With the recent publication of World Economic Forum’s The Global Competitiveness Report 2008-2009 (2008), a review of the ranking of Asian countries included in the recent WEF survey could give insights as what the future brings for the Philippines.
Among the Association of Southeast Asian Nations [ASEAN], except for Burma and Lao DPR, eight member-nations are included in the survey. Singapore ranked 5th overall, while most of the founding members of ASEAN are featured in the top 80 among 134 nations surveyed by WEF. The snapshot of this ranking is shown below compared to the top spot, United States, and the last ranked country, Chad, in 134th place.
Sadly, in terms of country’s competitiveness—both are factor-driven economies, Vietnam had overtaken the Philippines! In 2006-2007 ranking among 122 countries, Vietnam was 64th, the Philippines at 75th. In 2007-2008 ranking among 131 countries, Vietnam was 68th, the Philippines at 71st—lower than Sri Lanka’s 70th. In the current report, Vietnam fell to 70th, while the Philippines retained its 71st! How pathetic! Vietnam is relatively a recent member of ASEAN. Only in the later half of the 1990s did three Indochinese states (Vietnam, Laos and Cambodia) and Myanmar (Burma) became ASEAN members.
Based on the current rankings, while the Philippines’ scores in Efficiency enhancers (4.02) and Innovation factors (3.65) are higher compared to Vietnam at 3.94 and 3.59, respectively, what the Philippines lacked was on Basic Requirements. Under this subindex, the Philippines scored 4.09 (ranked 85th) compared to Vietnam’s 4.10 (ranked 79th).
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In terms of Key Indicators, while both countries are home to about the same number of people, 
Philippines’ GDP is twice that of Vietnam, and its GDP per capita is also twice that of Vietnam. Out of 110 GCI factors in the 12 pillars, however, Vietnam had 22 competitive advantage factors compared to all factor-driven economies while the Philippines had only 20 competitive factors! Basic Requirements for Factor-Driven economies consist of four pillars: Institutions, Infrastructure, Macroeconomic stability, and Health and primary education. Specifically, the Institutions and Health and primary education are the factors which needs to be addressed by the Philippines. Other pillar factors like Labor Market Efficiency and Innovation should also be improved.
Delving further using Pareto’s 80-20 Rule, the GCR cited that the top 80% problematic factors for doing business in the Philippines are corruption (23.9%), inefficient government bureaucracy (19.7%), inadequate supply of infrastructure (13.1%), policy instability (8.7%), government instability (7.0%) and tax regulations (6.4%). Meanwhile, Vietnam’s top 80% problems are inflation (17.9%), inadequate supply of infrastructure (16.5%), inadequately educated workforce (10.6%), corruption (9.0%), policy instability (8.2%), poor work ethic in national labor force (8.1%) and access to financing (7.7%). All these problems are not insurmountable. Implementation of equitable laws, right government policies and focused investments might be the key answers. Interestingly, Vietnam’s problem on work ethic and workforce would take time to address and bear fruit. Thus, the Philippines might just have ample time to do catch up.
Yet, the Philippines should not neglect that the other pillars are equally important to at least sustain its current competitive advantage factors. Similar to WEF’s warning, focusing only on the factors where Vietnam is ahead, would otherwise be foolish! Doing so, the Philippines might never be as competitive as Vietnam, or worst, it will remain as the everlasting basket-case of ASEAN or Asia! Is the Philippines waiting for Cambodia (now ranked 109th) rising through the competitive index and be ahead of the country?
