moreover, Sec. Lopez said DTI has endorsed to the Office of the President a proposed Executive Order (EO) creating an Inter-Cabinet Cluster on Competitiveness (I-CCC), that will address impediments to competitiveness using a whole-of-government approach. The proposed Executive Order will bring together national agencies such as the departments of Trade and Industry (DTI), Interior and Local Government (DILG), Finance (DOF), as well as the National Economic and Development Authority (NEDA), the Philippine Statistics Authority (PSA), other concerned government agencies, and ’eminent persons’ from the private sector that will work jointly at the national and regional levels.

Lastly, the Trade Chief said DTI needs to fully understand the WEF methodology since 30% is based on an opinion survey by executives.

Seventy percent of the indicator weight derived its results from various specialized organizations such as the World Bank, IMF, WTO, WHO, etc. Meanwhile, 30% are from the WEF’s Executive Opinion Survey, which involves 15,000 business executives surveyed with the help of 160+ partner institutes.♦

Date of Release: 09 October 2019