LAST Friday, I wrote a piece titled “Measuring what Matters,” where I cited the results of the 2019 Global Competitiveness Index of the World Economic Forum, which placed the Philippines at the 64th spot among 141 countries measured.
“Top 64,” as many locals are wont to say.
The index highlighted a number of strong points about the Philippines. The soundness of our banks was one such, where we ranked 17th among the 141, one of the highest rankings we achieved from the 12 pillars against which the countries were measured. But I also pointed out that there were not so good numbers that served to pull us down, as indeed we had dropped by eight rungs from our 2018 ranking of 56th.
Among the 10 Asean countries, only nine were measured (Myanmar wasn’t) and the Philippines sixth after Singapore (globally #1, Malaysia (#27), Thailand (#40), Indonesia (#50) and Brunei (#56). Following us was Vietnam, 67th on the Index.
It’s Vietnam that I find interesting, and should be a country we should keep track of. Let me tell you why.
There’s a lot that’s similar between the Philippines and Vietnam. Population wise, they’re about 95 million to our 106; per capita GDP in dollar terms they’re at about 2,500 while we are at 3,100, and the last 10 years saw them grow their GDP at an average of 5.4% as against our 5.5%. Of course Vietnam benefits from being one long continuous landmass at the easternmost edge of the Southeast Asian landmass south of China, while our being an archipelago can be seen in some ways as a hindrance to our development.
Ours is a “bigger” economy, with our GDP at 0.71% of the world’s in PPP terms whereas theirs is 0.53%.
But from 2018 to 2019, while the Philippines was falling eight rungs on the index, Vietnam was rising 10 rungs, moving from 77 to 67, the country whose progression score registered the biggest leap among all the 141 countries measured by the WEP. Inasmuch as foreign capital is a finite resource and we are in competition with our fellow ASEAN member nations, I would seriously worry about Vietnam.
As stated above, overall, the Philippines ranks 64th to Vietnam’s 68th. Among the 12 pillars here is how we ranked: for institutions, we are ranked 87th and they’re 89th; for infrastructure, it’s 96th for us and 77th for them; for ICT adoption, it’s 88th vs 41st; macroeconomic stability it is 55th vs 64th; health is 102nd vs 71st; skills is at 67th vs 93rd; product market is 52nd vs 79th; labor market is 39th vs 83rd; financial system is 43rd vs 60th; market size it’s 31st vs 28th; business dynamism is 44th vs 89th; and innovation capability it is 72nd vs 76th.
As a percentage of GDP though, Vietnam’s Foreign Direct Investments have averaged 6% over five years while the Philippines has averaged 2.1%. Foreign investors seem to prefer Vietnam.
As I stated last Friday, the use by the WEP of 12 pillars to measure a country’s competitiveness merely indicates that how well we do in enticing much needed foreign capital to fund our development is dependent on much more than the trade missions our tireless DTI executives embark on. It also matters that our financial system is healthy and our banks stable (check!), our people are skilled and mobile (check!) our infrastructure is in place (fail!) and our people are healthy (dengue, polio, ASF anyone?). And of course underlying it all are the institutions that provide security, check and balances, transparency, public and private governance — where we are ranked 87th among the 141 states.
We cannot establish a healthy society literally and figuratively if our institutions are weak or, worse, being weakened.
And so in this day and age of global competition, yes, the enemy is out there.
But the enemy is within as well.