Wednesday, March 30, 2011

Philippines again 2nd least attractive investment site in ASEAN

ONCE more, our country has been judged to be among the least attractive investment destinations. What makes this one more painful is that the assessment was done by businessmen in Asean (the Association of Southeast Asian Nations), people eager to see our regional grouping become a common market so that they and the peoples of Asean prosper and enjoy a better quality of life.

The judgment came out in the result of a survey conducted in the second half of 2010 by the Asean Business Advisory Council (ABAC). Asean, of which our country is an original founder, groups the Philippines, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

The survey was done to measure Asean competitiveness.

The respondents are from 335 companies across the Asean countries. Almost half of the enterprises surveyed are small companies employing less than 50 people.
Eighty-five percent of the respondents belong to companies with headquarters in an Asean country. Sixty percent of those surveyed are native or homegrown enterprises.
Eighty-five (85) percent of the survey respondents said they plan to invest or expand in at least one of the 10 Asean member-countries over the three-year period 2010 to 2012. Forty-one (41) percent of respondents prefer Vietnam, 36 percent prefer Singapore and about 33 percent Thailand or Indonesia or Malaysia.

Only 12 percent of respondents are interested in the Philippines—a smaller number than those interested in Cambodia (13 percent), Myanmar (14 percent) and Laos (19 percent).

Brunei was ranked lowest, with only five (5) percent of respondents eyeing it. We are second lowest with our 12 percent.

To the question which country offers the best prospects for offshore direct investments, 48 percent named Vietnam, Singapore, Indonesia, Malaysia, Laos, Myanmar and Thailand. Not a single respondent chose the Philippines.

Asean as a whole, the 10 countries combined, got more “votes” from the respondents than China as the “country that offers the best prospects . . . for offshore direct investments.”

Impatient for Asean common market

Businesses polled expressed anxiety over the delay in the implementation of the Asean Economic Community (AEC) Blueprint. The respondents apparently want to see the region become a single market and production base by 2015, which is the objective of the AEC Blueprint.

Ninety-one (91) percent of respondents said the implementation of the AEC Blueprint is an important consideration in their plans to invest or expand within Asean. Eighty-nine (89) percent said failure to form the AEC in 2015 would impact on their business costs. This means a lot of Asean businessmen have actually planned and spent for the future time when our region has become a common market.
What is the ABAC?

The government should take the results of this survey seriously.

The body behind it, the Asean Business Advisory Council (Asean-BAC) was established by the Asean Heads of State and Government (HOSGs) at the Seventh Asean Summit in November 2001 in Bandar Seri Begawan, Brunei Darussalam. Inaugurated at the Asean Secretariat in Jakarta, Indonesia, in April 2003, ABAC’s primary mission is to promote public-private sector partnership to achieve the integration needed for the Asean Economic Community (AEC).

Asean-BAC provides private sector feedback on the implementation of Asean economic cooperation activities. It identifies priority areas for the consideration of the Asean leaders (the economic ministers mainly and the heads of state and government).

We must improve in global competitiveness

In a survey of 473 Japanese companies conducted by the Japan External Trade Organization (JETRO) also last year (November to December), our country also figured as the least preferred investment venue in Southeast Asia.

We trailed behind Singapore, Thailand, Indonesia, Malaysia and Vietnam.

But we beat Vietnam and Malaysia as the preferred site for expansion of regional headquarters. The Japanese Chamber of Commerce of the Philippines attributed this to our “good command of English.”

We must have other qualities than just our English—which other countries in Asean are fast learning to cultivate.

Early in the year, we had some good news from the World Economic Forum’s World Competitiveness Index. We improved by two rungs. We were only in 87th place last year. Now we are in 85th place. The only problem is that 85th place still places us in the bottom third of the 139 countries rated by the Davos, Switzerland-based WEF.

Other Asean countries rate much better than us. Singapore is of course among the very top—3rd place. Malaysia is in 26th place, Thailand in 38th, Indonesia in 44th, and Vietnam in 59th. We are in the league of African countries like Uganda and Zimbabwe.

In coming up with its ratings, the WEF’s World Competitiveness Index assesses 12 pillars of competitiveness. These are (1) Institutions, (2) Infrastructure, (3) Macroeconomic environment, (4) Health and primary education, (5) Higher education and training, (6) Goods market efficiency, (7) Labor market efficiency, (8) Financial market development, (9) Technological readiness, (10) Market size, (11) Business sophistication, and (12) Innovation.

We are worst in Institutions. Of the 139 countries, we are at 125th place. We are miserably placed in “Diversion of Public Funds” (135th), “Public Trust of Politicians” (134th), “Ethical Behavior of Firms” (129th), and “Irregular Payments and Bribes” (128th). All of these suggest corruption in both government and the private sector.

We are also in the lowest one-fourth places in Innovation, Labor Market Efficiency, and Infrastructure.

Being poor in innovation shows up our weakness in science and technology and research and development. Poor labor market efficiency indicates our labor mismatches and business and government’s failure to help our labor sector adjust to changing market demands.

Low rating in Infrastructure simple means the other countries have better roads, logistics, etcetera. We must cease having diluted cement and asphalt—for heaven’s sake! Manila Times Editorial

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