Phils losing its competitive edge: US report

One of The Philippines most successful exports is English speaking people. And one of the most important reasons for businesses going to the Philippines has been its widespread high level of competence in English. OK, so it tends to be American rather than English, but for most purposes, it's close enough.

And as Malaysia and Hong Kong both went down the path of removing English as the primary teaching medium in schools, suffering a significant deterioration in both competence and capacity, the Philippines gained from being the country in South East Asia where English was both very widely and very competently spoken by a large proportion of the population.

That has led to a great deal of "offshoring" with call centres, document production, content and data entry and programming jobs being created there as a service industry for US and EU companies.

But that service-based economy is dependent on a continuous supply of those with high quality spoken and written English. And according to a US State Department report, that competitive advantage is being lost as both numbers and quality of competent users of English is falling.

The "2007 Investment Climate Statement - The Philippines" report says that restoring English is one of the most important and urgent tasks for the Philippines government if it wishes to stem the decline in inward investment.

Corruption also a factor

The other principle factor is corruption, says the report. Amongst the opportunities for corruption, and causes of complaint by would be investors, is that there is a serious lack of transparency in relation to business regulation and, worse, the rules are applied inconsistently - often depending on corruption.

The Report does not mince its words: "Foreign business representatives often cite corruption as a serious impediment to investment. Commercial disputes are often difficult to resolve quickly or satisfactorily in the understaffed and complex judicial system."

Uncertainty of contracts

The Report also says that it is difficult to get certainty in contracts, and to enforce obligations. This appears to be especially difficult in relation to utilities and infrastructure: "Investment disputes are infrequent, but when they occur it can take years for parties to reach settlement. Several disputes have concerned water rights, both for use in manufacturing and in power generation." Indeed, according to the report, a more practical issue revolves around inconstant power supplies.