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Becoming More Competitive - Moving in the Top Quartile by guillermo luz ncc private sector co-chairman
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Becoming More CompetitiveGUILLERMO M. LUZCO-CHAIRMAN, NATIONAL COMPETITIVENESS COUNCIL
Competitiveness=
The set of institutions, policies, and factors that
determine the level of productivity of a country, taking into account its level of
development.
Coverage = 142 economies = 99% of world GDP
COUNTRIES WITH COMPETITIVENESS COUNCILS
We are not alone
• Australia• Argentina • Bahrain• Brazil• Canada• Chile• Colombia• Croatia• Dominican Republic• Egypt• India• Ireland• Japan
• Korea• Mexico• New Zealand• Panama• Philippines• Russia• Saudi Arabia• Singapore• Sweden• United Kingdom• United Arab Emirates• United States
2 Singapore 5.633 Sweden 5.61
1 Switzerland 5.74Rank Economy
Score
6 Germany 5.417 Netherlands 5.418 Denmark 5.409 Japan 5.4010 United Kingdom 5.39
5 United States 5.434 Finland 5.47
Rank Economy Score
The Global Competitiveness Index 2011-2012
11 Hong Kong SAR 5.3612 Canada 5.3313 Taiwan, China 5.2614 Qatar 5.2415 Belgium 5.2016 Norway 5.1817 Saudi Arabia 5.1718 France 5.1419 Austria 5.1420 Australia 5.11
21 Malaysia 5.0824 Korea, Rep. 5.0226 China 4.9027 United Arab Emirates 4.8928 Brunei Darussalam 4.7836 Spain 4.5439 Thailand 4.5246 Indonesia 4.3850 South Africa 4.3453 Brazil 4.3256 India 4.3058 Mexico 4.2965 Vietnam 4.2466 Russian Federation 4.2175 Philippines 4.0897 Cambodia 3.85142 Chad 2.87
ASEAN members in bold. Lao PDR and Myanmar not covered
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Cambodia
China
Indonesia
Malaysia
Philippines
Thailand
Vietnam
GDP per capita (US$)
Why does it matter?
Source: IMF 2011
Why does it matter?
Source: UN 2011
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Indonesia
Malaysia
Philippines
Thailand
Viet Nam
FDI inflows (US$ million)
Spaghetti bowl
Bottom
80th
60th
20th
90th
10th
40th
70th
2005 2006 2007 2008 2009 2010 2011
30th
Median
India
China
Indonesia
Cambodia
Malaysia
Philippines
Singapore
Thailand
Vietnam
Global Competitiveness Index
Perc
entil
e
Top 53%
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
Our Mission
To build up long-term competitiveness of the Philippines through –opolicy reformsoproject implementationo institution-buildingoperformance monitoringogoal-setting
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
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 / 110No. 14 of 17 in Asia Pacific
Our target
• WEF Global Competitiveness Report No. 30 or higher by 2016
• IFC Doing Business SurveyNo. 50 or higher by 2016
• IMD World Competitiveness ReportNo. 20 or higher by 2016
• FutureBrand’s Country Brand IndexNo. 30 or higher by 2016
• No. 2 or 3 in ASEAN in all rankings
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$120 billion by 2016 with new products and services to account for 30% of exports
o GDP Growth of 7-8% per yearo Job Growth / Lower Unemployment o Lower Poverty Incidence : 26.5% in 2009 to 16.6% by
2015o Growing C socioeconomic class(currently 8.6%); shrinking
DE class (currently 91%)
Sources: NSCB (Breakdown: 2010 Baseline- US$ 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
2011 Performance
World Economic Forum GCI +10IFC Ease of Doing Business - 2
(following a +14 re-rating due to methodology change)
IMD World Competitiveness Report - 2Transparency International +5Millenium Challenge Account Pass
World Economic ForumGlobal Competitiveness Rankings
2011 2010 2009 2008PHILIPPINES 75 85 87 71
Key Drivers
Macroeconomic Management +14
Technological Readiness +12
Market Efficiency for Goods + 9
Institutions (Governance) + 8
Key ConstraintsInstitutions (Governance) + 8
Infrastructure - 1
Innovation + 2
Labor Market Efficiency - 2
EducationHigher education & training + 2Science & Math education quality - 2Quality of primary education -11
Corruption
Inefficient government bureaucracy
Inadequate supply of infrastructure
Policy instability
Tax rates
Crime and theft
Tax regulations
Restrictive labor regulations
Inadequately educated workforce
Access to financing
Inflation
