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Feruary Makati Shangri-La
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Rating Tally Tally
2011 2012 2013
TallyPercentage Percentage Percentage
Completed
Substantial Progress
Started
Not Ongoing
Backward / Regression
No Longer Relevant
5
36
191
168
51
11
1.08%
7.79%
41.34%
36.36%
11.04%
2.38%
2.38%
16.02%
44.37%
29.00%
5.41%
2.81%
4.11%
20.35%
46.10%
20.35%
5.63%
3.68%
11
74
205
134
25
13
19
94
213
94
26
17
2011 2012 2013
Tally
232
Tally
290
Tally
326
Percentage
51.44%
Percentage
64.59%
Percentage
73.26%
2011 2012 2013
Tally
219
Tally
159
Tally
120
Percentage
48.56%
Percentage
35.41%
Percentage
26.97%
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Tally
285
50
112
Progress
Steady
Declined
Improved
Percentage
63.33%
11.24%
25.17%
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SETIO
OT
L
B
O
St
SP
Stea
dy
Dec
line
d
Improv
ed
PartroingTooSlo
PartBecomingMoreompetitive
Agriusiness
BusinessProcessOutsourcingBP
O
reativeIndustries
Manufacturing
Logistics
Mining
Tourism
MedicalTravelandetire
ment
InfrastructurePolicy
InfrastructureAirports
InfrastructurePoer
Infrastructureoadsails
InfrastructureSeaports
InfrastructureTelecommunications
Infrastructureater
Businessosts
EnvironmentandaturalDisaster
ForeignEuityandProfessionals
overnance
udicial
Laor
Legislation
Localovernment
MacroeconomicPolicy
Security
SocialServicesEducation
SocialServicesHealthandPopula
tion
SocialServicesPoverty
Ac
tive
Dorman
t
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viii ARANGKADA PHILIPPINES 3rd
ANNIVERSARY ASSESSMENT
First Anniversary Assessment esults
Second Anniversary Assessment esults
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Second Anniversary Assessment 2012
Completed
Substantial Progress
Started
Not Ongoing
Backward / Regression
No Longer Relevant
11
74
205
134
25
13
(2.38%)
(16.02%)
(44.37%)
(29.00%)
(5.41%)
(2.81%)
First Anniversary Assessment 2011
Completed
Substantial Progress
Started
Not Ongoing
Backward / Regression
No Longer Relevant
5
36
191
168
51
11
(1.08%
(7.79%
(41.34%
(36.36%
(11.04%
(2.38%
Steady 63.33%
Deteriorated 11.24%
Improved 25.17%
2013
2012
2011
290 (64.59%)
232 (51.44%)
326 (73.26%)
159 (35.41%)
219 (48.56%)
120 (26.97%)
Third Anniversary Assessment 2013
Completed
Substantial Progress
Started
Not Ongoing
Backward / Regression
No Longer Relevant
19
94
213
94
26
17
(4.11%)
(20.35%)
(46.10%)
(20.35%)
(5.63%)
(3.68%)
OVERALL TALLY
PROGRESS OF RATINGS
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xiv ARANGKADA PHILIPPINES 3rd
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2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active
Active Dormant
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2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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xvi ARANGKADA PHILIPPINES 3rd
ANNIVERSARY ASSESSMENT
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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x
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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xviiiARANGKADA PHILIPPINES 3rd
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Survey Year2012
Ranking2013
RankingTrend
PreviousASEAN-6Ranking
2013 ASEAN-6 Ranking
TrendDate of Previous
Press Release(Est.) Date ofNext Release
1. Best Countries forBusiness
2013 87 of 141 90 of 145 Deteriorated 5 of 6 5 of 6 Stable Dec. 2013 Dec. 2014
2. Failed States Index1 2013 56 of 177 59 of 178 Improved 6 of 6 6 of 6 Stable Jun. 24, 2013 Jun. 2014
3. Index of EconomicFreedom
2013 107 of 179 97 of 177 Improved 4 of 6 4 of 6 Stable Jan. 10, 2013 Jan. 2014
4. WorldCompetitivenessYearbook
2013 43 of 59 38 of 60 Improved 5 of 52 5 of 52 Stable May 30, 2013 May 2014
5. InternationalProperty Rights Index
2013 87 of 130 77 of 131 Improved 5 of 63 4 of 6 Improved Sept. 20, 2013 Sept. 2014
6. CorruptionPerception Index
2013 105 of 174 94 of 177 Improved 4 of 6 3 of 6 Improved Dec. 2013 Dec. 2014
7. Human DevelopmentReport
2013112 of 187
114 of186
Deteriorated4 of 64
(2011)4 of 6 Stable Mar. 14, 2013 Mar. 2014
8. E-GovernmentReadiness Survey5
2012 88 of 190 -- -- 4 of 6 -- Mar. 6, 2012 Mar. 2014
9. Doing Business6 2013 136 of 183138 of185
Deteriorated 6 of 6 6 of 6 Stable Oct. 23, 2012 Oct. 2013
10. Investing AcrossBorders7
201087
countries-- -- -- -- -- Jul. 7, 2010
Before end of2012
11. Paying Taxes12 2013 135 of 183143 of185
Deteriorated 5 of 6 6of 6 Deteriorated Nov. 21, 2012 Nov. 2013
12. GlobalCompetitiveness Report
2013 65 of 144 59 of 148 Improved 5 of 6 5 of 6 Stable Sept. 4, 2013 Sept. 2014
13. Global EnablingTrade Report8
2012 72 of 132 -- Improved 6 of 6 -- -- May 23, 2012 May 2014
14. Travel & TourismCompetitiveness9
201372 of 139
(2011)82 of 140 Deteriorated 4 of 6 6 of 6 Deteriorated Mar. 7, 2013 Mar. 2015
15. EnvironmentalPerformance Index10
2012 42 of 16311 -- -- 3 of 6 -- -- Jan. 25, 2012 Jan. 2014
1A Failed States Index ranking closer to 0 means closer to complete state failure.2The 2012 and 2013 World Competitiveness Yearbook did not include Vietnam.
3The 2013 IPRI stated that the Philippines was at par with Vietnam.4THE UNDP, as per its database, did not publish a 2012 Human Development Report.
5The UN E-Governance Readiness Survey is a biennial report previously published in 2010.
6The 2013 Report was published in October 2012. The latest is the Doing Business 2014 which published on Oct. 2013, Philippines rank 108 of 189.7Investing Across Borders is a biennial report due out before the end of 2012; previous report was published in 2010.
8The Global Enabling Trade Report is a biennial report. The previous report was published in 2010. It does not include all 6 major ASEAN economies.
9The World Economic ForumsTravel and Tourism Competitiveness Report is supposedly a biennial report first published in 2007(with the exception in 2008 when a report was published).10
The Environmental Performance Index is a biennial report, previously published in 2010, first r eleased in 2006.11Based on the New Series of Environmental Performance Index. Based on the 2012 report, but latest data is 2010; this series was revised and is not comparableto the data released in2006, 2008 and 2010 due t o methodological refinements12
Paying Taxes for 2013 is published on 2012. The latest is Paying Taxes 2014published on Nov. 19, 2013, Philippines rank 131.
