Becoming More Competitive - Moving in the Top Quartile by guillermo luz ncc private sector co-chairman

1. Becoming More Competitive
GUILLERMO M. LUZ
CO-CHAIRMAN, NATIONAL COMPETITIVENESS COUNCIL

2. Competitiveness
=
The set of institutions,
policies, and factors
that determine the
level of productivity of
a country, taking into
account its level of
development.

3. Coverage = 142 economies = 99% of world GDP

4. COUNTRIES WITH COMPETITIVENESS COUNCILS
We are not alone
• Australia • Korea
• Argentina • Mexico
• Bahrain • New Zealand
• Brazil • Panama
• Canada • Philippines
• Chile • Russia
• Colombia • Saudi Arabia
• Croatia • Singapore
• Dominican Republic • Sweden
• Egypt • United Kingdom
• India • United Arab Emirates
• Ireland • United States
• Japan

5. The Global Competitiveness Index 2011-2012
Rank Economy Score Rank Economy Score
1 Switzerland 5.74 21 Malaysia 5.08
2 Singapore 5.63 24 Korea, Rep. 5.02
3 Sweden 5.61 26 China 4.90
4 Finland 5.47 27 United Arab Emirates 4.89
5 United States 5.43 28 Brunei Darussalam 4.78
6 Germany 5.41 36 Spain 4.54
7 Netherlands 5.41 39 Thailand 4.52
8 Denmark 5.40 46 Indonesia 4.38
9 Japan 5.40 50 South Africa 4.34
10 United Kingdom 5.39 53 Brazil 4.32
11 Hong Kong SAR 5.36 56 India 4.30
12 Canada 5.33 58 Mexico 4.29
13 Taiwan, China 5.26 65 Vietnam 4.24
14 Qatar 5.24 66 Russian Federation 4.21
15 Belgium 5.20 75 Philippines 4.08
16 Norway 5.18 97 Cambodia 3.85
17 Saudi Arabia 5.17 142 Chad 2.87
18 France 5.14
19 Austria 5.14 ASEAN members in bold. Lao PDR and Myanmar not
covered
20 Australia 5.11

6. Why does it matter?
GDP per capita (US$)
10,000
9,000
8,000
7,000
6,000
5,000 China
4,000
Indonesia
3,000
Philippines
2,000
Vietnam
1,000 Cambodia
0
Source: IMF 2011

7. Why does it matter?
FDI inflows (US$ million)
14,000
Indonesia
12,000
10,000
Malaysia
8,000 Viet Nam
6,000
4,000
2,000 Philippines
0
-2,000
Source: UN 2011

8. Spaghetti bowl
Global Competitiveness Index
2005 2006 2007 2008 2009 2010 2011
Percentile
Singapore
90th
Malaysia
80th China
Thailand
70th
Indonesia
60th India
Vietnam
Median Top 53%
Philippines
40th
30th Cambodia
20th
10th
Bottom

9. Our Vision
 To develop more competitive Philippines
 To instill a Culture of Excellence in Governance
 To use Public-Private Sector Partnerships as a
development engine

10. Our Mission
To build up long-term competitiveness of the
Philippines through –
o policy reforms
o project implementation
o institution-building
o performance monitoring
o goal-setting

11. Work Program
 Benchmark against key global competitiveness
indices
 Map each indicator to the agency responsible
 Focus on lowest-ranking indicators
 Track city competitiveness and key indicators
 Working Groups concentrate on specific projects
 Link Competitiveness Plan to Philippine
Development Plan, National
Budget, LEDAC, Cabinet Agenda

12. Where we are today
 WEF Global Competitiveness Report : No. 75 / 142
(2011)
No. 7 of 8 in ASEAN
 IFC Doing Business Survey : No. 136 / 183 (2011)
No. 7 of 8 in ASEAN
 IMD World Competitiveness Report : No. 41/85 (2011)
No. 5 of 5 in ASEAN
 FutureBrand’s Country Brand Index : No. 65 / 110
No. 14 of 17 in Asia Pacific

13. Our target
• WEF Global Competitiveness Report
No. 30 or higher by 2016
• IFC Doing Business Survey
No. 50 or higher by 2016
• IMD World Competitiveness Report
No. 20 or higher by 2016
• FutureBrand’s Country Brand Index
No. 30 or higher by 2016
• No. 2 or 3 in ASEAN in all rankings

14. Impact : Inclusive Growth
o Higher FDI (new investments of 3-4% of GDP), from
US$1.7 billion in 2010
o Double export growth to US$120 billion by 2016 with new
products and services to account for 30% of exports
o GDP Growth of 7-8% per year
o Job Growth / Lower Unemployment
o Lower Poverty Incidence : 26.5% in 2009 to 16.6% by
2015
o Growing C socioeconomic class(currently 8.6%); shrinking
DE class (currently 91%)
Sources: NSCB (Breakdown: 2010 Baseline- US$ 51.39 (goods) US$ 12.27(services) , 2016 Target- US$ 91.5 B (goods) & US$ 28.9 B (services),
Chapter 3 Phil Development Plan (Competitive Industry Sector ), NEDA Targets; Phil. Labor and Employment Plan 2011-2016

