Catching up

The year is drawing to a close with some good news. The National Competitiveness Council, in its yearend report released last Thursday, noted that the country saw improvements in eight annual international assessments this year. These include the World Economic Forum’s Global Competitiveness Index and Economic Freedom Index, the WEF reports on global information technology and travel and tourism as well as the World Intellectual Property Organization’s global index on innovation.

The Philippines did particularly well in the WEF’s Gender Gap Report, ranking as the seventh best country in terms of gender equity. The improvement was surely helped along by the start of the implementation of the Reproductive Health law after over a decade, although it continues to be slowed down by legal challenges.

In certain cases, the country has too many laws, according to the National Competitiveness Council. The overregulation is reflected in the international assessment in which the country dropped in ranking this year: the Ease of Doing Business Report prepared by the World Bank Group and International Finance Corp.

The difficulty of doing business in the Philippines is surely one of the major reasons why the country, despite sustained improvements in many economic indicators in the past years, continues to lag behind many of its neighbors, including the four other founding members of the Association of Southeast Asian Nations. Singapore, Indonesia, Malaysia and Thailand remain more attractive than the Philippines for foreign direct investments that create meaningful jobs.

Among the other disincentives to investments are the restrictive economic provisions in the Constitution. These are unlikely to be amended within the remainder of the term of President Aquino, who has stood firm against tinkering with the Charter that was crafted during his late mother’s incumbency. If the President won’t back economic amendments, he should move to implement better systems and procedures that will reduce opportunities for graft. The administration that rose to power on an anti-corruption platform should give priority to cutting red tape where possible.

There are numerous measures to make the nation more businessfriendly that need not wait for a new administration. President Aquino still has time to show what can be done, short of Charter change, to make the nation catch up with better performers.