Progress Data
World
Ranking
Improved Rankings (both 2012 and2013)
8
Stable Rankings 0
Deteriorated Rankings 4
Unreleased (2013) 3
AS
EAN-6
Ra
nking
Improved Rankings 3
Stable Rankings 6
Deteriorated Rankings 2Unavailable 4
Sources1 Forbes Magazine2 Foreign Policy Magazine / The Fund for Peace3 Heritage Foundation / Wall Street Journal4 International Institute of Management Development5 Property Rights Alliance6 Transparency International7 United Nations Development Programme8 United Nations Public Administration Network9 World Bank10 World Bank11 World Bank12 World Economic Forum
13 World Economic Forum14 World Economic Forum15 Yale Center for Environmental Law and Policy
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There is no other time in our history where so manyfavorable factors are converging in our favor: oureconomy is robust and getting stronger, we have a youngand dynamic citizenry, the entire investment world isfocusing on us and giving us favorable marks, unlike theattitude in past years it is a rare time in our history.
- Ramon del Rosario Jr., Chairman, Makati Business Club, February 11, 2014
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Growing Too Slow
PART 1
Recommendations: 8
Progress:
Rating:
2 Improved 0 Declined 6 Steady
0 Backward/RegressionNo Longer Relevant0 1 Not Ongoing
3 Substantial ProgressStarted4 0 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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2 ARANGKADA PHILIPPINES 3rd
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PART 1
GROWING TOOSLOWWhile the macroeconomic fundamentals of the Philippines have been impressive, itsshare of foreign direct investments pales in comparison with those of other countriesin the region. If we do not make our economy attractive for foreign investments, we
would not be able to maximize the benefits from economic integration. Investmentswill pour in and factories will be built in our neighboring countries, and they will be
exporting goods to us while we export our workers to them to run their factories... amost sorry scenario.
- Speaker Feliciano R. Belmonte Jr., Meeting with Joint Foreign Chambers and Philippine Business Groups,
February 12, 2014
The three biggest challenges facing the Philippine economy are to move up to ahigher level of sustained growth, create more and better jobs, and make growthinclusive. After two decades (1980-2000) of negligible per capita GDP growth, percapita income has steadily increased from 2000 onwards as population growth easedand OFW remittances accelerated. Of the ASEAN-6, for the past five decades, the
Philippines had the lowest GDP and PCI growth, but from 1999 to 2013, real GDPgrowth improved, averaging 5.1% and tracking closely to Indonesia, Singapore, andThailand. From 2010 to 2013, GDP growth fell from 7.6% (2010) to 3.6% (2011),
Philippine Historical GDP and GNI Real Growth Rates, 1980-2013
Sources: NSCB (new linked series); Bernardo and Tang (2008)
-15%
-10%
-5%
0%
5%
10%
15%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
GDP
GNI
Aquino, C Ramos Estrada Arroyo Aquino, B
EDSA 1
BOP & Powercrises/ Coup
AsianFinancial
Crisis EDSA2
Fiscalcrisis
GlobalFinancial
Crisis
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then rose to 6.8% (2012) and 7.2% (2013). This achieved the distinction of being the fastegrowing of the ASEAN-6 economies for two successive years. This is the first time in our daseries (beginning 1960) that the Philippines has placed first, hopefully the start of extendecatching up with the other regional economies. The Philippines has also lagged in job-creatinFDI within ASEAN, no matter what measures are usedabsolute, per capita, or percent of GD2013 saw a signifcant increase to a record level of $3.1 billion in the first nine months, for aestimated annual figure of $4.1 billion, almost 50% higher than the $2.8 billion in 2012, anover twice the $1.8 billion in 2011. This development placesArangkadastarget of $7.5 billio
a year within arms reach.
Recommendation 1
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Substantial Progress Substantial Progress
Average Real GDP Growth Rates, % ASEAN-6, 1960-2013
Sources: World Bank; 2012 data - Country statistics offices (Philippines, Singapore and Vietnam); Media releases(Indonesia and Thailand) and authors estimates (Malaysia)
0%
2%
4%
6%
8%
10%
12%
1960-1970 1970-1980 1980-1990 1990-2000 2000-2010 2010-2013
IndonesiaVietnamPhilippinesMalaysiaSingaporeThailand
PART 1: GROWING TOO SLOW
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Recommendation 4
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Total Philippine Exports, 1990-2012, US$ Bn
Source: BSP (BOP concept)
-20%
-10%
0%
10%
20%
30%
40%
50%
-30
-15
0
15
30
45
60
75 Services, lhs
Goods, lhs
YOY growth
PART 1: GROWING TOO SLOW
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6 ARANGKADA PHILIPPINES 3rd
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Recommendation 5
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 6
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
Domestic Investments, % of GDP, ASEAN-6, 1990-2012
Countries 1990-1999 2000-2009 2010-2012 2011 2012
IndonesiaMalaysia
Philippines
Singapore
Thailand
Vietnam
Sources: ADB, Country Statistics Office (Malaysia and Thailand)
27.836.3
25.2
33.8
36.3
23.7
25.023.0
20.2
24.0
25.9
35.8
33.524.1
20.2
23.9
27.0
32.9
32.823.6
21.7
22.4
26.5
32.6
35.325.5
18.5
27.0
28.5
27.2
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Recommendation 7
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Substantial Progress
Gross Fixed Investments, % of GDP, ASEAN-6, 1990-2012
Sources: ADB and NESDB (Thailand QGDP series)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Indonesia
Vietnam
Thailand
Singapore
Malaysia
Philippines
PART 1: GROWING TOO SLOW
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8 ARANGKADA PHILIPPINES 3rd
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Recommendation 8
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
Real GDP Growth Rates, ASEAN-6, 1990-2013
Sources: World Bank; 2012 data - Country statistics offices (Philippines, Singapore and Vietnam); Media releases(Indonesia and Thailand) and authors estimates (Malaysia); 2013f are from WEO forecast except for actual figuresfor Philippines and Singapore.
-15%
-10%
-5%
0%
5%
10%
15%
20%
Philippines
Indonesia
Thailand
Malaysia
Vietnam
Singapore
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Recommendations: 3
Progress:
Rating:
0 Improved 0 Declined 3 Steady
Becoming More Competitive
PART 2
0 Backward/RegressionNo Longer Relevant0 0 Not Ongoing
2 Substantial ProgressStarted1 0 Completed
2013
2012
2011
Active
Active
Active
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10 ARANGKADA PHILIPPINES 3rd
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PART 2
BECOMING MORECOMPETITIVEMyanmar is opening up, Indonesia is making progress on infrastructure, and you havethe Philippines, which is a real bright spot in the region right now,... Thailand risks losing itsinternational competitiveness. Thats the real worry.
- Euben Paracuelles, Southeast Asia economist, Nomura, quoted in International New York Times, January31, 2014
While Filipinos are highly competitive in the world job market, the countrys domesticcompetitiveness has much room for improvement. Global rating surveys abound
with ever-expanding coverage stimulated by the globalization of investment, trade,and information. The Philippines was on a downward trajectory in internationalcompetitiveness rankings in the last decade but in recent years has reversed direction,making significant gains in closing gaps with several of its comparable regionaleconomies, especially in measures of corruption, governance, and infrastructure. Thisimprovement can be credited to more systematic efforts undertaken by the PhilippineGovernment through the National Competitiveness Council for several years to regaincompetitiveness. However, these efforts must be sustained and accelerated to producemore encouraging results faster.