15. 2011 Performance
World Economic Forum GCI +10
IFC Ease of Doing Business -2
(following a +14 re-rating due to methodology change)
IMD World Competitiveness Report - 2
Transparency International +5
Millenium Challenge Account Pass

16. World Economic Forum
Global Competitiveness Rankings
2011 2010 2009 2008
PHILIPPINES 75 85 87 71

17. Key Drivers
Macroeconomic Management +14
Technological Readiness +12
Market Efficiency for Goods + 9
Institutions (Governance) + 8

18. Key Constraints
Institutions (Governance) + 8
Infrastructure - 1
Innovation + 2
Labor Market Efficiency - 2
Education
Higher education & training + 2
Science & Math education quality - 2
Quality of primary education -11

19. The most problematic factors for
doing business in the Philippines in 2011
Percent of responses (weighted totals)
0 5 10 15 20 25 30
Corruption 24.4
Inefficient government bureaucracy 18.3
Inadequate supply of infrastructure 16.5
Policy instability 7.9
Tax rates 5.7
Crime and theft 5.6
Tax regulations 5.6
Restrictive labor regulations 4.6
Inadequately educated workforce 2.5
Access to financing 2.2
Inflation 2.0
Government instability/coups 1.9
Poor work ethic in national labor… 1.9
Foreign currency regulations 0.5
Poor public health 0.5

20. Philippine Competitiveness Ranking
IFC Doing Business Report 2009 - 2012
2012 2011 2010 2009
Indicators (183 (183 (183 (181
economies) economies) economies) economies)
Over-all ranking 136 134 144 140
Starting a business 158 155 162 155
Dealing w/ construction 102 98 111 105
permits
Getting electricity 54 57 - -
Employing Workers - - 115 126
Registering Property 117 109 102 97
Getting Credit 126 116 127 123
Protecting Investors 133 131 132 126
Paying Taxes 136 127 135 129
Trading across borders 51 54 68 58
Enforcing contracts 112 114 118 114
Resolving Insolvency 163 161 153 151

22. PHILIPPINE COMPETITIVENESS RANKING
WEF GLOBAL COMPETITIVENESS REPORT 2010 & 2011
2010 2010 2011 2011
RED – bottom 20% (111th – 139th) 25 indicators (113th – 142nd) 21 indicators
PURPLE – bottom 40-21% (83rd – 110th) 37 indicators (85th – 112th) 36 indicators
ORANGE – bottom 50 – 41% (69th – 82nd) 20 indicators (71st– 84th) 17 indicators
BLACK (1st – 68th) 29 indicators (1st – 70th) 37 indicators
111 indicators 111 indicators
INDICATORS RANKING (2010) RANKING (2011) change
OVER-ALL RANKING
85/139 75/142 + 10
1st pillar: INSTITUTIONS
125 117 +8
1.01 Property rights
99 105 -6
1.02 Intellectual property protection
103 102 +1
1.03 Diversion of public funds
135 127 +8
1.04 Public trust of politicians
134 128 +6
1.05 Irregular payments and bribes
128 119 +9
1.06 Judicial independence
111 102 +9
1.07 Favoritism in decisions of government officials
131 118 +13
1.08 Wastefulness of government spending
118 109 +9
1.09 Burden of government regulation
126 126 0
1.10 Efficiency of legal framework in settling disputes
122 115 +7

23. INDICATORS RANKING (2010) RANKING (2011) change
1.11 Efficiency of legal framework in challenging
116 118 -2
regulations
1.12 Transparency of government policymaking
123 120 +3
1.13 Business costs of terrorism
126 130 -4
1.14 Business costs of crime and violence
104 112 -8
1.15 Organized crime
106 102 +4
1.16 Reliability of police services
105 112 -7
1.17 Ethical behavior of firms
129 118 + 11
1.18 Strength of auditing and reporting standards
75 62 + 13
1.19 Efficacy of corporate boards
56 52 +4
1.20 Protection of minority shareholders’ interests
80 84 -4
1.21 Strength of investor protection*
109 111 -2

24. INDICATORS RANKING (2010) RANKING (2011) change
2nd pillar: INFRASTRUCTURE
104 105 -1
2.01 Quality of overall infrastructure
113 113 0
2.02 Quality of roads
114 100 + 14
2.03 Quality of railroad infrastructure
97 101 -4
2.04 Quality of port infrastructure
131 123 +8
2.05 Quality of air transport infrastructure
112 115 -3
2.06 Available airline seat kilometers*
28 28 0
2.07 Quality of electricity supply
101 104 -3
2.08 Fixed telephone lines*
106 103 +3
2.09 Mobile telephone subscriptions*
88 92 -4
3rd pillar: MACROECONOMIC ENVIRONMENT
68 54 + 14
3.01 Government budget balance*
62 71 -9
3.02 National savings rate*
74 70 +4
3.03 Inflation*
73 69 +4
3.04 Interest rate spread*
75 50 + 25
3.05 Government debt*
102 89 + 13
3.06 Country credit rating*
75 63 + 12