Notes:
Porter, Michael E. & Klaus Schwab, (2008). The Global Competitiveness Report 2008-2009, Geneva: World Economic Forum, October 2008. pp. 276-277, 346-347. back to text
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The Grey Chronicles
Asian Competitiveness Index 2008-2009: Vietnam
Tags: 80-20 Rule, ASEAN, Asian, Association of Southeast Asian Nations, Basic Requirement, Bureaucracy, Burma, Cambodia, Competitive Advantage, Competitiveness, Corruption, Doing Business, Economic Growth, Economy, Education, Efficiency, Efficiency Enhancers, Factor-Driven, Financing, GCI, GCR, GDP, GDP per capita, Global Competitiveness Index, Global Competitiveness Report, Government, Gross Domestic Product, Health, Inflation, Infrastructure, Innovation, Instability, Institution, Investment, Labor Force, Labor Market, Lao DPR, Laos, Laws, Macroeconomic Stability, Pareto, Philippines, Pillars, Policy, Primary Education, Singapore, Tax Regulations, Vietnam, WEF, Work Ethic, Workforce, World Economic Forum
Among the Association of Southeast Asian Nations [ASEAN], except for Burma and Lao DPR, eight member-nations are included in the survey. Singapore ranked 5th overall, while most of the founding members of ASEAN are featured in the top 80 among 134 nations surveyed by WEF. The snapshot of this ranking is shown below compared to the top spot, United States, and the last ranked country, Chad, in 134th place.
Sadly, in terms of country’s competitiveness—both are factor-driven economies, Vietnam had overtaken the Philippines! In 2006-2007 ranking among 122 countries, Vietnam was 64th, the Philippines at 75th. In 2007-2008 ranking among 131 countries, Vietnam was 68th, the Philippines at 71st—lower than Sri Lanka’s 70th. In the current report, Vietnam fell to 70th, while the Philippines retained its 71st! How pathetic! Vietnam is relatively a recent member of ASEAN. Only in the later half of the 1990s did three Indochinese states (Vietnam, Laos and Cambodia) and Myanmar (Burma) became ASEAN members.
Based on the current rankings, while the Philippines’ scores in Efficiency enhancers (4.02) and Innovation factors (3.65) are higher compared to Vietnam at 3.94 and 3.59, respectively, what the Philippines lacked was on Basic Requirements. Under this subindex, the Philippines scored 4.09 (ranked 85th) compared to Vietnam’s 4.10 (ranked 79th).
In terms of Key Indicators, while both countries are home to about the same number of people,
Philippines’ GDP is twice that of Vietnam, and its GDP per capita is also twice that of Vietnam. Out of 110 GCI factors in the 12 pillars, however, Vietnam had 22 competitive advantage factors compared to all factor-driven economies while the Philippines had only 20 competitive factors! Basic Requirements for Factor-Driven economies consist of four pillars: Institutions, Infrastructure, Macroeconomic stability, and Health and primary education. Specifically, the Institutions and Health and primary education are the factors which needs to be addressed by the Philippines. Other pillar factors like Labor Market Efficiency and Innovation should also be improved.
Delving further using Pareto’s 80-20 Rule, the GCR cited that the top 80% problematic factors for doing business in the Philippines are corruption (23.9%), inefficient government bureaucracy (19.7%), inadequate supply of infrastructure (13.1%), policy instability (8.7%), government instability (7.0%) and tax regulations (6.4%). Meanwhile, Vietnam’s top 80% problems are inflation (17.9%), inadequate supply of infrastructure (16.5%), inadequately educated workforce (10.6%), corruption (9.0%), policy instability (8.2%), poor work ethic in national labor force (8.1%) and access to financing (7.7%). All these problems are not insurmountable. Implementation of equitable laws, right government policies and focused investments might be the key answers. Interestingly, Vietnam’s problem on work ethic and workforce would take time to address and bear fruit. Thus, the Philippines might just have ample time to do catch up.
Yet, the Philippines should not neglect that the other pillars are equally important to at least sustain its current competitive advantage factors. Similar to WEF’s warning, focusing only on the factors where Vietnam is ahead, would otherwise be foolish! Doing so, the Philippines might never be as competitive as Vietnam, or worst, it will remain as the everlasting basket-case of ASEAN or Asia! Is the Philippines waiting for Cambodia (now ranked 109th) rising through the competitive index and be ahead of the country?
Notes:
Porter, Michael E. & Klaus Schwab, (2008). The Global Competitiveness Report 2008-2009, Geneva: World Economic Forum, October 2008. pp. 276-277, 346-347. back to text
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