Changes in 15 PH International Competitiveness Rankings, 2008-2013
Source: JV Pimentel, AmCham-TAPP, 2014
2008 2009 2010 2011 2012 2013
Improved Rankings 3 2 6 5 7 9
Deteriorated Rankings 5 10 6 6 3 1
Stable Rankings 4 1 1 0 2 2
Unreleased 3 2 2 4 3 3
0
2
4
6
8
10
12
No.ofRa
nkings
Expon.(ImprovedRankings )
Expon.
(DeterioratedRankings)
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10 Lessons on Competitiveness by Guillermo M. Luz (Private SectorCo-Chair, National Competitiveness Council - NCC)
1. Transparency leads to competitiveness.
2. Work in progress is not good enough.
3. Execution and delivery matter.
4. Teamwork is important.
5. We need to work on multiple fronts.
6. The competition never sleeps.
7. The bar always rises.
8. Speed to reform is important.
9. Maintaining momentum is important.
10. We need to institutionalize change.
Recommendation 1
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
PH Competitiveness Rankings, 2008-2013
Survey
2008 2009 2010 2011 2012 2013
Trend SourcesRanking
Forbes Magazine
Foreign Policy Magazine /The Fund for Peace
Heritage Foundation / WallStreet Journal
International Institute ofManagement Development
Property Rights Alliance
Transparency International
United NationsDevelopment Programme
United Nations PublicAdministration Network
World Bank
World Bank
World Bank
1. Best Countries forBusiness1
2. Failed States Index2
3. Index of EconomicFreedom
4. World CompetitivenessYearbook
5. International PropertyRights Index
6. Corruption PerceptionIndex
7. Human DevelopmentReport
8. e-GovernmentReadiness Survey5
9. Doing Business
10. Investing AcrossBorders6
11. Paying Taxes
91 of 121
59 of 177
98 of 156
40 of 55
62 of 115
141 of 180
90 of 177
66 of 182
141 of 183(2008-09)
87 coun-tries
126 of 178
91 of 128(2010)
51 of 177
109 of 178
39 of 58
80 of 125
134 of 178
97 of 169(2010)
78 of 183
134 of 183(2010-11)
87 coun-tries
135 of 183
87 of 141
56 of 177
107 of 179
43 of 59
87 of 130
105 of 174
112 of 187(2011)
88 of 190
138 of 185(2012-13)
87 coun-tries
135 of 183
87 of 134(2011)
50 of 177
115 of 179
41 of 59
87 of 129
129 of 182
112 of 187
-----
136 of 183(2011-12)
-----
124 of 183
90 of 145
59 of 178
97 of 177
38 of 60
77 of 131
94 of 177
114 of 186
-----
108 of 189(2013-14)
-----
143 of 185
Deteriorated
Stable
Improved
Improved
Improved
Improved
Stable
Deteriorated
Improved
-----
Deteriorated
84 of 127
53 of 178
104 of 178
43 of 57
74 of 115
139 of 180
105 of 182
-----
146 of 183(2009-10)
-----
129 of 181
PART 2: BECOMING MORE COMPETITIVE
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12 ARANGKADA PHILIPPINES 3rd
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Survey
2008 2009 2010 2011 2012 2013
Trend SourcesRanking
12. GlobalCompetitivenessReport
13. Global EnablingTrade Report7
14. Travel & TourismCompetitiveness8
15. EnvironmentalPerformance Index9
World Economic Forum
World Economic Forum
World Economic Forum
Yale Center forEnvironmental Law andPolicy
71 of 134
82 of 118
81 of 130
41 of 132
85 of 139
92 of 125
-----
41 of 132
65 of 144
72 of 132
-----
41 of 132
75 of 142
-----
94 of 139
-----
59 of 148
-----
82 of 140
-----
Improved
Improved
Improved
Stable
87 of 133
82 of 121
86 of 133
42 of 132
Recommendation 2
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
Areas of Dissatisfaction %, Philippines, 2003-2013
Source: AmCham Gallup Surveys
88%84%
79%
73%
59%
40%
54%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Corruption
Laws and regulations
Infrastructure
Local Protectionism
Ease of moving products
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PART 2: BECOMING MORE COMPETITIVE
Recommendation 3
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Started Started
World Competitiveness, Percentile Rankings, Selected ASEAN Countries, 2001-2013
Sources: International Institute for Management Development and authors calculations
43rd
38th
010
20
30
40
50
60
70
8090
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Singapore Malaysia Thailand Indonesia Philippines
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14 ARANGKADA PHILIPPINES 3rd
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Corruption Perceptions Index, Percentile Rankings, ASEAN-6, 1998-2013
Sources: Transparency International and authors calculations
129th
105th94th
0
10
2030
40
50
60
70
80
90
100
Singapore Malaysia Thailand Philippines Indonesia Vietnam
Ease of Doing Business, Percentile Rankings, ASEAN-6, 2006-2014
Source: World BankNote: 2014 data contains 2013 data; this one-year advanced reporting applies to the rest of previous reports
138th
108th
0
10
20
30
40
50
60
70
80
90
100
2006 2007 2008 2009 2010 2011 2012 2013 2014Singapore Thailand Malaysia Vietnam Indonesia Philippines
Global Competitiveness, Percentile Rankings, ASEAN-6, 2001-2013
Sources: World Economic Forum, authors calculation
87th
85th
75th
61st
59th
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Singapore Malaysia Thailand Indonesia Philippines Vietnam
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Recommendations: 18
Progress:
Rating:
4 Improved 0 Declined 14 Steady
Agribusiness
PART 3SEVEN BIG WINNER SECTORS
0 Backward/RegressionNo Longer Relevant0 3 Not Ongoing
1 Substantial ProgressStarted14 0 Completed
2013
2012
2011
Active Dorma
Active Dormant
Active Dormant
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16 ARANGKADA PHILIPPINES 3rd
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PART 3
SEVEN BIG WINNER SECTORS
AGRIBUSINESSWith over one million Filipinos entering the labor force each year, the service sectoralone cannot absorb them all... No surprise, then, that poverty has barely declined inrecent years or that the countrys per capita GDP is the lowest among ASEANs core five.To reverse these trends, the country has to create jobs for semi- and unskilled workersin manufacturing and agriculture. But doing that, in turn, will require attracting moreforeign investment, which for the Philippines is currently among the lowest in Asia...
- Karen Brooks, former Asian Affairs Director, US National Security Council, Foreign Affairs, January-February 2014
Although 32% of employed Filipinos worked in agriculture in 2012, Philippine foodexports were less than 5% of the ASEAN-6 total that year. By contrast, Vietnam hastripled its share of the ASEAN total since 1997, while the share of the Philippinesactually declined. Growth in Philippine agricultural export value has been very slow,
while such exports of Indonesia, Malaysia, Thailand, and Vietnam skyrocketed 5-to8-fold in the past two decades. Nevertheless, the Philippines has very high potentialto export large quantities of specialized food products exploiting a multitude of new
market opportunities from present and future Free Trade Agreements (FTAs). Filipinofarmers face high domestic transport, labor, and other costs, and the Philippines lagsin integrating small farms into larger enterprises. Mindanao has great potential, bothto feed Luzon and to export. Long-standing farm infrastructure requirements needinvestment. The Comprehensive Agrarian Reform Program Extended with Revisions(CARPER), which ends in mid-2014, has greatly discouraged corporate farming.