25. Working Groups
1. Education and Competitive Human Resources
2. Performance Governance System
3. Infrastructure for Competitiveness
4. Transaction Costs and Flows
5. Import and Export Clearance Process / Single Window
6. Power and Energy : Cost and Availability
7. Transparency in Budget Delivery
8. Judiciary
9. Anti-Corruption
10. IT Governance Framework

26. NCC Co-Chairmen
Sec. Domingo (Public Sector) Mr. G. Luz (Private Sector)
NCC Secretariat
Board Members:
Public: Secretaries of DepEd, DOT, DOE, DOF, NEDA,
Private: J. Ayala, E. Chua, D. Banatao, T. Tancaktiong
Infrastructure for Education and Human
Competitiveness Resources
Working Groups
Performance Transaction Costs and
Governance System Flows
Transparency in Budget Customs/National Single
Delivery Window
Judiciary System Anti-Corruption
ICT Governance
Energy and Power
Framework
Science and
Technology * Agriculture *
Special Projects

27. Building Momentum for
Transparency
 National Competitiveness Council
 Open Government Partnership
 Integrity Initiative
 APEC Code of Conduct for Business

28. National Competitiveness Council
 Office of the Ombudsman
 Process improvements in business permits, licenses,
registration
 Budget transparency measures
 Balanced Scorecard and Multisectoral Governance Councils
in National Agencies – DPWH, DSWD, Army, PNP, etc.
 COMELEC – Campaign Finance Reforms

29. Open Government Partnership
• Government + Business + Civil Society
• International partnership. Steering Committee from
US, Brazil, Mexico, Norway, UK, South Africa, Indonesia,
Philippines
• Time-based Country Action Plan (examples)
– Disclosure of Budget Information
– Disclosure of LGU use of funds
– Online posting of “pork barrel” and lump sum
disbursements
– Freedom of Information Act
– Social Audit for Public Infrastructure Projects
www.opengovpartnership.org

30. Integrity Initiative
 Private Sector + Government
 Integrity Pledge (1000+ enterprises)
 Unified Code of Conduct
 Pre-requisite for bids ?

31. APEC Code of Conduct for Business
“Corruption is a serious threat to good
governance and deters investment…fighting
corruption is essential to the development of
our economies for the benefit of our people.”
 APEC-wide Business Integrity and
Transparency Principles for the Private Sector
www.apec.org

32. 2012 Plan
o Continuous tracking of global reports
o Regional / Local Competitiveness Councils
o Industry Roadmaps
o National Competitiveness Assessment and
Plan

33. Maintain focus on …
o Governance and Bureaucracy
o Infrastructure
o Macroeconomic management
o Education
o Goods Market Efficiency
o Labor Market Efficiency
o Technological Readiness

34. Global Competitiveness Index: Comparative Weights Rank Score
Philippines (1–7)
GCI 2011–2012 (out of 142) 75 4.1
BASIC REQUIREMENTS 60.0 % 100 4.2
Institutions 117 3.2
Infrastructure 105 3.1
Macroeconomic environment 54 5.0
Health and primary education 92 5.4
EFFICIENCY ENHANCERS 35.0% 70 4.0
Higher education and training 71 4.1
Goods market efficiency 88 4.1
Labor market efficiency 113 3.9
Financial market development 71 4.0
Technological readiness 83 3.5
Market size 36 4.6
INNOVATION AND SOPHISTICATION FACTORS 5.0% 74 3.4
Business sophistication 57 4.1
Innovation 108 2.8

35. Regional Competitiveness Councils
o Encourage creation of regional / local
competitiveness councils co-chaired by Public and
Private Sector
o Build template of indicators so regions can track
their competitiveness for comparison with
national and global standards
o Involve universities in data-collection and analysis

36. Industry Roadmaps
• As competitive environment is created, industry and
individual firms are drivers of growth and wealth
creation.
• DTI will invite industries to prepare 5 - 10 year industry
roadmaps
• Roadmaps should describe –
– State of industry today
– Other country competitors
– Potential of industry for value and employment growth
– Projected investments by industry players
– Policy environment required by industry (e.g., regulatory,
infrastructure, human resources, financial, etc.)

37. National Competitiveness
Assessment and Plan
o Annual assessment of performance indicators
o Global performance indicators linked to 6-
year Philippine Development Plan
o 10 to 20 year strategic long-term
perspective

38. Building Blocks
National
Competitiveness
Plan
Regional
Industry
Working Groups Competitiveness
Roadmaps
Councils

39. Next steps
• Concentrate on Basic Requirement and
Efficiency Enhancers (75+% of weight).
• More networking with other clusters (e.g.,
Social Cluster, Governance Cluster)
• Undersecretaries permanently assigned to
Working Groups as point persons for
Departments
• Establishment of Competitiveness Teams in
key Departments

40. What lies ahead ?
• The bar always rises – moving up the “weight
class”
• The competition never sleeps
• The definition is evolving  sustainable
competitiveness  not compromising future
generations’ ability to grow