Jaime Augusto Zobel de Ayala, Chairman and CEO, Ayala Corporation, on competitiveness

 

Country competitiveness has become a central theme for both developed and developing nations. We are in the midst of an increasingly open and integrated world economy where countries compete for the investment and human capital that are critical to economic growth.

This focus on national competitiveness has been increasingly reinforced by global competitiveness rankings published by a variety of institutions. While the Philippines has not placed favourably in many of these surveys, it is encouraging to see significant progress in its latest rankings. In the most recent edition of the World Economic Forum’s annual Global Competitiveness Index, the Philippines showed a marked improvement, moving up 10 places, from 85th (of 139) in 2010 to 75th out of 142 countries in 2011. This was one of the largest jumps recorded on the index in 2011.

In Transparency International’s Corruption Perception Index, we also moved up five positions to 129th compared to 2010. However, we slipped by two positions to 136th in the World Bank’s “Doing Business” Report. While our country has achieved some gains, there is always room for further growth.

Our top three immediate challenges, as defined by the surveys, are in the areas of corruption, inefficient government bureaucracy and inadequate infrastructure. Our longer-term challenges lie in the areas of education, science and technology, and innovation. Among the top priorities in 2012 is improvement in transparency and accountability, which are important to building trust in our society and our institutions. Ultimately, trust in our institutions, both public and private, is the foundation for attracting more investment which, in turn, drives job and wealth creation within a country.

I think it is important to note that while a trusted and efficient economic system, with stable institutions coupled with strong political, legal and social frameworks underpin the success of an economy; they are not by themselves sufficient to sustain country competitiveness. These broader macro conditions are only half of the competitiveness equation. The other half lies in the micro, or firm level, of an economy, where the private sector carries much of the responsibility.

An economy cannot be competitive unless the companies operating within it are competitive and productive, and this is linked to the quality of the broader macroeconomic and business environment. Productivity is the ultimate driver of country competitiveness, which highlights the crucial role of the private sector.

At the core of productivity is the quality of the human resources of a nation. It is here that one of the greatest long-term challenges to global competitiveness for the Philippines is found. In recent years, our education standards, and in particular our science and technology education, research and development, ability to innovate, and the level of industry-academe collaboration have been rated low by investors. We cannot afford to ignore this any longer.

Businesses can support national competitiveness by creating an environment for inclusive growth. We cannot, as businesses operating in an emerging economy, ignore the needs of the broader population. As businesses, we are in a unique position to be able to put resources to work to address the needs of this broader market effectively, while simultaneously generating new growth for our businesses. National competitiveness cannot be achieved if the majority of the population is struggling to meet their most basic needs.

Finally, the last key building block lies in regional competitiveness. We need to build more economic growth centres across the country. More importantly, these centres need to begin to measure themselves against similarly situated cities in ASEAN.

Competitiveness comes from a series of improvements across all sectors, over long periods of time.

Everything matters in improving country competitiveness: education, infrastructure, efficient financial and capital markets, workforce, and social and political environments. We all have to work together in the public and private sectors to truly improve country competitiveness. We are both equal sides to the equation.

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Jaime Augusto Zobel de Ayala

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The Report: The Philippines 2012

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