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Recommendation 1
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Started
0%
10%
20%
30%
40%
50%
60% Indonesia
Thailand
Malaysia
Vietnam
Singapore
Philippines
Share in ASEAN-6 Agricultural Exports, 1990-2012
Source: WTO; No data for Vietnam before 1997
Recommendation 2
2011 Rating 2012 Rating 2013 Rating
Started Started Started
PART 3: SEVEN BIG WINNER SECTORS: AGRIBUSINESS
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18 ARANGKADA PHILIPPINES 3rd
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0
10
20
30
40
50
60
19901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
Indonesia
Thailand
Malaysia
Vietnam
Singapore
Philippines
Agricultural Products Exports, ASEAN-6, 1990-2012, US$ Billion
Source: WTO; No data for Vietnam before 1997
Recommendation 3
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
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Agricultural Goods and Food Exports, ASEAN-6, 2012, US$ Billion
Countries Agricultural goods
Exports Imports Trade Balance
Agricultural food exports,% of total agricultural
exports
Agricultural Area,in (000 Ha), 2009
Indonesia
Malaysia
Philippines
Singapore
ThailandViet Nam
Sources: WTO and FAO (for agricultural land area as of 2009)
45.0
33.9
5.1
9.9
42.025.0
0.7
0.8
0.9
0.9
0.70.8
54500.0
7870.0
12100.0
0.7
21060.010842.0
20.9
21.4
7.2
14.0
16.813.7
24.1
12.5
-2.2
-4.1
25.211.3
Recommendation 4
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Recommendation 5
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
PART 3: SEVEN BIG WINNER SECTORS: AGRIBUSINESS
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Recommendation 6
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 7
2011 Rating 2012 Rating 2013 Rating
Started Started Started
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Coconut Products,37.8%
Sugar and RelatedProducts, 4.9%
Bananas, 17.9%
Other Fruits andvegetables, 15.4%
Other Agro-BasedProducts, 22.4%
Forest Products, 1.6%
Agriculture and Forest Products Exports Distribution, 2012
Source: NSO
Recommendation 8
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
Recommendation 9
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
PART 3: SEVEN BIG WINNER SECTORS: AGRIBUSINESS
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Recommendation 10
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 11
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 12
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Substantial Progress
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Recommendation 13
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 14
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
PART 3: SEVEN BIG WINNER SECTORS: AGRIBUSINESS
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Recommendation 15
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
Recommendation 16
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 17
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
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PART 3: SEVEN BIG WINNER SECTORS: AGRIBUSINESS
Recommendation 18
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Not Ongoing
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Recommendations: 30
Progress:
Rating:
6 Improved 6 Declined 15 Steady
Business Process Outsourcing
PART 3SEVEN BIG WINNER SECTORS
1 Backward/RegressionNo Longer Relevant3 2 Not Ongoing
8 Substantial ProgressStarted13 3 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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BUSINESS PROCESSOUTSOURCING (BPO)
Business Process Outsourcing (BPO) has become an important business sectorbecause of its large size, high growth rate, and long-term potential to provide several
million quality jobs and earn high service export revenue. The Philippines has clearadvantages: a large workforce of educated, English-speaking talent with a strongcustomer-service orientation, a close cultural affinity to North America, highly reliablelow-cost international telecommunications, diverse and inexpensive site locations, andstrong government support. Drivers for success are being strengthened, while newreforms are also being sought to realize the high growth potential. A better industrylegal framework requires retaining fiscal incentives, fixing labor legislation that makesit more difficult to compete in the global market, and reducing the high numberof paid holidays which cost the industry tens of millions of dollars of unbudgetedexpenses for every new holiday declared. The Labor Code should be amended to allowsubcontracting and to make it easier to terminate employees.
0%
10%
20%
30%
40%
50%
60%
70%
0
5
10
15
20
25
30
2004 2005 2006 2007 2008 2009 2010 2011 2012 2016F
Revenues, lhs
YOY growth, rhs
Offshoring and Outsourcing Industry Revenues, BN US$, 2004-2016F
Sources: BPA/P
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Recommendation 1
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
Recommendation 2
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: BUSINESS PROCESS OUTSOURCING
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Recommendation 3
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Backward/Regression
Recommendation 4
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Started
Recommendation 5
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2011 Rating 2012 Rating 2013 Rating
Completed Completed Completed
Recommendation 6
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Not Ongoing
Recommendation 7
2011 Rating 2012 Rating 2013 Rating
Completed Completed Completed
Recommendation 8
PART 3: SEVEN BIG WINNER SECTORS: BUSINESS PROCESS OUTSOURCING
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2011 Rating 2012 Rating 2013 Rating
No Longer Relevant Completed No Longer Relevant
Recommendation 9
2011 Rating 2012 Rating 2013 Rating
No Longer Relevant No Longer Relevant No Longer Relevant
Recommendation 10
2011 Rating 2012 Rating 2013 Rating
No Longer Relevant No Longer Relevant No Longer Relevant
Recommendation 11
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2011 Rating 2012 Rating 2013 Rating
Substantial Progress Completed Substantial Progress
Recommendation 12
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Completed Substantial Progress
Recommendation 13
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Completed Completed
PART 3: SEVEN BIG WINNER SECTORS: BUSINESS PROCESS OUTSOURCING
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Recommendation 14
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Recommendation 15
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Started
Recommendation 16
2011 Rating 2012 Rating 2013 Rating
Started Started Started
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Recommendation 17
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
Recommendation 18
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: BUSINESS PROCESS OUTSOURCING
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Recommendation 19
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
Recommendation 20
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Substantial Progress Started
Recommendation 21
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
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Recommendation 22
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Recommendation 23
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
Offshoring and Outsourcing Industry Employment, in 000, 2004-2016F
Source: BPA/P
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
200
400
600
800
1000
1200
1400
2004 2005 2006 2007 2008 2009 2010 2011 2012 2016F
Employment level, lhs
YOY growth, rhs
PART 3: SEVEN BIG WINNER SECTORS: BUSINESS PROCESS OUTSOURCING
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Recommendation 24
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
Recommendation 25
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
Recommendation 26
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
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Recommendation 29
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
Recommendation 30
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
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Recommendations: 16
Progress:
Rating:
7 Improved 1 Declined 8 Steady
Creative Industries
PART 3SEVEN BIG WINNER SECTORS
0 Backward/RegressionNo Longer Relevant0 2 Not Ongoing
1 Substantial ProgressStarted11 2 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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CREATIVEINDUSTRIESCreative industries are very diverse, including advertising, animation, architecture,broadcast arts, crafts, culinary arts, cultural/heritage activities, design, film, literature,
music, new media, performing arts, content development, mobile TV, publishing, andvisual arts. Filipinos enjoy a well-deserved reputation for creativity. However, to betterunderstand the sector, Philippine Creative Industries should be mapped and developed.There are legal issues that work against full development, such as limiting the practiceof foreign professionals, the ban on any foreign equity in media, and the limit of 25%foreign equity in advertising. The landmark Philippine Design Competitiveness Act of2013 was enacted in 2013 to spur further development of the sector.
