Philippines on the road to sustainability

The Philippines is already a leader in trade sustainability amongst low-income Asian economies, according to the 2018 Sustainable Trade Index. The country ranked tenth overall, outperforming some middle-income economies including Malaysia and Thailand in overall scores.

When comparing its performance relative to GDP, the Philippines’ performance becomes even more impactful. The nation outperformed its GDP ranking by three places – one of the top overperformers along with Vietnam, India and Sri Lanka.

The Philippines has a number of strengths that it can utilize to attract more sustainable FDI in the future. According to the 2018 Index, the country boasts low tariff and non-tariff barriers to trade and low levels of air pollution, partially reflecting the country’s lack of pollution-generating industries. Where the Philippines shines most in comparison to regional competitors is in educational attainment, a key indicator for trade and economic competitiveness. The Philippines outperformed all other low-income countries in education level.

With lower barriers to trade, a good environment and a highly educated workforce, the Philippines should be an ideal location for FDI. However,as with all of the economies on the Index, there are areas where the Philippines can improve its performance.

More work to be done to enhance competitiveness

The Philippines is home to some of the highest trade costs in the region— performing in the bottom half of index economies for legal system, infrastructure, logistics and corruption. It also scores near the bottom of the Index in technological innovation, which reflects a lack of critical investment in research and development (R&D).

As companies increasingly start looking beyond China for supply chains, the Philippines— and all Southeast Asian nations— would do well to remember that sustainability is increasingly at the forefront of company’s minds when making FDI and sourcing decisions. By further enhancing its sustainability successes and consciously working to improve its shortcomings, the Philippines could better make the case for itself as an attractive hub for FDI in the region.