Philippine business conditions seen headed in right direction

The Philippines is headed in the right direction in terms of becoming a more conducive business environment, the Chandler Institute of Governance (CIG) said.

“The attractive marketplace (pillar) is about the capabilities that the government has to create a conducive business environment,” Kenneth Sim, dean at Chandler Academy of Governance, a Singapore-based public-sector training organization, said in an event organized by CIG and the Eastern Regional Organization for Public Administration.

“Relative to peers, the Philippines doesn’t do as well. But the gap is closing, and in the right direction, which means the Philippines is actually catching up to the global average,” he added, citing comparable economies like Vietnam and Egypt.

Citing results of the Chandler Good Government Index (CGGI) in 2024, Mr. Sim said that the Philippines posted a 0.56 marketplace attractiveness score last year, up from 0.53 in 2023. The global average is 0.58.

“Part of the reason why this is improving is the stable macroeconomic environment, which looks at things like inflation, as well as the other one that has improved, which is logistics competence,” he said.

Some key indicators for an attractive marketplace, like property rights and business regulations, are below the global average.

In particular, the country scored 0.39 in stability of business regulations, against the 0.51 global average. It scored 0.30 in property rights, against the 0.50 global average.

Mr. Sim noted opportunities to improve in the leadership and foresight components of the index.

“Over the years, there has been a decline in the score for the Philippines. It started at just above 0.4 in 2021, and by 2024, the Philippines will have dropped to 0.33. So this means, again, that the gap between the Philippines and the global average has been widening,” he said.

“It is important to point out, however, that even though we call it leadership and foresight, it is not about individual leaders; it is about the ability of the system to develop these capabilities,” he said.

“Of course, leaders play an important role, but this pillar is not about people. It is about the system,” he added.

“The performance of the Philippines in the CGGI in 2024 is somewhere in the middle. 67th out of 113, not the best, but certainly not the worst,” Mr. Sim said.

He added that although the country’s rank has suffered, its score has declined only slightly.

“What this means is that over time, relative to itself, in your own country, you have kept your performance relatively stable, but the rank has fallen, which simply means that more people are joining the index, and others are doing even better,” he said.

“So, staying in place and being patient is not going to help you to improve in ranking,” he added.

He said that the Philippines is stronger in areas like strong institutions and financial stewardship.

Source: Business World

World food prices dip 2% in 2024

World food commodity prices declined by 2.1 percent in 2024 compared to the previous year, the UN Food and Agriculture Organization (FAO) said on Friday, but they remain considerably higher than before the Covid-19 pandemic.

FAO's overall Food Price Index averaged 122.0 points 2.6 points or 2.1 percent lower than the average value in 2023.

However, food prices increased over the course of the year, with the index climbing from 117.6 points in January to 127.0 in December.

The index rose 6.7 percent from December 2023 to 2024, with meat, dairy and food oils accounting for the increase.

The United Nations' food agency tracks monthly and global changes in the international prices of a set of globally traded commodities.

Food prices also remain considerably higher roughly 26 percent than they were five years ago.

The disruption to global trade during the Covid-19 pandemic initially saw food prices dip but they later climbed higher amid the surge in inflation as the global economy rebounded.

Russia's invasion of Ukraine in February 2022 sent them spiking to records, since both nations are major wheat exporters, but efforts to ensure shipments were not blocked led to prices easing lower until the beginning of 2024.

The dip in the average value for the index between 2023 and 2024 was mainly due to falls in cereals and sugar prices.

Cereals dropped 13.3 compared to 2023, and the FAO's sugar price index fell 13.2 percent.

The decreases were offset in part by a 9.4-percent rise in the vegetable oil price index.

Source: Manila Times

PHL slumps to near bottom of global talent index

The Philippines slumped to the near bottom of an annual global ranking of countries’ ability to attract and retain a skilled workforce, a report by the Institute for Management Development (IMD) World Competitiveness Center showed.

In the IMD’s World Talent Ranking (WTR) 2024, the Philippines slipped three spots to 63rd out of 67 countries, from 60th out of 64 economies last year. This is the country’s worst ranking from as early as 2005.

The Philippines’ talent competitiveness continued to fall behind Asia-Pacific neighbors. It ranked 13th out of 14 Asia-Pacific countries, better only than Mongolia.

Singapore was the highest-ranking economy in the Asia-Pacific, as it finished second overall. It was followed by Hong Kong (9th), Australia (14th), Taiwan (18th), South Korea (26th), Malaysia (33rd), China (38th), New Zealand (39th), Japan (43rd), Indonesia (46th) and Thailand (47th), and India (58th).

The talent index was again dominated by European economies led by Switzerland (1st overall), Luxembourg (3rd), Sweden (4th), and Denmark (5th).

