UMVA has learned that the Philippines' long-standing conversation about ease of doing business has been misframed as a governance story, focusing on reducing red tape and cutting processing times, rather than measuring the country's competitiveness in a rapidly shifting global economy.
The outcome that truly matters is whether the Philippines is becoming more or less competitive as a destination for capital, talent, and enterprise. This distinction is crucial, as an economy can excel in permit processing times yet still lose the competitiveness race, with investment decisions being made elsewhere.
National competitiveness is a relative standard, not an absolute one. The Philippines is competing against regional peers like Vietnam, Indonesia, and Singapore, which have attracted significant foreign direct investments and built structural advantages through trust infrastructure, regulatory predictability, and seamless movement of capital, data, and talent.
Despite a 38.5% rise in foreign direct investment inflows in 2024, the Philippines attracted only 4% of the total FDI flowing into Southeast Asia, which reached $225 billion that year. The uncomfortable truth is that while the Philippines has achieved incremental reforms, its competitors have been transforming their economies' underlying architecture.
Low competitiveness comes at a significant cost, particularly for micro, small, and medium-sized enterprises (MSMEs), which represent 99.6% of all business establishments and generate 67% of total employment. A substantial portion of these businesses cannot access formal credit, verify their financial reputation, or participate in regional supply chains.
Financial exclusion compounds the problem, with approximately 37.6 million Filipinos remaining unbanked. The most recent data show that financial account ownership actually declined slightly from 51.4% in 2021 to 50.2% in 2024, highlighting the need for a more comprehensive approach to financial inclusion.
When investors and businesses decide where to locate in Southeast Asia, they consider factors beyond permit processing times, such as efficient capital movement, reliable digital infrastructure, and a predictable regulatory environment. Vietnam, Malaysia, Indonesia, and Thailand are currently answering these questions more completely than the Philippines.
The Philippines has made progress in digital payments, with 57.4% of total monthly retail payment volume and 59% of overall transaction value now digital. However, these achievements remain pieces of an architecture that has not yet been fully assembled, and in competitiveness, partial assembly does not earn partial credit.
Competitiveness is a policy choice that requires government to see itself not just as a regulator or service provider but as a platform for private enterprise, innovation, and investment. Countries like India, the UK, and Singapore have made deliberate decisions to treat digital payments, open banking, and digital governance as public infrastructure, resulting in significant economic benefits.
The Philippines has the ingredients for a genuine competitiveness transformation: a young, digitally fluent population, a growing fintech ecosystem, and reformers in government and the private sector. What is needed now is the policy ambition to match, treating digital identity interoperability, credit frameworks, and cybersecurity standards as competitiveness infrastructure.
It is time for the Philippines to build better systems that make it easy for its people and businesses to compete, grow, and succeed. The ease of doing business conversation must shift from bureaucracy to whether the country makes it easy or hard for Filipinos to prove their worth in formal economic systems.
