Bernardo M. Villegas
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How Competitive is the Philippines?

           Whenever I hear an employer complain about his workers' lack of productivity and the proper work attitudes, my instinct is to blame the employer rather than the workers.  With very few exceptions, the very same workers who manifest negative attitudes to work can blossom into the most productive human beings under the appropriate management style and corporate culture.  There are ten million Filipino workers all over the world who are generally cited as hard working, responsible and pleasant to work with.  That is a big enough sample to conclude that Filipino workers are among the most highly motivated and productive in the world, if properly managed and provided the right working environment.  If the Philippines is ranked low in many surveys of global competitiveness, the fault lies in the poor working environment either at the macro level or the level of the firm rather than in the individual weaknesses and limitations of the workers.

          This long standing assessment of mine about productivity in the Philippines has been recently confirmed by pronouncements made by the National Competitiveness Council which is co-chaired by Mr. Guillermo M. Luz who is among the persons most responsible for institutionalizing certain processes that will go a long way in guaranteeing sustainable growth for the Philippines.   First at the Makati Business Club and NAMFREL and now at the National Competitiveness Council, Bill has helped to strengthen institutions that will outlive our generation in promoting authentic democracy and inclusive economic growth.  These are among the three institutions that give me confidence that the present euphoria about the "Philippine economic tiger" is no flash in the pan.  These, together with other institutions, will outlive the present Government and will help to keep future leaders on the straight path.  In contrast with what is happening now in Indonesia in which the admirable governance reforms in the first five years of President Susilo Bambang Yudyohono (SBY) were very much based on personalities (especially on the feisty Minister of Finance then), with little help from the private sector, civil society in the Philippines has been very proactive in supporting the fight against corruption in the Philippines. Consider, for example, the Integrity Initiative signed by more than 1,000 private enterprises.

          I have already written extensively about the very positive contributions made by the foreign chambers of commerce in coming out with the document called Arangkada Philippines, a regular feedback mechanism on how the Government is meeting its targets in key result areas of governance.  Bill Luz contributed a very valuable chapter to the most recent evaluation which forms part of the Arangkada  Philippines Forum.  Entitled "Becoming More Competitive", the report of the National Competitiveness Council (NCC) summarized ten lessons on how the Philippines can be more globally competitive.  It made the following observations:  "While Filipinos are highly competitive in the world job market, the country's domestic competitiveness has declined.  Global rating surveys abound with ever-expanding coverage, stimulated by the globalization of investment, trade, and information.  Until recently, the Philippines was being left behind by most neighbors in too many measures of competitiveness.  Indonesia and Vietnam, ranked lower in the past, were overtaking the country.  The Philippines was on a downward trajectory in international competitiveness rankings during the last decade, especially for corruption, governance and infrastructure.  Focused efforts to reverse the trend after being underway for several years are beginning to take effect, especially since 2010.  Efforts to reverse the trend must be sustained and intensified to produce more positive results sooner."

          There were ten lessons that summarized the recommendations of the National Competitiveness Council.  These ten were primarily addressed to public officials who are responsible for providing the appropriate "macro" environment such as good governance, ease of doing business and efficient infrastructure.  But they could very well also be addressed to individual employers who must work on more enabling corporate cultures and company working environments to obtain the greatest productivity from their individual workers.  These ten lessons are:  1. Transparency leads to competitiveness.  2.  "Work in progress" is not good enough.  3.  Execution and delivery matter.  4.  Teamwork is important.  5.  We need to work on multiple fronts.  6.  The competition never sleeps.  7.  The bar always rises.  8.  "Speed to reform" is important.  9.  Maintaining momentum is important.  10.  We need to institutionalize change.

          A recent survey of its members by the Makati Business Club (MBC Executive Outlook Survey, First Semester 2013) gave some very important insights into both a rationale for emphasizing even further the need for global competitiveness and a major step towards competitiveness in the ASEAN region, the most immediate environment in which the Philippines has to compete with its peers.  When asked about the ASEAN Economic Community (AEC), more than 95% of respondents said they were aware of the AEC that will be established on 31 December 2015.  Over 64% of those surveyed believe that the Philippines is unprepared at present for regional integration under the AEC.  When asked if their companies are already preparing to take the challenges posed by and opportunities offered by the AEC, more than 78% said yes.  These figures show that the AEC will be a very important force in putting pressure on Philippine firms--both big and small--to be more competitive if they do not want to be swallowed up by their ASEAN competitors, especially from Indonesia, Thailand and Vietnam.

          The MBC membership showed an admirable willingness to face more competition from foreign investors by going against the usual nationalistic tendency to preserve strategic industries in the hands of Filipinos under the decades-long "Filipino First" policy.  On the issue of "Charter change", specifically the removal of foreign ownership restrictions under the 1987 Constitution to attract more foreign investments, close to 91% of respondents (three-quarters of whom are Filipinos and a quarter composed of foreigners) favor the initiation of amendments to economic provisions.  More than 59% of those who are for amending the Constitutions' economic provisions said it should be initiated within the next 12 months, and over 31% said this should be undertaken after the next 12 months.  These large percentages support the view I have always held, even while a member of the Constitutional Commission that drafted the 1987 Philippine Constitution:  that removing constitutional restrictions against foreign equity investments in strategic sectors, including land ownership, can lead to a big jump of Foreign Direct Investments.  Considering the very low level of FDIs in the Philippines, as compared with our peers like Thailand, Indonesia, Vietnam and Malaysia, charter change should be very high in the agenda of the Government after the May 13, 2013 elections.   Global competitiveness is a many-splendored thing.  Openness to FDIs is one of those things.  For comments, my email address is bernardo.villegas@uap.asia