The Aquino administration continues to inspire business confidence, but
impatience is starting to creep in. There is also uncertainty over the
sustainability of reforms and the lack of long-term plans in several key
sectors.
This can be gleaned from the
latest annual assessment of progress in 471 recommendations first presented in
2010 by the Joint Foreign Chambers of the Philippines to improve the business
climate and speed up economic growth.
The title of that 470-page
document was “Arangkada Philippines” – or acceleration. The 471 recommendations
were the product of nine focus group discussions over six months involving
about 300 Filipino and foreign investors.
In January last year, the joint
chambers released the first anniversary assessment of progress on the 471
recommendations. About 40 senior consultants, academics, business executives
and former public officials gave their inputs.
Late last month, the second
anniversary assessment came out, with a call to “realize the potential.”
The 214-page assessment
acknowledged last year’s economic growth and achievements in promoting
investments in several promising areas. It cited gains in the fight against
corruption, although in this area, the best rating in a six-tier system that
the government received was only four stars, meaning steps to implement the
recommendations “started” in 2012. (Five stars mean “substantial progress” and
six, “completed.”)
Opinion ( Article MRec ),
pagematch: 1, sectionmatch: 1
The report gave two stars
(“backward/regression”) to the fight against smuggling. “There is a strong
perception that smuggling continues to be rampant and widespread,” the report
said.
It added that the seizure of
contraband in 2012 tended to reinforce the perception “that smuggling is
getting worse instead of improving.”
* *
*
While 6.6 percent GDP growth last
year made the country the fastest growing economy among the five founding
members of the Association of Southeast Asian Nations plus Vietnam (or
ASEAN-6), the Philippines is still considered to be growing too slow.
Those behind the Arangkada
project believe the country needs an annual growth rate of 9 percent, backed by
a clear long-term industry policy. In this area, the assessment report gives
five stars for progress in 2012.
Among the founding members of
ASEAN, the Philippines is now at the tail-end in terms of per capita income,
behind Singapore, Malaysia, Thailand and Indonesia. We’re still ahead of
Vietnam.
GDP per capita is not the only
area where the Philippines lags behind the ASEAN founding states. In terms of
net foreign direct investment, we lag behind ASEAN-6, attracting less than $2
billion in FDI last year. We also have the lowest gross investments as a
percentage of GDP.
We’re also losing out in domestic
competitiveness, even as our people become highly competitive in the global job
market. We have the highest unemployment rate and the lowest labor productivity
index within ASEAN-6.
Indonesia overtook us in
competitiveness in 2009, making us rank last in ASEAN-5 last year, while within
ASEAN-6, we overtook Vietnam in this area only in 2011. The biggest slides in
Philippine competitiveness were noted in governance, infrastructure and
corruption.
Since 2007, we have ranked lower
than Vietnam, making us the lowest within ASEAN-6, in ease of doing business.
From 2003 to 2012, according to
the Arangkada assessment report, the top areas of dissatisfaction for investors
in the Philippines were corruption, laws and regulations, infrastructure, local
protectionism, and ease of moving products.
Corruption is a two-way thing.
The Arangkada report did note “little progress in private sector propensity to
bribe government officials and follow improper business practices…”
In terms of overall
infrastructure, we’re rated ahead of only Vietnam. And one of the
recommendations that merited two stars ‑ for “backward/regression” ‑ was in instituting
long-range planning for infrastructure development.
Arangkada recommended that the
National Economic and Development Authority “should consider” a 10-year plan.
Its latest assessment: “The current development plan is only good for the term
of the Aquino Administration. NEDA has not released the Philippine Investment
Plan.”
* *
*
The report cited the high
potential in agribusiness, noting that the country had the lowest agricultural
exports within ASEAN-6 from 1990 to 2011. Thailand is No. 1 in this area,
followed by Indonesia and Malaysia.
Where the Philippines received a
lot of six and five-star ratings was in business process outsourcing, but we already
know the good news in BPO. There were also several five stars in the
recommendations on developing creative industries.
Certain aspects of investor
dissatisfaction are not entirely within P-Noy’s control, such as the judiciary
and local governance.
Since 2009, the Philippines has
ranked lowest within ASEAN-6 in terms of efficiency of legal framework in
settling business disputes.
There are several complaints
about intervention by local government units (LGUs), in mining for example, and
in Muntinlupa where truckers passing through have been required to register
with city hall. Investors want certain economic activities to be considered
strategic and kept out of the hands of local governments.
“The issue of LGU exceptionalism
and disregard for national policy remains serious,” according to Arangkada,
which is proposing the designation of “Domestic Economic Zones” outside LGU
jurisdiction.
In infrastructure, the
Philippines has the worst airports among ASEAN-6 (yes, we’re rated lower than
Vietnam), but progress was noted here in 2012 in several aspects. Our road
networks improved last year, putting us ahead of Indonesia and Vietnam within
ASEAN-6, but we have the worst seaports.
We have the second highest power
costs in East/Southeast Asia after Japan. In telecommunications, we’re ranked
below Singapore, Malaysia and Vietnam.
In overall business costs and
burden of Customs procedures, we’re ranked lowest in ASEAN-6. The Philippines
has the highest minimum wage, the most number of holidays, and highest
telecommunication costs among the six countries. Office rentals in Manila,
however, are “a relative bargain” and living costs are among the lowest in
Asia.
In terms of burden of government
regulation, the Philippines ranked 113th among 133 economies in the Global
Competitiveness Report prepared by the World Economic Forum ‑ ahead of only Vietnam in ASEAN-6.
Overall, the country is seen to
be moving forward under P-Noy’s watch, but it can move faster. Investors also
want clear signs that new ways of doing business will be sustained beyond 2016.
This is as great a challenge to P-Noy as the need for an accelerated pace of
reforms.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
No comments:
Post a Comment