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Recommendation 1
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Substantial Progress Started
Recommendation 2
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Completed
Recommendation 3
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: CREATIVE INDUSTRIES
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Recommendation 4
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Recommendation 5
2011 Rating 2012 Rating 2013 Rating
Started Started Started
Recommendation 6
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Completed
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Recommendation 7
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 8
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 9
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: CREATIVE INDUSTRIES
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Recommendation 10
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
Recommendation 11
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Recommendation 12
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
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Recommendation 13
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
Clustered Industries UtilizingCreative Workers:
Examples of Creative and Knowledge Workers, 2013
Advertising Architecture Crafts Design Fashion Film and video Literature Music
Performing and visual arts Publishing Television and radio Video and computer games
Source: UNESCO-UNDP, Creative Economy Report: Special Edition [http://www.unesco.org/culture/pdf/creative-economy-report-2013.pdf] (New York: UN, 2013)
Business Process Outsourcing Engineering Design Financial Services Hardware and Systems Design Legal Services Medical and Healthcare Services Research and Development
Consulting Services
Software Development(non-entertainment Mobile PhoneApplications)
Website Development
Clustered Industries UtilizingKnowledge Workers:
Recommendation 14
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Started
PART 3: SEVEN BIG WINNER SECTORS: CREATIVE INDUSTRIES
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Recommendation 15
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
Recommendation 16
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
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Recommendations: 25
Progress:
Rating:
12 Improved 3 Declined 9 Steady
Policy
PART 3SEVEN BIG WINNER SECTORS - INFRASTRUCTURE
0 Backward/RegressionNo Longer Relevant1 3 Not Ongoing
7 Substantial ProgressStarted9 5 Completed
2013
2012
2011
Active Dorman
Active Dormant
Active Dormant
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INFRASTRUCTURE:
POLICY"What we can expect in the years to come: airports and ports to facilitate commerce andtourism; roads to ensure that we all reap the maximum benefit from these big-ticketprojects; power plants that will generate enough energy and fuel the development ofindustry. All the infrastructure projects that are being and will be constructed will give rise
to a society teeming with opportunity. This is the framework from which other initiativeswill branch out, creating even greater opportunities for Juan and Juana de la Cruz."
- State of the Nation Address of President Benigno S. Aquino III to the Congress of the Philippines, BatasangPambansa Complex, Quezon City, July 22, 2013
What is wrong with Philippine infrastructure? To my mind, the problem boils downto three things: one, we dont have enough of them; two, they are not integrated andcoordinated; and three, they are improperly distributed. As a result, our competitivenessas an economy is severely handicapped.
- Cielito Habito, economist, January 6, 2014, No Free Lunch: Our Infrastructure Handicap
The Philippines significantly underinvests in physical infrastructure, with spendingaveraging 2% to 3% of GDP for the last 10 years, far below regional norms. However,for the Aquino Administration, poor infrastructure is a key inhibitor to higher investment.In the WEF Global Competitiveness Report, the countrys overall infrastructure qualityranks below Singapore, Malaysia, Thailand, and Indonesia and close to Vietnam.
Arangkadacontains lists ofmajor projects completed,under construction, orbeing financed as wellas future projects all
from 2001 to 2020.Recommendations concernoverall infrastructurepolicy and are followedby specific sub-sectionsfor Airport, Power, Roadsand Rail, Seaports,Telecommunicaitons, and
Water.
Quality of Overall Infrastructure Rankings, ASEAN-6, 2008-2014
Source: WEF Global Competitiveness Reports;
1
21
41
61
81
101
121
1412008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Sin
Mal
Tha
Ind
Phil
Viet
SingaporeMalaysia
Thailand
Indonesia
Philippines
Vietnam
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
0%
1%
2%
3%
4%
5%
6%
0
50
100
150
200
250
300
350
400
450 Other capital outlays, lhs
Infrastructure, lhs
Total capital outlays, % of GDP, rhs
Infrastructure spending, %of GDP, rhs
National Governments Infrastructure Spending and Other Capital Outlays, 1990-2013, Bn Php
Sources: DBM and authors calculations; Note: Other capital outlays include capital transfers to LGUs (20% of IRA allocation for developmentprojects), special shares to LGUs and other capital outlay items not classified elsewhere but net of corp equity (all in obligation basis)
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Substantial Progress Started
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: POLICY
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2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Started No Longer Relevant Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Started Substantial Progress
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2011 Rating 2012 Rating 2013 Rating
Substantial Progress Completed Completed
2011 Rating 2012 Rating 2013 Rating
Started Started Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Backward/Regression Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: POLICY
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2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
Householdelectrifica-
tionrate, 2010
Distribu-tion losses
as % oftotal net
gen-eration1,
2010
Quality ofelectricity
supplyscore(WEF)2012
Main fixedtel linesper 100inhabit-
ants, 2011
Mobilephone
subs per100 inhab-
itants,2011
Share ofpopula-tion withaccess toimproved
water
sources, %,2010
Share ofpopula-tion withaccess toimprovedsanitation,
%, 2010
Roaddensity -
Populationper km
of road2,2011
Pavedroads
as % oftotal roadnetwork2,
2011
Key Infrastructure Indicators, ASEAN-6, 2010-2012
Indonesia 73.0 3.9 9.9 15.9 97.7 82.0 54.1 488 63.1
Malaysia 99.4 5.9 6.9 14.7 127.0 99.7 95.7 184 81.1
Philippines 83.3 3.7 12.1 7.2 92.0 92.5 73.9 431 23.5
Singapore 100.0 6.7 7.3 38.9 149.5 100.0 100.0 1,519 100.0
Thailand 87.7 5.5 6.7 9.7 113.2 95.7 95.7 607 94.5
Vietnam 97.6 3.1 10.1 11.5 143.4 94.8 75.9 298 64.4
Sources: US EIA, ITU, WHO-UNICEF JMP, UN Stats Div, ASEAN-Japan Transport Partnership, ASEAN Secretariat, World Bank & authors calculations1 - Derived using data from World Energy Outlook Database 2012 (IEA)
2 - This refers to the entire road network; Vietnam data - 2010
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2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Completed
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Completed
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: POLICY
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2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
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2011 Rating 2012 Rating 2013 Rating
Completed Completed Completed
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Started Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: POLICY
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2011 Rating 2012 Rating 2013 Rating
No Longer Relevant No Longer Relevant No Longer Relevant
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Started
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
2011 Rating 2012 Rating 2013 Rating
Completed Completed Completed
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: POLICY
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Recommendations: 15
Progress:
Rating:
6 Improved 2 Declined 6 Steady
Airports
PART 3SEVEN BIG WINNER SECTORS - INFRASTRUCTURE
1 Backward/RegressionNo Longer Relevant1 0 Not Ongoing
4 Substantial ProgressStarted7 2 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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INFRASTRUCTURE:
AIRPORTSThe past five years have been one of lost opportunities and meandering drift formost in the aviation business due to restrictive sanctions imposed on us. In many
ways, CAAPs loss of credibility as a regulator among the international civil aviation
community has affected the manner by which most of you have conducted and plannedyour operations... I say, innovation and diligence are the answers. We need to keepour sector, on average, at par with global norms and, at best, ahead of internationalstandards.
