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The Philippines slumped to the near bottom of an annual global ranking of countries’ ability to attract and retain a skilled workforce, a report by the Institute for Management Development (IMD) World Competitiveness Center showed.

In the IMD’s World Talent Ranking (WTR) 2024, the Philippines slipped three spots to 63^rd out of 67 countries, from 60^th out of 64 economies last year. This is the country’s worst ranking from as early as 2005.

The Philippines’ talent competitiveness continued to fall behind Asia-Pacific neighbors. It ranked 13^th out of 14 Asia-Pacific countries, better only than Mongolia.

Singapore was the highest-ranking economy in the Asia-Pacific, as it finished second overall. It was followed by Hong Kong (9^th), Australia (14^th), Taiwan (18^th), South Korea (26^th), Malaysia (33^rd), China (38^th), New Zealand (39^th), Japan (43^rd), Indonesia (46^th) and Thailand (47^th), and India (58^th).

The talent index was again dominated by European economies led by Switzerland (1^st overall), Luxembourg (3^rd), Sweden (4^th), and Denmark (5^th).

The WTR rankings are based on three factors: “appeal,” or the extent to which an economy attracts foreign talent and retains local talent; “investment and development,” which refers to the measurement of resources allotted to develop a homegrown workforce; and “readiness,” or the quality of the skills in a country’s talent pool.

José Caballero, a senior economist at IMD World Competitiveness Center, said in an e-mail interview that the drop in the Philippines’ talent ranking was due to the decline in the investment and development and readiness factors.

“At the indicator level, the main aspect affecting its performance in investment and development is the inadequate implementation of apprenticeship programs and the limited prioritization of employee training by the private sector,” he said.

The Philippines had the lowest ranking in investment and development, falling to 64^th this year from 62^nd last year. This was due to a significant drop in the ranking for apprenticeships and employee training.

The Philippines also ranked among the lowest in terms of public expenditure on education per student (63^rd) and pupil-teacher ratio for primary (60^th) and secondary (63^rd) education.

On the readiness factor, the country slipped a spot to 52^nd place.

“In terms of readiness, there is a general decline in all measures of the impact of the country’s talent development efforts,” Mr. Caballero said. “There is also a decline in the prioritization of talent attraction and retention among companies (57^th) and workers’ motivation (47^th), which feed into brain drain (54^th). The latter is one of the key drivers of talent readiness.”

The low scores of 15-year Filipino students in the  Programme for International Student Assessment (PISA) are one of the Philippines’ top weaknesses. Filipino students were among the world’s weakest in math, reading and science, according to the 2022 PISA. The Philippines ranked 77^th out of 81 countries and performed worse than the global average in all categories.

Mr. Caballero said that the country’s low investment in education and the quality of the system are fundamental to understanding why is it lagging behind its regional counterparts.

On appeal, the Philippines went up a notch to 54^th spot, as it performed well in terms of cost-of-living (20^th) and collected personal income tax (20^th). However, it ranked low in terms of quality of life (57^th).

“The Philippines’ appeal is also a factor. Although it has a relatively strong cost of living, its quality of life is lacking, as is its performance in measures of institutional strength, which are crucial for attracting highly qualified talent,” Mr. Caballero added.

To improve, he said that the country must revisit its overall talent development strategy, which will help streamline its investment in the education sector.

“This should be a carefully considered strategy, not a matter of just increasing expenditure, but one that aligns investment with the outcome of the system, that is, the skills and competencies that the Philippines’ economy needs to perform efficiently,” he added.

Jose Enrique “Sonny” A. Africa, executive director of think tank IBON Foundation, said that the country lags in talent competitiveness due to its failure to prioritize education and public health.

“Asia-Pacific countries like Japan, South Korea, Taiwan, Singapore, Malaysia, and Thailand have done better because they have focused on building comprehensive education systems, investing in public health, and different levels of national industrial policy,” Mr. Africa said via Viber. 

“In contrast, the Philippines continues to struggle with reckless liberalization, underfunded institutions, and shortsighted economic strategies,” he added.

Mr. Africa said the government can achieve immediate gains by investing more in education, health, and social protection, which will ensure a more capable and productive workforce.

“The government can build more and better public educational infrastructure, ensure universal access to quality education, and improve vocational and technical training,” he said.

Meanwhile, Benjamin B. Velasco, assistant professor at the School of Labor and Industrial Relations at the University of the Philippines Diliman, said that it is not surprising that the country ranks very low in the talent index.

“Many of the indicators for talent are dependent on education, for example, the program for PISA rankings, student-teacher ratios, and the budget for education,” Mr. Velasco said in a Viber message.

“In this objective set of indicators, we do not do well. Our education system is in crisis,” he added.

To improve its education system, Mr. Velasco said that the country will have to increase the budget for public education, improve pay to attract talent to the teaching profession, and provide books, gadgets, and classrooms.

“The private sector should pay more, not less, taxes to increase public revenues. These are hardly original ideas. Many have said this before. It is not that our public officials do not have talent. But they lack the will to just do it. They seem busy in their games of thrones,” he added.

