Discovering PHL’s regional competitive edge

By Mhicole A. Moral, Special Features and Content Writer

The Philippines ranked 51^st out of 69 economies in the 2025 World Competitiveness Yearbook, released by the Switzerland-based International Institute for Management Development, improving by one notch from 52^nd the previous year. Behind the slight improvement, the country remained behind several Southeast Asian neighbors that had moved faster in manufacturing, digital infrastructure, logistics efficiency, and foreign investment attraction.

In the first panel of the BusinessWorld Economic Forum 2026, economists and industry leaders discussed how the Philippines could build a competitive business environment that translates to regional economic growth.

Jestoni A. Olivo, senior economist at the Philippine Competition Commission (PCC), said policymakers often misunderstand the relationship between competition and competitiveness, leading to interventions that distort market behavior instead of improving economic performance.

“Policy interventions not aligned with a proper understanding of competitiveness can confuse market dynamics, resulting in a mismatch between the action and the problem it tries to resolve to resolve,” he stated. “We hope to align our understanding of how competition drives competitiveness and how competitiveness shapes competition.”

He noted that competition and competitiveness should not be viewed as opposing ideas, but as complementary factors that shape the quality of economic growth, business development, and investment attraction.

Likewise, improving competitiveness requires action across multiple fronts, including education systems that allow workers to adapt quickly to technological changes, business environments that allow firms to enter and exit markets efficiently, and government systems that reduce bureaucratic barriers and attract investors.

“Our labor force should have the ability to quickly learn new tools and upskill through education and human capital development systems. For firms and industries, there should be ease of entry and exit, and [they should] be equipped with the ability to expand and innovate. For government and jurisdictions, effective regulations should be in place to attract foreign investment by instituting less bureaucratic administrative systems and investment-friendly regulations,” Mr. Olivo explained.

Jamil Paolo S. Francisco, executive director of the Asian Institute of Management’s (AIM) Rizalino S. Navarro Center for Competitiveness, said the Philippines has struggled to maintain pace with regional rivals despite periodic gains in international rankings.

He described competitiveness as a “race” rather than an isolated national achievement, saying countries improve only if they outperform their peers in attracting investment, improving productivity, and modernizing industries.

“We have been slipping in terms of our competitiveness. The highest ramp we reached was 38^th, and the lowest was 52^nd. We have been quite consistent the last five years, hitting that 52^nd mark three times,” he noted.

Mr. Francisco added that the World Competitiveness Yearbook evaluates economies through four major pillars: economic performance, government efficiency, business efficiency, and infrastructure. While the Philippines has posted relatively stable performance in economic indicators, he mentioned that the country remains weak in the other three pillars and has shown declining trends in some areas.

However, for Anthony Oundjian, managing director and senior partner for Manila at Boston Consulting Group (BCG), competitiveness can no longer be measured through a single ranking because countries now compete across several interconnected areas.

“The Philippines is genuinely competitive on talent quality, service export, and the depth of its consumer markets, but it lacks in manufacturing, productivity, logistic cost, power cost, and digital capital,” he stated.

Mr. Oundjian argued that narrowing even one of those gaps could alter the country’s economic growth trajectory. Instead of imitating neighboring countries, he advised that the Philippines should pursue its own economic model.

Digitalization as a competitiveness metric

In terms of digital competitiveness, Grab Philippines Country Head Ronald Roda said regional economies are increasingly relying on integrated systems that include telecommunications infrastructure, digital platforms, payment systems, and artificial intelligence.

“Digital competitiveness is measured not simply about owning the technology, but how a country develops, adopts, and scales technology to reach the ordinary Filipinos and local MSMEs,” he stated.

The Philippines has shown progress in digital adoption, and local markets are becoming more digitally connected and economically active. Still, Mr. Roda acknowledged that the Philippines remains behind its regional neighbors in some areas.

“A lot of people have said that the Philippines has a lot of innate talent in terms of digital savviness, and we have a lot of entrepreneurial communities. But, ultimately, the challenge is creating an environment for the next technologies to prosper,” he explained.

While this gap reflected operational, technological, and logistical limitations, Mr. Roda argued that the Philippines could narrow the difference quickly if the proper environment develops.

“I’m a firm believer that a more competitive Philippines is where growth is more inclusive and where growth reaches the bottom of the pyramid, because digitalization allows it to be,” he shared.

In this regard, Mr. Olivo of PCC said digital competitiveness depends heavily on stable electricity and telecommunications infrastructure. He argued that the Philippines cannot develop large-scale digital industries or data centers without dependable energy access and telecommunications support.

Addressing long-standing gaps

BCG’s Mr. Oundjian said the Philippines possesses favorable demographics and a large consumer market but still struggles to scale worker productivity compared with neighboring economies.

For instance, manufacturing productivity per worker in the Philippines remains significantly behind Thailand’s level, arguing that improving productivity could narrow much of the country’s competitiveness gap with Vietnam and other ASEAN economies.

Mr. Oundjian linked the issue to three long-standing constraints: infrastructure costs, skills development, and access to capital. Addressing those areas would influence wage growth, tax collection, and the country’s ability to attract foreign direct investment.

Concurrently, Mr. Francisco of AIM noted that businesses in the Philippines face high operating costs compared with regional competitors.

“We need a framework and an implementation of that framework that will make the costs more predictable. The last thing you want is the risk that you can’t understand,” he shared.

Businesses also face inconsistent regulatory execution across cities and municipalities, according to Grab’s Mr. Roda. Launching services took years because businesses had to navigate different permitting systems and local requirements.

“One should ask how to standardize all [permits] to make it easy for businesses to enter. Where are the laws about standardization, or are things being executed or not?” he said.

Likewise, Mr. Olivo stated that competition policy affects not only business activity but also ordinary consumers through pricing, service quality, and market access. He advised that stronger competition can help lower costs in sectors such as food, telecommunications, energy, and transportation while improving service quality and accessibility.

“Competition policy does not only equate to lower costs in the market. It is also preserving the competitive process, like having better quality and access to goods and services,” he explained. “Competition policy should also come into place to protect [MSMEs] from larger businesses.”

Meanwhile, Mr. Oundjian outlined five sectors that could strengthen Philippine competitiveness over the next decade: renewable energy, semiconductor backend processing, processed food and high-value agriculture, healthcare services and life sciences, and creative and digital content industries.

In fact, he added, the Philippines already possesses export experience and has internationally recognized creative talent, but has yet to scale those industries into major investment drivers.

Furthermore, Mr. Francisco noted that the Philippine economy has posted strong growth largely because of domestic consumption and population expansion. However, the country may eventually need stronger export industries and higher foreign investment levels to sustain faster long-term growth.

“We have been growing quite spectacularly, and we have been growing because of our own meaning; because the local market is expanding,” he explained. “With one or two export sectors, we can go and find investors. Foreign investment is a way for us to grow, instead of fueling our own growth.”