1

Building UpPhilippine Competitiveness

Ambassador Cesar B. BautistaCo-Chair for the Private SectorNational Competitiveness Council

Bali, IndonesiaNovember 2007

2

The Economy

Period 1985-1992 1993-19981999-2004

% FDI/GDP 0.5 % 2.3% 1.4%

Exports, in US$

$9.8 B

(’92)

$29.5 B

(’98)

$39.7 B

(’04)

% Export Growth

4% 16% 12%

% GDP Growth average

2.1% 3.6% 4.3%

3

Total Philippine Merchandise Exports

8.89.8

11.413.5

17.4

20.5

25.2

29.5

35.0

38.1

32.235.2 36.2

39.7 41.3

47.0

0

5

10

15

20

25

30

35

40

45

50

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

In Billion Dollars1991-2006

4

Contribution of Electronics Exports

1.7 3.03.8

4.9

7.6

10.6

15.0

19.9

25.3

27.0

23.0

24.025.0

26.6

27.7

30.0

0

5

10

15

20

25

30

35

40

45

50

1991199219931994199519961997199819992000200120022003200420052006

Others Electronics

In Billion Dollars1991-2006

5

GDP by Industrial Origin1991 vs 2006

1991

Agriculture22.7%

Industry34.7%

Services42.5%

Agriculture18.8%Services

48.3%

Industry32.8%

2006

6

Employed Persons by Industry Group 1991 vs 2006

1991

Services39.2%

Industry15.9%

Agriculture44.9%

2006

Industry15.2%

Services49.0%

Agriculture35.8%

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Competitiveness Ratings

World CompetitivenessYearbook (IMD) #49 out of 61•Economic Performance•Government Efficiency•Business Efficiency

•Infrastructure

Global Competitiveness Report (WEF) #77 out of 117•Macroeconomic Stability•Openness and Market Size•Institutions•Business Sophistication•Good Market Efficiency•Labor Market Efficiency•Financial Market Efficiency•Infrastructure•Personal Security•Basic Human Capital•Advanced Human Capital•Technological Readiness•Innovation

Doing Business (WB, 2007)#126 out of 175•Government Efficiency•Institutions

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Executive Order 571

• Issued by President Arroyo on 5 October 2006

• Created the National Competitiveness Council, a Private-Public Task Force on Philippine Competitiveness

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Competitiveness Model

Demand Conditions

Factor Conditions

Firm strategy, structure &

rivalry

Related & supporting industries

•Human Resources•Management•Access to Financing•Infrastructure•Transaction costs and flows•Energy

The Determinants of National Advantage“Porter Diamond”

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Competitiveness SummitSeptember 2006

• Series of Consultations (covering more than 1,000 participants)

• Representatives from business, government, NGOs, development agencies, academe

ACTION AGENDA

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Take-off References

• Medium Term Philippine Development Plan 2004 - 2010

• Philippine Export Development Plan 2005 – 07• National Export Congress Scorecards• Philippine Development Forum• 31st Philippine Business Conference (PCCI)• 2006 National Manpower Summit• 2006 Roadmap for Export Competitiveness of

Services Sectors (EO 372, S. 2004)• EO 395, S. 1997• RA 9013• EO 428, S. 2005• ADB Country Report• AmCham Investment Climate Improvement Report• Current Efforts - Services Coalition,

Private sector efforts (e.g. PQAF, ECOP, MAP, PCCI, LGU-based initiatives etc.)

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National Competitiveness Council

A. VISIONA Competitive Philippines by 2010Instill Culture of ExcellencePPP as the Development Engine

B. MISSIONImplement the Action Agenda with Private Sector

Initiatives that Support Public Policies- Competitive Human Resources- Management Expertise in Specific Public Offices- Financing to Micro and SMEs- Reduced Transaction Costs and Improved

Transaction Flows- Upgrade Infrastructure (Transport)- Reduced Energy Costs, Secure Supply

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National Competitiveness Council

C. METRICS IN 2010• Top 1/3 ranking in major international

surveys• Total investments at record level (FDI at

3-4% of GDP)• New export services to generate $15B per

year

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NCC SECRETARIATPublic-Private Sector

ED Boy Fulgencio – Mr. Ruy Moreno

COMPETITIVE HUMAN RESOURCESAtty Emerico de Guzman

EFFICIENT PUBLIC AND PRIVATE SECTOR MANAGEMENT

Mr. Baltazar Endriga

EFFECTIVE ACCESS TO FINANCINGMr. Sergio Ortiz-Luis, Jr.

