Philippines remains low in competitive ranking in ASEAN

While international rating agencies continue to harp on the strong economic fundamentals of the Philippines, the country has remained low in competitiveness ranking within the Association of Southeast Asian Nations (ASEAN), according to the World Economic Forum (WEF).

In WEF's Global Competitiveness Index (GCI) 2015-2016, which was released recently, the Philippines was ranked 47th among the 140 economies assessed by the WEF.

The Philippines actually moved up five notches in the WEF-GCI ranking compared with that of last year when it was ranked the 52nd.

The WEF Global Competitiveness Report is an annual publication that measures the productivity and competitiveness of countries around the world using statistical and survey data of major economic indicators.

But the Philippines has remained in the 5th place in competitive ranking among ASEAN member countries, only slightly higher than Vietnam, which is relatively new in opening its market to foreign investments.

The WEF-GCI ranks Singapore the first place in ASEAN, followed by Malaysia in the second, Thailand in the third and Indonesia in the fourth. In the WEF ranking, Singapore was ranked the 2nd place, Malaysia, the 18th, Thailand, the 32nd and Indonesia, the 37th.

Singapore was second in the overall WEF-GCI ranking while Vietnam was the 56th. The WEF said the "conduciveness" of the country's business environment continued to be hampered by what it termed as " problematic factors" that include inefficient government bureaucracy, inadequate supply of infrastructure, corruption, complexity of tax regulations and high tax rates.

The lowest ranking that the Philippines got was in infrastructure wherein the country placed the 90th. This pertains to the quality of roads, railroad, ports and air transport infrastructure, among others.

These were practically the same reasons cited as to why the Philippines has also lagged behind other ASEAN economies in the inflow of foreign direct investments (FDIs). In its latest report, the Bangko Sentral ng Pilipinas (BSP), the country's central bank, said as of the first half of this year, the net FDI inflow into the country reached only 2.02 billion U.S. dollars, which was even down 40.1 percent from the same period in 2014. In contrast, FDI inflows to Indonesia for the first half of 2015 amounted to 13.66 billion U.S. dollars, the highest in the region. The amount corresponds to 31 percent of all FDIs that flowed into ASEAN.

Data from financial sources showed that in the first half of 2015, Vietnam garnered 7.53 billion U.S. dollars and Malaysia with 7.01 billion U.S. dollars, or 17 percent and 16 percent respectively from the FDI inflows to ASEAN.

The recently-released Open Markets Index (OMI) of the International Chamber of Commerce (ICC) has ranked the Philippines among those in the bottom of the 75 economies that it assessed.

The Philippines is still deemed by the international investor community to have trade restrictive measures and a protectionist regime, the ICC said.

Despite these unfavorable assessments, Standard & Poor's (S&P), an American rating agency, has tagged the Philippines as the world 's strongest major emerging market, citing its buffers that would insulate the economy from external shocks.

In a report this week, S&P said Asian economies in general were more resilient to adverse global trends than Latin American counterparts.

Countries in the region are expected to fare well in the face of a slowdown in China, Asia's biggest economy. "Latin American sovereigns are, on average, more vulnerable than sovereigns in Asia," S&P said. S&P said the Philippines will be the least affected by worsening global conditions among countries covered by the S&P report.

Aside from the Philippines, the least vulnerable countries in S& P's ranking are Poland, Mexico, Pakistan and Hungary.

The S&P said the major risks to emerging markets in Asia and other regions would be the tightening of global liquidity conditions that could result from the U.S. Federal Reserve's much- awaited rate hike and the unwinding of high levels of debt built up during years of loose monetary conditions.