- Director-General William Hotchkiss, Civil Aviation Authority of the Philippines (CAAP) at the 1st PhilippineAviation Safety and Good Corporate Governance Symposium, Pasay City, August 30, 2013
With its archipelagic character, the Philippines depends on air and sea transport muchmore than continental countries do. Since affordable airfares have stimulated domestictourism, Filipinos are flying in record numbers. But the Philippines does not build airportand terminal capacity before demand as do competing economies. New terminalsand modern equipment are badly needed, as are more direct international flightsto secondary cities. The absence of a modern international gateway airport restrictstourism, trade, and investment - in short, it is a major turnoff for international visitors.Clark and Subic have great potential for passenger and cargo operations. In many Asianairports - Beijing, Jakarta, Kuala Lumpur, Seoul, and Singapore - terminal capacity is
being increased.Mumbai hasopened aspectacular US$2billion terminal
at ChhatrapatiS h i v a j iI n t e r n a t i o n a l
Airport. The highstandards beingset by these Asianneighbors shouldbe emulated bythe Philippines.
1
21
41
61
81
101
121
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Singapore
Malaysia
Thailand
Indonesia
Vietnam
Philippines
Quality of Air Transport Infrastructure Rankings, ASEAN-6, 2008 to 2013
Source: WEF Global Competitiveness Reports; Note: Number of countries evaluated - 2008-134; 2009-133;2010-139; 2011-142; 2012-144; 2013-148
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Backward/Regression
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: AIRPORTS
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Backward/Regression No Longer Relevant
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Started
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2011 Rating 2012 Rating 2013 Rating
Started Started Started
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: AIRPORTS
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2011 Rating 2012 Rating 2013 Rating
Start - Substantial Progress Substantial Proagress Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Completed
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-30%
-20%
-10%
0%
10%
20%
30%
-21
-14
-7
0
7
14
21
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-H1
Passengers, Mn
Growth
Domestic Air Transport Passengers, 1990-2013
Source: CAB. 2013 figures are not comparable as they only cover H1.
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Completed
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: AIRPORTS
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2011 Rating 2012 Rating 2013 Rating
Start - Substantial Progress Started Started
2011 Rating 2012 Rating 2013 Rating
Substantial Progress Substantial Progress Substantial Progress
Shenzhens new airport terminalSource: http://www.theverge.com/2013/11/28/5154484/baoan-international-airport-terminal-3-studio-fuksis-design
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INFRASTRUCTURE:
POWERToday many questions have been raised on whether EPIRA was a success. I submit that,
while there has been a delay, a fair call is so far, so good. EPIRA has provided theframework for the restructuring of the Electric Power Industry, including privatization
of National Power Corp.s assets, defining the responsibilities of various governmentagencies and the private sector, and transitioning to a functioning competitive structure.The end goal was to make sure we had an ample and reliable supply of electricity, atreasonable and competitive rates.
A common complaint has been that under EPIRA, power rates have actually gone upfaster, and that, as a consequence, we now have the highest power rates in the region.
While it is true that our rates are higher than our neighbors, this is because substantialsubsidies have been removed as mandated under EPIRA so that true cost of power isadhered to while our neighbors continue to subsidize.
On the recent suspension of payments to Meralco and operators of Gencos -- thisis a gift to the Filipino people as headlined only if the law of supply and demandhas been suspended in the Philippine islands. What actually needs to be done is tode-risk the sector from political and regulatory uncertainty to make the market workand encourage more investments, yielding more competition, ample supply andreasonable, less volatile tariffs.
- Romeo L. Bernardo, BusinessWorld, January 26, 2014
The Philippines is completing a decade-long transition from an inefficientpublic sector power generation monopoly to a private sector-led open access
competitive environment with enhanced regulatory oversight. Electricity pricesare among the highest in Asia and there are actual or potential supply shortagesin all three grids. Unreliable, expensive electric power is a major deterrent toinvestment. Under the open access policy, rates in the medium term should godown after more efficient generating plants are commissioned that are profitableat lower costs. With the five conditions precedent to open access met, the long-awaited reform began in mid-2013. However, only one large baseload plant
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has opened in Luzon in the the last decade. Underinvestment in power is likely to continuunless there is a clear and stable energy policy, without legislative or judicial interferencBlackouts could occur in Luzon if more plants are not built soon. Renewable energy annuclear technology offer excellent prospects for diversifying power sources. It is essentithat the transmission and distribution network expands in line with generation and growin demand.
2011 Rating 2012 Rating 2013 Rating
Started Backward/Regression Started
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Backward/Regression Started
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2011 Rating 2012 Rating 2013 Rating
Backward/Regression Backward/Regression No Longer Relevant
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
No Longer Relevant Not Ongoing No Longer Relevant
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2011 Rating 2012 Rating 2013 Rating
Started Started Backward/Regression
2011 Rating 2012 Rating 2013 Rating
Backward/Regression - Not Ongoing Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Started No Longer Relevant Backward/Regression
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2011 Rating 2012 Rating 2013 Rating
No Longer Relevant Backward/Regression No Longer Relevant
2011 Rating 2012 Rating 2013 Rating
Backward/Regression No Longer Relevant No Longer Relevant
2011 Rating 2012 Rating 2013 Rating
Started Started Started
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing No Longer Relevant Started
2011 Rating 2012 Rating 2013 Rating
Started Backward/Regression Started
Installed Generating Capacity, 2012
Source: DOE
Diesel/Oil, 18.1%
Hydro, 20.7%
Geothermal, 10.9%
Coal, 32.7%
Non-conventional, 0.9%
Natural Gas, 16.8%
Power Generation by Source, 2012
Source: DOE
Oil-Thermal, 1.0%
Diesel, 0.5%
GasTurbines, 0.3%
Hydro, 14.1%
Geothermal, 1
Coal, 38.8%
Non-conventional, 0.4%
Natural Gas, 26.9%
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2011 Rating 2012 Rating 2013 Rating
Started No Longer Relevant Backward/Regression
2011 Rating 2012 Rating 2013 Rating
Started Started Started
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2011 Rating 2012 Rating 2013 Rating
Started Started Backward/Regression
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Backward/Regression Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing No Longer Relevant
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
0
5
10
15
20
25
30
Japan(Kansai)
Philippines,Manila
Singapore Sri Lanka Hong Kong,China
Malaysia Thailand SouthKorea
Taipei,China
Indonesia
Estimated subsidy
Paid by consumers
Average Retail Electricity Tariffs, June 2012, Selected Asian Countries, USc/kWh
Source: DOE
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
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2011 Rating 2012 Rating 2013 Rating
Started Started Started
2013Projects
2014
Projects
2015
Projects
2017
Projects
0
1500
