Philippines least competitive in Asia; graft blamed

RP least competitive in Asia; graft blamed

By Michaela P. del Callar

Daily Tribune 05/21/2009

The country slipped anew in terms of its global competitiveness ranking 43rd out of 57 countries in the World Competitiveness Yearbook that Swiss business school IMD released yesterday.

Among 12 Asian countries on the list, the Philippines got the poorest ranking with Hong Kong considered as the world’s second most competitive country, next to the United States. Singapore ranked 3rd; Japan, 17th; Malaysia, 18th; China, 20th; Taiwan, 23rd; Thailand, 26th; Korea, 27th; India, 30th; Kazakhstan, 36th, and Indonesia, 42nd.

The Philippines’ competitiveness grade had regressed the past five years having been ranked 40th in 2005, 42nd in 2006, 45th in 2007 before improving to 40th last year.

What’s more telling was that IMD ranked the economic performance of the country at 51st out of 57 this year despite President Arroyo’s continuous harping about her administration’s focus on uplifting the economy.

The economic performance of the country had deteriorated progressively since 2005 when it was ranked 36th, 45th in 2006 and 2007, and 42nd last year.

On government efficiency the Philippines was ranked 42nd, on business efficiency, 32nd and infrastructure second to the last at 56th.

Aside from perceptions of corruption, a weak government institution was blamed for the dismal ranking of the country in the annual competitiveness ranking.

A United Nations report echoed the IMD findings, saying weak congressional oversight on foreign aid

and national budget facilitates corruption in the country.

In the Philippine Human Development Report for the period 2008-2009, it said that “loopholes” in the current budget law give the executive and not congress the “power of the purse.”

It added that the President can override congressional budget mandates in a number of ways by not releasing or delaying the release of authorized appropriations and by using “savings” and “other unprogrammed, discretionary or confidential funds at will.”

The PHDR cited overwhelming amounts with savings ranging from P11.4 billion in 2004 t P117.5 billion in 2007.

Lump sums in the 2009 National Expenditure Program—defined as one-liner appropriations amounting to P100 million or more—amounted to P224 billion, or 16 percent of the proposed national budget. Confidential and intelligence funds amount to another P1.12 billion.

“Presidents can, and have restored programs scrapped by Congress by using ‘savings,’ lump sums or contingency funds,” the report said.

It lamented that mandatory obligations comprise more than 80 percent of the total annual budget on average, leaving little headroom to increase spending on basic services or fund innovations.

The report also pointed out that Congress plays a significant part in undermining its own powers, noting that when it fails to pass the national budget, the previous year’s budget is automatically re-enacted.

It said that there have been three fully re-enacted budgets since 2000, 2001, 2004 and 2006 and a few more being partially re-enacted.

“The re-enactment of a budget even strengthens the President’s control over allocations owing to larger savings that can be disbursed at his or her discretion,” the report said.

It also noted the lack of transparency in government agencies as they fail to submit quarterly financial reports in a complete and timely manner to Congress, the Commission on Audit, the Department of Budget and Management, and the Office of the President.

“One problem is the lack of any mechanism for systematic legal or administrative sanctions against such agencies, notwithstanding the oversight functions of the CoA,” the report said.

The report also cited many instances of unresolved “recurrent adverse audit findings” among national government agencies and corporations from the COA.

Five war-torn provinces in Southern Mindanao ranked lowest in the human development index due to lack of economic development, extreme poverty and thousands of displaced civilians due to ongoing hostilities between Muslim rebels and government troops .

At the bottom 10 are seven provinces from Mindanao, five of which are from the Autonomous Region for Muslim Mindanao (ARMM), the report that covers the country’s 77 provinces and Metro Manila released yesterday said.

Sulu, a stronghold of Muslim militants and a battleground for Philippine armed forces and rebels, was retained in the last spot, followed by Tawi-Tawi, Maguindanao, Basilan and Lana del Sur. Their performance in human development is comparable to Ghana, Mauritania, Nigeria, Pakistan and Senegal.

“As human insecurity increases from armed conflict, people turn away from those social and activities that could have facilitated the development of their human potential,” the report said.

“Lives are destroyed, families and communities torn apart, cultures decline, and investment is foregone or deflected. Development in the immediate are stagnates and, through spillovers, the entire region and perhaps the entire country is affected,” it added.

Previous Philippine human development reporters dating back to the mid-1990s have consistently shown that the bottom 10 provinces in almost every aspect of human development are the most conflict-ridden.

New to the bottom 10 are Eastern Samar and Romblon and graduating from the lowest ranking provinces list are Agusan del Sur, Northern Samar and Surigao del Sur.

Provinces in Luzon led by Bataan, Benguet, Cavite and Rizal topped the human development rankings. Completing the top ten are Batanes, Ilocos Norte, Laguna, La Union, Nueva Vizcaya and Pampanga.

Human development levels increased for 51 provinces and declined for 27, including Metro Manila.

Benguet, Biliran and Siquijor were cioted as “the most improved in human development,” while the top ten provinces performed well in the gender-development index.

Overall, the Philippines is classified as a medium human development country, along with other Asian states like China and Thailand, ranking 90th out of 177 countries. Highest ranked countries are Australia, Canada, Japan, Iceland, Ireland, France, Netherlands, Norway, Sweden and Switzerland.

In terms of health, the estimated life expectancy at birth of the Philippines is 71 years, or 3.5 years above the average for medium-ranked countries. For simple literacy rate, the Philippines has 92.6 while real per-capita incomes is at $5,137 or about five percent above the average of $4,876 for the group.

“This is an improvement over the past computations, where the Philippines’ real per capita income was below the group average,” the report said.