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Infrastructure remains weak link in Philippines' competitiveness

MANILA, Philippines – Investors think the country's macroeconomic environment is among the most attractive in the world, but their interest in the Philippine economy is being dampened by slow infrastructure development.

Even if the Philippines' macroeconomic environment ranked 22nd out of 137 nations in the World Economic Forum (WEF) Global Competitiveness Index this year, it scored low in overall infrastructure.

The Philippines has underinvested in infrastructure – it was ranked 97th out of 137 nations in the WEF report for 2017-2018. Its score of 3.4 out of 7 is the same with Rwanda and even lower than that of Kenya, Cape Verde, and Albania.

"We're improving, but our neighbors are improving faster. We need to focus our efforts to addressing key constraints to competitiveness. Infrastructure is a major constraint," Arsenio Balisacan, chairman of the Philippine Competition Commission (PCC), said on his official Twitter page. (READ: IN NUMBERS: Three-year Rolling Infrastructure Plan (TRIP))

"Inadequate supply of infrastructure" is one of the top 3 reasons the Philippines' score slipped even if it climbed a notch in the rankings. In terms of overall competitiveness, the country climbed to the 56th spot out of 137 economies in this year's report, from 57th out of 138 in 2016, even as its score slipped to 4.35 out of 7.

The report showed that the Philippines' overall infrastructure lags behind those of its Southeast Asian neighbors. The WEF investigated the quality as well as availability of roads, railroads, ports, air transport, electricity, and telephones.

The WEF said in its report that the Philippines, Vietnam, Cambodia, and Laos could all make large gains in competitiveness at a relatively lower cost by improving their performance in infrastructure, health, and education.

The Philippines' position is buoyed by finishing among the top nations in one category: the number of available airline seats. In other words, it is a breeze to get a plane ticket in the Philippines to wherever people need to go. The WEF reported an estimated 1.4 billion available seat kilometers (ASK) per week.

Other areas, however, hold the Philippines' ranking down.

For example, the quality of air transport infrastructure is the lowest in the Association of Southeast Asian Nations (ASEAN). The same goes for quality of overall infrastructure and quality of roads.

The Makati Business Club (MBC), which counts executives of the country's largest conglomerates as members, even said infrastructure "paints a dim picture for the Philippines."

"The quality of other infrastructure, such as roads and ports, stand as big disadvantages, as well. In fact, we trail behind our ASEAN neighbors in almost all measures of infrastructure," the MBC said in a statement.

In quality of air transport infrastructure, the Philippines ranked 124th out of 137 countries, down 8 spots from its 2016 rank.

For Guillermo Luz, private sector co-chairman of the National Competitiveness Council (NCC), the Philippines will suffer from a low rating in infrastructure until investors see existing gateways being rehabilitated and new airports being built.

"Infrastructure remains quite low, especially ports and airports. This is kind of holding steady. Investors just want to see more airports being rehabilitated," Luz told Rappler in a phone interview.

To address the constraint, Balisacan pointed out that the Philippine government is intending to develop more infrastructure, "as reflected in its fiscal and development program."

President Rodrigo Duterte and his economic team unveiled details of an ambitious plan to "build, build, build" projects worth up to P3.6 trillion until 2022.

MBC executive director Peter Perfecto said "implementing the plans under the infrastructure program is critical for the effective functioning of a growing Philippine economy." – Rappler.com