3000
4500
6000
7500
9000
10500
12000
13500
15000
16500
18000
Peak demand Required reserve margin Available Capacity Available Capacity + Commited Projects
Required Reserve Margin and Peak Demand Estimates, Luzon, in MW, 2013-2030
Source: DOE; Note: 2013 Projects (Mariveles Bataan Expansion Project Phase 2(600MW) in May, Maibarara Geo (20MW) in Oct), 2014Projects (Putting Bato Phase 1 (135MW) in Aug, Pililia Wind (67MW) in Sept, SJCI Biomass (9.9MW) in Nov, Southwest Luzon 1 (150MW)in Dec), 2015 Projects (Southwest Luzon 2 (150MW) in Mar, Isabela Biomass (20MW) in Mar, Putting Bato Phase 2 (135MW) in Nov); 2017Projects (Mariveles Bataan Expansion Project Phase 2(600MW) in Dec)
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Required Reserve Margin and Peak Demand Estimates,Visayas, in MW, 2013-2030
Source: DOE; Note: 2014 Projects (Villasiga HEP (8MW) in Mar, Nasulo Geo (50MW) in Jun, Toledo Expansion (82) MW inSept), 2015 Projects (Sn. Carlos Biomass (16MW) in Mar, ASIAN Biomass (3.6MW) in Jun), 2016 Projects (Concepcion Coal1 (135MW) in Jul, Concepcion Coal 2 (135MW) in Sept)
2014Projects
2015Projects
2016Projects
0
500
1000
1500
2000
2500
3000
3500
4000
Peak demand Required reserve margin Available Capacity Available Capacity + Commited Projects
: ; : ill i i l i l i i
l i i I i i i l i l i l i
Required Reserve Margin and Peak Demand Estimates,Mndanao, in MW, 2013-2030
Source: DOE; Note: 2013 Projects (EEI HFO (15MW) in Aug, Mapadalad (15MW) in Oct), 2015 Projects (Therma South(300MW) in Mar, Sarangani Coal (200MW) in Sep), 2016 Project (Mt Apo (50MW) in Jun)
2013Projects
2015Projects
2016Project
0
500
1000
1500
2000
2500
3000
3500
Peak demand Required reserve margin Available Capacity Available Capacity + Commited Projects
: ; : I i l i i i l
i i
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INFRASTRUCTURE:
ROADS AND RAILSRush hour, 5:30 p.m. Ayala MRT [Metro Rail Transit] station, north-bound. Queue 15minutes to turnstiles. 10 Minutes wait and then one train comes, too crowded, onlyfive people in front of me get in. Next train after five minutes, but announcement is
made: train is defective, no passengers can ride. Wait for next train. Comes after threeminutes. Meanwhile the platform is bursting with people because trains come too fewand far between. I finally get in. Ride to Cubao takes 12 minutes. MRT is such a MESS!Fix those trains, add at least another five more per hour between 5 and 7 p.m., bothdirections.
- Carol Singson, Veteran MRT-3 commuter
Modern, efficient ground transportation infrastructure facilitates the efficientmovement of goods and people, while its absence increases transport cost andultimately harms country competitiveness. Unfortunately, this race to improve
public transport before traffic gridlock worsens is being lost. Although DPWH greatlyincreased its budget in the final years of the previous administration, too muchwent into barangay roads built for political purposes. Meanwhile, the national roadnetwork barely increased in two decades as traffic on national roads multiplied. Thecurrent Administration has corrected this and is implementing an ambitious nationalhighway and bridge program. There are seven limited-access toll roads operatingor under construction, all in Central Luzon, totaling some 300 kilometers. Another300 kilometers are planned by 2020. This acceleration of road investments led toa sharp improvement in the Philippine rank in the WEF quality of roads ranking,from the lowest of the ASEAN-6 in 2009-10 to 4th in 2012-2013 and 5th in 2013-2014. The Philippines ranks a distant last among the ASEAN-6 for the WEF quality
of railroad infrastructure. There is only one heavy rail line in operation. DOTC hassought unsuccessfully for two decades to restore rail service north of Manila; thePRC-supported North Rail project turned into a major white elephant. Three lightrail lines operate in Metro Manila, often at overcapacity. Planned new lines takea decade or more to implement. The current Administration is unlikely to see anynew rail project, which it initiated, completed during its term. If this slow pace ofimplementation continues, the urban centers will become increasingly choked andunattractive to private sector investment.
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2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: ROADS AND RAILS
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2011 Rating 2012 Rating 2013 Rating
Started Completed Completed
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Substantial Progress Substantial Progress
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2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Started Started Substantial Progress
2011 Rating 2012 Rating 2013 Rating
Backward/Regression Not Ongoing Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: ROADS AND RAILS
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing No Longer Relevant No Longer Relevant
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PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: ROADS AND RAILS
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
50
100
150
200
2005 2006 2007 2008 2009 2010 2011 2012 2013p
Budget, lhs
Budget expenditure, lhs
DPWH budget, % of national, rhs
DPWH budget spending, % of national, rhs
DPWHs Budget and Actual Spending, 2005-2013p
Source: DBM (Total obligations; Adjusted-Budget; Actual-Expenditure)
1
21
41
61
81
101
121
141
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Singapore
Malaysia
Thailand
Philippines
Indonesia
Vietnam
Quality of Roads Rankings , ASEAN-6, 2008-2014
Source: WEF Global Competitiveness Reports; Note: Number of countries evaluated - 2008-134; 2009-133; 2010-139; 2011-142; 2012-144; 2013-148.
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
140
160
180
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
LRT-2
LRT-1
MRT-3
Total YOY growth,rhs
Light Rail Ridership (LRT-1, MRT-2 & MRT-3), 2002-2012
Sources: LRTA and Metrostar Express; Note: MRT-2 and MRT-3 only started operating in April 2003 and December1999, respectively. Latest data available for MRT is only from February to April 2012.
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Following is an assessment, separate of the original recommendations in Arangkada, that providesmore detailed recommendations on Institutional Reforms and Railway Expansion projects for therail sector. This assessment compliments the infrastructure subsection Roads & Rails.
PARAMETER/INDICATOR PROGRESS/ACCOMPLISHMENTS RATING
1.1
1.2
1.3
1.4
1.5
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
+1
0
0
+1
0
-1
-1
+1
0
0
+1
-1
+1
0
+1
Institutional Reforms
Organization of a railwayregulatory authority
Financial restructuring of LightRail Transit Authority
Re-capitalization of thePhilippine National Railways
Fare adjustments relative toother transport modes
Legislation on railway reforms
Railway Expansion
LRT-1 Extension to Cavite,approx. 12-km length. Threeprevious attempts failed
LRT-2 Extension to East. approx4 km without ROW problem
Additional Railcars for MRT-3
Rehab and improvementof PNR South Commuter toCalamba
Construction of the Malolos-Tutuban (North) CommuterLine
Common Ticketing System forAll Railway Lines
Rehabilitation of existing LRT-1assets (cars, tracks, powerlines)
Completion of MRT3-LRT1Linkage
Construction of Metro CebuBRT System
Construction of MRT-7 onCommonwealth Avenue
A recommendation of the 1997 Philippine Transport Strategy Studyand 1999 Transport Infrastructure and Capacity DevelopmentStudy, both funded by ADB. DOTC invited consultancy proposalsin March 2013; nothing has been heard since.
Detailed recommendations from the 2009 JICA Study, discussedand accepted by inter-agency technical committee. No actionsince then.
The Php1.5 Billion capitalization of PNR, set in 1975, is inadequateand impaired by years of losses.
Fares on rails have been stagnant since 2003. Three attemptsproposed since 2011 were rejected by the President. This wouldhave negative impact on rail PPPs. Public consultations announcedDecember 2013.
Several Bills have been filed (and refilled) in Congress in the last15 years. None has moved beyond 2nd reading.