IMPROVED TRANSACTIONS FLOWS AND COSTS

Mr. David Balangue

SEAMLESS INFRASTRUCTURE NETWORK

Mr. Meneleo Carlos, Jr

ENERGYCOST COMPETITIVENSS AND SELF SUFFICIENCYDr. Francisco Viray

SPECIAL CONCERNS (LEGISLATURE)

Mr. Francis Chua

SPECIAL CONCERNS(OMBUDSMAN/JUDICIARY)Atty Miguel Varela

NCC Organizational Structure

PUBLIC SECTOR PRIVATE SECTOR

DTI Secretary Co-Chairs Amb CBBautista

DOF, DOTC, DepEd, NEDA Amb DGDee, Amb RRRomulo

Dr. FMMacaranas, Mr. Gil Salazar

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Stages of Innovation

A

B

IDEA SUCCESS!

+ ENTREPRENUERSHIP

INNOVATION

+ FINANCE= SUCCESS!= SUCCESS!

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Competitive Human Resources

Project Private Sector Partners

• Improve proficiencies in English, Science and Math by 30% in 2010

- PMAP, PBED

A. Teacher Support Programs•Mentoring the Mentors•1000 Teachers Campaign•Promote teaching profession/ advocacy and image building•Increase recruitment of teachers

Mirant Foundation, PBed, Metrobank Foundation, Ayala Foundation, AmCham, League of Corporate Foundations

B. Student Support Programs•Nutrition/School feeding program

League of Corporate Foundations

• Pursue various OJT and dual-tech projects

- Don Bosco, Hanns Seidel Fdn, Meralco Fdn, ECCP

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Effective Access to Financing

Project Private Sector

Partners

• Improve credit worthiness/capability of SMEs through assistance with the business group

- PCCI, FINEX

• Enhance the role of SME financing approach

- PhilExport

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Efficient Public and Private Sector Management

Project Private Sector

Partners

• Develop programs to help cities achieve world-class performance by 2008 and 20% of municipalities by 2010

- MAP, ISA, CDS

• Institutionalization of e-Governance in relevant government offices mandated with business related processes

- PhilExport

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Improved Transaction Costs and Flows

Project Private Sector

Partners

• Improve the procedures for the entry and exit of business persons

- Foreign Chambers

• Enhance the procedures for the entry and exit of goods

- PCCI, Philexport, Port Users Confederati

on

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Seamless Infrastructure Network

Project Private Sector

Partners

• Lighting of airports - Domestic airlines

• Reduce “total” shipping cost (start with a couple of routes)

- DMAP, UPS

21

Energy Cost Competitiveness and Sufficiency

Project Private Sector

Partners

• Real open access to distribution of power

- PCCI, SEIPI

• No-Nonsense Energy savings Drive

- PCCI

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Accomplishments

• Easier entry/exit of foreign investors • Reduction of some costs for exporters• Reduced power costs at PEZA for locators.• Aligned private sector corporate projects to

help support the increase in proficiency in English, Science and Math among teachers and students.

• Aligned private sector corporate initiatives to support a systematic school-feeding program.

• Encourage dual tech/OJT initiatives• Private initiatives at infrastructure projects• Training towards model cities by private sector• Training centers for SMEs in PEZA zones

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Key Challenges

1. Effective partnership with Government officials

2. Strong network of companies, chambers, leaders, NGOs, development partners

3. Align individual actions to the whole4. Project financing outside government5. Involve legislators and the judiciary

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Government ENABLES. Business DRIVES and goes for GROWTH

• Economic growth depends upon the drive of business (the engine of development)

• Business, government and society must be linked to achieve goals

• Partisanship must be avoided

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How Can Businesses Lift Philippine Competitiveness?

• Align your projects with the key actions of the NCC

• HR: 30% improvement in English, Science and Math by promoting teaching as a profession

• Financing: Improve SME capabilities by volunteering to serve in SME Centers

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How Can Businesses Lift Philippine Competitiveness?

• Work with your local officials to introduce new NCC programs

• Introduce the Model Cities Program to your mayors or governors

• Advocate for streamlining of business licensing processes in your local governments

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How Can Businesses Lift Philippine Competitiveness?

• Be actively involved with improvements in infrastructures

• Encourage the PPP approach in electricity cooperatives to maximize professional management and commercial operations

• Introduce a business approach in allocating scarce resources to key infrastructure projects – such as in tourism development

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Competitiveness Begins With You!

From: MAGALING ANG PINOY…To: MAGALING ANG PILIPINAS!

www.competitive.org.ph