The WTR rankings are based on three factors: “appeal,” or the extent to which an economy attracts foreign talent and retains local talent; “investment and development,” which refers to the measurement of resources allotted to develop a homegrown workforce; and “readiness,” or the quality of the skills in a country’s talent pool.

José Caballero, a senior economist at IMD World Competitiveness Center, said in an e-mail interview that the drop in the Philippines’ talent ranking was due to the decline in the investment and development and readiness factors.

“At the indicator level, the main aspect affecting its performance in investment and development is the inadequate implementation of apprenticeship programs and the limited prioritization of employee training by the private sector,” he said.

The Philippines had the lowest ranking in investment and development, falling to 64th this year from 62nd last year. This was due to a significant drop in the ranking for apprenticeships and employee training.

The Philippines also ranked among the lowest in terms of public expenditure on education per student (63rd) and pupil-teacher ratio for primary (60th) and secondary (63rd) education.

On the readiness factor, the country slipped a spot to 52nd place.

“In terms of readiness, there is a general decline in all measures of the impact of the country’s talent development efforts,” Mr. Caballero said. “There is also a decline in the prioritization of talent attraction and retention among companies (57th) and workers’ motivation (47th), which feed into brain drain (54th). The latter is one of the key drivers of talent readiness.”

The low scores of 15-year Filipino students in the  Programme for International Student Assessment (PISA) are one of the Philippines’ top weaknesses. Filipino students were among the world’s weakest in math, reading and science, according to the 2022 PISA. The Philippines ranked 77th out of 81 countries and performed worse than the global average in all categories.

Mr. Caballero said that the country’s low investment in education and the quality of the system are fundamental to understanding why is it lagging behind its regional counterparts.

On appeal, the Philippines went up a notch to 54th spot, as it performed well in terms of cost-of-living (20th) and collected personal income tax (20th). However, it ranked low in terms of quality of life (57th).

“The Philippines’ appeal is also a factor. Although it has a relatively strong cost of living, its quality of life is lacking, as is its performance in measures of institutional strength, which are crucial for attracting highly qualified talent,” Mr. Caballero added.

To improve, he said that the country must revisit its overall talent development strategy, which will help streamline its investment in the education sector.

“This should be a carefully considered strategy, not a matter of just increasing expenditure, but one that aligns investment with the outcome of the system, that is, the skills and competencies that the Philippines’ economy needs to perform efficiently,” he added.

Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation, said that the country lags in talent competitiveness due to its failure to prioritize education and public health.

“Asia-Pacific countries like Japan, South Korea, Taiwan, Singapore, Malaysia, and Thailand have done better because they have focused on building comprehensive education systems, investing in public health, and different levels of national industrial policy,” Mr. Africa said via Viber. 

“In contrast, the Philippines continues to struggle with reckless liberalization, underfunded institutions, and shortsighted economic strategies,” he added.

Mr. Africa said the government can achieve immediate gains by investing more in education, health, and social protection, which will ensure a more capable and productive workforce.

“The government can build more and better public educational infrastructure, ensure universal access to quality education, and improve vocational and technical training,” he said.

Meanwhile, Benjamin B. Velasco, assistant professor at the School of Labor and Industrial Relations at the University of the Philippines Diliman, said that it is not surprising that the country ranks very low in the talent index.

“Many of the indicators for talent are dependent on education, for example, the program for PISA rankings, student-teacher ratios, and the budget for education,” Mr. Velasco said in a Viber message.

“In this objective set of indicators, we do not do well. Our education system is in crisis,” he added.

To improve its education system, Mr. Velasco said that the country will have to increase the budget for public education, improve pay to attract talent to the teaching profession, and provide books, gadgets, and classrooms.

“The private sector should pay more, not less, taxes to increase public revenues. These are hardly original ideas. Many have said this before. It is not that our public officials do not have talent. But they lack the will to just do it. They seem busy in their games of thrones,” he added.

Jamil Paolo S. Francisco, executive director of the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness, said the Philippines lags behind its peers due to its low public expenditure on education as a percentage to gross domestic product and on a per student level.

“Our relatively weaker investment in human capital development has negative implications for the future readiness of our workforce. Further complicating this challenge is the fact that we continue to lose globally competitive talent to more ‘appealing’ countries,” Mr. Francisco said in an e-mail interview.

“This is disappointing because while one of the few bright areas cited by respondents to the executive opinion survey is still the availability of skilled labor in the Philippines, insufficient investment in education and workforce development undermines the readiness of our future workforce and therefore the productivity and overall competitiveness of our economy in the future,” he added.

Moving forward, Mr. Francisco said the country must significantly improve the quality of education to see better results.

“The future workforce will need to learn how to work with advanced digital technologies to remain competitive,” he said.

Being a largely service-sector-driven an d labor-abundant economy, we need to invest in equipping our current workforce and preparing our future workforce for this type of human-machine collaboration to leverage on the much-needed potential productivity gains,” he added.

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Source: Business World