Government instability/coups
Poor work ethic in national labor force
Foreign currency regulations
Poor public health
0 5 10 15 20 25 30
24.4
18.3
16.5
7.9
5.7
5.6
5.6
4.6
2.5
2.2
2.0
1.9
1.9
0.5
0.5Percent of responses (weighted totals)
The most problematic factors for doing business in the Philippines in 2011
Philippine Competitiveness RankingIFC Doing Business Report 2009 - 2012
Indicators2012 (183
economies)
2011 (183
economies)
2010 (183
economies)
2009(181
economies)
Over-all ranking 136 134 144 140
Starting a business 158 155 162 155
Dealing w/ construction permits
102 98 111 105
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
INDICATORS RANKING (2010) RANKING (2011) change
OVER-ALL RANKING 85/139 75/142 + 101st pillar: INSTITUTIONS 125 117 + 81.01 Property rights 99 105 - 61.02 Intellectual property protection 103 102 + 11.03 Diversion of public funds 135 127 + 81.04 Public trust of politicians 134 128 + 61.05 Irregular payments and bribes 128 119 + 91.06 Judicial independence 111 102 + 91.07 Favoritism in decisions of government officials 131 118 +131.08 Wastefulness of government spending 118 109 + 91.09 Burden of government regulation 126 126 01.10 Efficiency of legal framework in settling disputes 122 115 + 7
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
1.11 Efficiency of legal framework in challenging regulations
116 118 - 21.12 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
INDICATORS RANKING (2010) RANKING (2011) change
2nd pillar: INFRASTRUCTURE 104 105 - 12.01 Quality of overall infrastructure 113 113 02.02 Quality of roads 114 100 + 142.03 Quality of railroad infrastructure 97 101 - 42.04 Quality of port infrastructure 131 123 + 82.05 Quality of air transport infrastructure 112 115 - 32.06 Available airline seat kilometers* 28 28 02.07 Quality of electricity supply 101 104 - 32.08 Fixed telephone lines* 106 103 + 32.09 Mobile telephone subscriptions* 88 92 - 4
3rd pillar: MACROECONOMIC ENVIRONMENT 68 54 + 143.01 Government budget balance* 62 71 - 93.02 National savings rate* 74 70 + 43.03 Inflation* 73 69 + 43.04 Interest rate spread* 75 50 + 253.05 Government debt* 102 89 + 133.06 Country credit rating* 75 63 + 12
Working Groups
1. Education and Competitive Human Resources 2. Performance Governance System3. 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
Wor
king
Gro
ups
NCC Co-ChairmenSec. Domingo (Public Sector) Mr. G. Luz (Private Sector)
Infrastructure for Competitiveness
Education and Human Resources
Performance Governance System
Transparency in Budget Delivery
Customs/National Single Window
Transaction Costs and Flows
Anti-Corruption
Agriculture *
Judiciary System
Special Projects
ICT Governance Framework
Science and Technology *
Energy and Power
NCC SecretariatBoard Members:
Public: Secretaries of DepEd, DOT, DOE, DOF, NEDA,Private: J. Ayala, E. Chua, D. Banatao, T. Tancaktiong
Building Momentum for Transparency
National Competitiveness Council
Open Government Partnership
Integrity Initiative
APEC Code of Conduct for Business
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
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 Projectswww.opengovpartnership.org
Integrity Initiative
Private Sector + Government
Integrity Pledge (1000+ enterprises)
Unified Code of Conduct
Pre-requisite for bids ?
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 Sectorwww.apec.org
2012 Plan
o Continuous tracking of global reports
o Regional / Local Competitiveness Councils
o Industry Roadmaps
o National Competitiveness Assessment and Plan
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
Global Competitiveness Index: Comparative WeightsPhilippines
Rank Score(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
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
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.)
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
Building BlocksNational Competitiveness Plan
Working Groups Industry Roadmaps Regional Competitiveness Councils
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
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
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