One of the low-hanging fruits proposed for immediate executionin 2010. Failure of bidding in October 2013. DOTC has set newbid submission for April 2014. Delayed by 16 months, based onoriginal schedule.
Award to sole pre-qualified engineering firm reset to December2013, more than 6 months behind schedule.
Budget for new railway cars released in November 2011 andawarded to a Chinese rail manufacturer, the sole bidder selectedby DOTC, made in October 2013, for 48 additional railcars.
This was supposed to be phase 2 of the north-south rail linkageproject funded via Korean ExIm Bank. Phase 1 was completed in2009. No action made in last 3 years.
This was the Northrail project whose contract with Sinomach wasterminated in 2012. Arbitration proceedings are in a snail pacemode. Reconfiguration to pure commuter line is on hold.
Five pre-qualified firms have submitted bids in November 2013.The contract was awarded in January 2014, 6 months behindoriginal timetable.
Several packages were to be tendered by LRTA - starting January2012. DOTC took over responsibility. Two packages that wereawarded were declared illegal. Scope now folded into the LRT-1Extension to Cavite.
This refers to the common station to serve platform transfers ofpassengers. Issue has been debated fo 3 years. Decision madein November 2013, bid award for construction is Q2 2014,according to DOTC.
Construction was supposed to be in January 2013 but was puton hold pending proof-of-concept by DOTC. Nothing has beenheard since.
In November 2013, NEDA approved issuance of performanceguarantee (equivalent to a financial guarantee) to concessionaire.Contract was signed in 2009, but no financial closing was possible
without the guarantee.
Notes on Rating:-1 = Retrogress +1 = Some progress or Movements 0 = No activity Best score is +5
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Recommendations: 20
Progress:
Rating:
5 Improved 5 Declined 10 Steady
Seaports
PART 3SEVEN BIG WINNER SECTORS - INFRASTRUCTURE
1 Backward/RegressionNo Longer Relevant0 9 Not Ongoing
1 Substantial ProgressStarted9 0 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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INFRASTRUCTURE:
SEAPORTSBecause the archipelagic Philippines depends on seaports to move most domesticand international commerce, efficiency of marine transport is critical to nationalcompetitiveness. Its high cost has long been an impediment to more commerce.
Tourism growth is also influenced by seaport quality. Improving maritime safety isimportant given the high loss of life from long-standing negligence of ship ownersand government agencies. The volume of international container shipments is smallcompared to Asias larger export economies and the lowest of the ASEAN-6. Althoughit has improved in the past two years, the Philippines ranks 116th of 148 countries inQuality of Port Infrastructure of the WEF Global Competitiveness Reportthe lowestamong the ASEAN-6 countries. Manila ranked 35th worldwide in tonnage volume and26th in container traffic. Over the last decade, there have been significant investments inthe international ports of Batangas, Davao, PHIVIDEC, and Subic, almost doubling theircombined capacity. Bangkok and Ho Chi Minh have capped their old city ports in favorof new deep-water ports. Manila remains the most congested port, and Batangas andSubic remain underutilized. The RoRo Nautical Highway, with three routes connectingLuzon-Visayas-Mindanao, can be expanded and made more efficient. Regional portsneed modernization with feeder links.
1
21
41
61
81
101
121
141
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Singapore
Malaysia
Thailand
Indonesia
Vietnam
Philippines
Quality of Port Rankings, ASEAN-6, 2008-2014
Source: WEF Global Competitiveness Reports; Note: Number of countries evaluated -2008-134; 2009-133; 2010-139; 2011-142; 2012-144; 2013-148.
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2011 Rating 2012 Rating 2013 Rating
Started Started Started
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: SEAPORTS
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2011 Rating 2012 Rating 2013 Rating
Started Substantial Progress Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Substantial Progress
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: SEAPORTS
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2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Backward/Regression
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Started
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: SEAPORTS
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
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2011 Rating 2012 Rating 2013 Rating
Started Started Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Started
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
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1
Recommendations: 25
Progress:
Rating:
1 Improved 2 Declined 8 Steady
Telecommunications
PART 3SEVEN BIG WINNER SECTORS - INFRASTRUCTURE
0 Backward/RegressionNo Longer Relevant0 7 Not Ongoing
0 Substantial ProgressStarted4 0 Completed
2013
2012
2011
Active Dormant
Active Dormant
Active Dormant
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INFRASTRUCTURE:
TELECOMMUNICATIONS
Reform in this area has been considered. In a decade, Philippine telecommunicationsadvanced from being monopolistic, high-cost, and inefficient to having considerablecompetition, enabling a majority of the population and businesses to communicate at
home and abroad at much reduced cost. While fixed line penetration is lowest of theASEAN-, mobile phone penetration is high (), and digital fiber connections arerobust. However, the percentage of Internet use, which stood at . of the population in, remains a challenge. Broadband Internet is also very limited, with fixed broadbandpenetration at only for every persons and mobile broadband at for every persons. Only of cities and municipalities in the country have broadband access(Broadband Commission, ). The next new technology for the country is high-speedwireless broadband. Within a few years, many millions can have cheap Internet access onG and G mobile phones. The benefit for national competitiveness from these changescould be considerable. Filipinos will be able to avail of global SMS, email, and Interneton mobile devices and leap over the low household computer penetration level(ITU statistics, ). In the UN E-Governance Readiness Survey, Philippine rankinghas been declining from in to in (UN E-Government Survey, ). ForICT, two non-fiscal laws (Data Privacy and Anti-Cybercrime) have been enacted, whilethe DICT law, despite advancing near final passage in the th Congress, was opposedby the Executive.
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1
2011 Rating 2012 Rating 2013 Rating
Not Ongoing Started Started
Popula-tion,
in mn
Mobilephone
subs per100 in-
habitants
Mainfixed tellines per100 in-
habitants
Propor-tion ofhouse-
holds withinternet
Internetusers
per 100inhabit-
ants
Mainfixed tellines, mn
Propor-tion ofhouse-
holds withcomputer
Mobilephone
subscrip-tion, mn1
Estimat-ed totalinternet
users, mn
Access to Information and Communication Technology Indicators, Selected Countries, 2012
China
India
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
1350.7
1236.7
246.9
29.2
96.7
5.3
69.8
88.8
1112.2
864.7
282.0
41.3
103.0
8.1
85.0
134.1
88%
65%
37%
19%
16%
18%
7%
10%
278.2
30.9
38.3
4.6
4.0
2.0
6.4
10.1
81.3
68.7
115.2
140.9
106.8
153.4
120.3
149.4
571.3
155.6
37.9
19.2
35.0
3.9
18.5
35.1
20.6
2.5
15.5
15.7
4.1
37.8
9.1
11.4
88%
67%
41%
27%
18%
17%
15%
11%
42.3
12.6
15.4
65.8
36.2
74.2
26.5
39.5
Sources: ITU and World Bank (population)Notes: 1 - Includes both pre-paid and post-paid accounts
2011 Rating 2012 Rating 2013 Rating
Started Not Ongoing Not Ongoing
PART 3: SEVEN BIG WINNER SECTORS: INFRASTRUCTURE: TELECOMMUNICATIONS
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2011 Rating 2012 Rating 2013 Rating
Not Ongoing Not Ongoing Not Ongoing
2011 Rating 2012 Rating 2013 Rating
Not Ongoing