MANILA, Philippines – The Philippines is a top performer among low income economies in Asia in sustaining long-term trade.

Hinrich Foundation’s Sustainable Trade Index 2018 showed on Tuesday, September 4, that the Philippines improved its ranking from 13th place in 2016 to 10th this year, among 18 other Asian countries and the United States.

The index measures participation of the 20 countries in the international trading system that supports long-term domestic and global goals in economic growth, environmental protection, and strengthening social capital.

According to the report, the Philippines “outperformed” middle income countries Malaysia and Thailand due to a major improvement in its social pillar, boasting the “most educated population” among all low income countries.

The Philippines jumped from 19th in 2016 to 11th in 2018. The improvement can be attributed to the passage of the free tuition law, which the report saw as a “national commitment” to educate Filipinos. (READ: 8 things you need to know about the free tuition law) 

In terms of economic growth, the Philippines fell 6 places from 9th to 15th, due to the declining domestic labor force. The report states foreign remittances from overseas Filipino workers is a key economic driver, but is also “a source of brain drain” in the long-term.

The report also notes that the country demonstrates “an openness” to trade, but also has some of the highest trade costs in the region.

Meanwhile, the country’s rank in environmental preservation remains the same at 6th place among 20 countries, with the best score on curbing air pollution. (READ: Air pollution deaths 3rd highest in PH)

In the region, the Philippines has the second lowest level of air pollution. Hinrich Foundation cautioned, however, that vehicle emission and traffic congestion in metropolitan areas need to be addressed soon, or these would hurt the country’s foreign direct investments (FDI).

FDI supports a country’s trade and economic growth. (READ: Foreign direct investments in PH continue to strengthen in February)

‘Alarming’ trend in Asia

Richer countries in Asia are sliding in trade sustainability, which the report describes as an “alarming trend” that shows a disconnect with corporate expectations.

“The 2018 index results show an alarming trend of countries in Asia, especially the richer ones, broadly regressing in their trade sustainability, with improvements in the economic pillar more than offset by significant declines in the social and environmental pillars,” the report said.

South Korea, Singapore, Japan, and Taiwan saw declining scores in the 3 pillars.

This year, Hong Kong edged out Singapore and South Korea as the best in sustainable trade. Hong Kong was top in the economic and environment pillars, but the report notes the rising inequality and political instability in the country.

Singapore slipped due to its drop in rankings on air pollution indicator, from the best performer to 14th place this year. The transboundary haze pollution remained an issue in the city-state, which is the reason behind the steep fall.

Meanwhile, Taiwan and South Korea took a hit in FDI, which both represented less than 1% of the economy’s total gross domestic product.

Despite the “alarming trends,” the report states that emerging economies in Asia such as Sri Lanka and Vietnam are willing to engage in sustainable trade.

The report also found that sustainability has become “an increasingly important determinant of FDI” in choosing supply-chain partners for multinational companies.

Hinrich Foundation is a nonprofit organization that does trade-related policy research and development work in Asia.

It commissioned the Economist Intelligence Unit, a British business within the Economist group, to build the Sustainable Trade Index. – Rappler.com