Jamil Paolo S. Francisco, executive director of the Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness, said the Philippines lags behind its peers due to its low public expenditure on education as a percentage to gross domestic product and on a per student level.

“Our relatively weaker investment in human capital development has negative implications for the future readiness of our workforce. Further complicating this challenge is the fact that we continue to lose globally competitive talent to more ‘appealing’ countries,” Mr. Francisco said in an e-mail interview.

“This is disappointing because while one of the few bright areas cited by respondents to the executive opinion survey is still the availability of skilled labor in the Philippines, insufficient investment in education and workforce development undermines the readiness of our future workforce and therefore the productivity and overall competitiveness of our economy in the future,” he added.

Moving forward, Mr. Francisco said the country must significantly improve the quality of education to see better results.

“The future workforce will need to learn how to work with advanced digital technologies to remain competitive,” he said.

Being a largely service-sector-driven an d labor-abundant economy, we need to invest in equipping our current workforce and preparing our future workforce for this type of human-machine collaboration to leverage on the much-needed potential productivity gains,” he added. – Justine Irish D. Tabile, Reporter

Domestic rice prices are likely to decline further with the entry of more imports under lowered tariffs, the National Economic and Development Authority (NEDA) said.

“There’s a great amount of imports coming in from the effects of the tariff reduction plus of course the development of the global market,” NEDA Secretary Arsenio M. Balisacan told reporters on the sidelines of an event late on Tuesday.

President Ferdinand R. Marcos, Jr. issued Executive Order No. 62, which slashed tariffs on rice imports to 15% from 35% previously, until 2028. The lower tariff rates on rice took effect on July 5.

Agriculture officials have previously said the lower tariffs are expected to bring down rice prices by P6-P7 per kilo.

“We should expect a greater translation of the tariff reduction into lower prices. But don’t expect too much because the world prices are still high,” Mr. Balisacan said.

The Food and Agriculture Organization’s (FAO) All Rice Price Index, which follows rice prices in key exporting countries, rose to 137.3 as of end-August from 127.9 in the same period a year ago. A higher price index means a rise in commodity prices over the period, while a lower index means otherwise. 

In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the full effect of lower tariffs on rice imports will likely be felt as early as the fourth quarter “as a function of competition from local and import rice amid lower world prices of rice.”

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said rice prices may fall by October.

“It is possible for prices to fall next month as a series of typhoons had destroyed domestic production. Importers would usually store their rice in anticipation of higher prices. Since immediate price increases are expected, then the release of imports would also be immediate,” he said in a Facebook Messenger chat.

However, Mr. Lanzona noted that rice prices may not drop “significantly” despite the lower tariffs.

“Port congestion can delay the influx of imported rice in the market. But more than this, since domestic production is weak, importers or through their collusions now have an incentive to control and limit the decrease in rice price,” he said.

To avoid this, Mr. Lanzona said the government should encourage greater domestic production.

“But government support for local production is also hampered by the decreased tariffs. In effect, we are caught in a situation where rice prices can still remain high and market supply is below the needs of the households,” he said.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. on Monday said port congestion has caused delays in the release of rice imports. He said rice prices are projected to begin dropping in October, but a more significant drop is likely by January 2025.

“But since demand for food usually spikes in December, we anticipate seeing a more substantial drop in rice prices by January,” he said in a statement.

On Wednesday, the Philippine Ports Authority noted that consignees are taking longer to withdraw rice container shipments, leading to “possible artificial increases in rice prices.”

Despite this, the PPA recorded a 70% yard utilization, indicating that the country’s ports are not congested.

Mr. Balisacan also called on the need to invest in port development to lessen shipment traffic.

The latest data from the Agriculture department showed that imported regular milled rice costs PHP 46.73 per kilogram this week, a PHP 3.73 increase from PHP 43 in the same period last year.

On the other hand, the price of well milled rice is at PHP 51.45 per kilo, PHP 6.45 higher than the PHP 45 recorded a year ago. — B.M.D.Cruz

The Bangko Sentral ng Pilipinas (BSP) plans to reduce the reserve requirement ratio (RRR) “substantially” this year, its top official said.

“We’re considering it. We’ve discussed the timing of it. I would say it’s going to happen this year,” BSP Governor Eli M. Remolona, Jr. said in a press chat on Wednesday.

“We will reduce reserve requirements substantially this year and then there may be further reductions by next year,” he added.

The RRR is the portion of reserves that banks must hold onto rather than lending out.

The BSP reduced the ratio for big banks and nonbank financial institutions with quasi-banking functions by 250 bps to 9.5% in June 2023.

It also lowered the ratio for digital banks by 200 bps to 6% and by 100 bps for thrift banks, and rural and cooperative banks to 2% and 1%, respectively.

The central bank has since brought down the RRR for universal and commercial banks to a single-digit level from a high of 20% in 2018.

“The banks want a reduction of the reserve requirement and they’re saying ‘if you do reduce it, we’ll do this other thing for you,’ reduce transaction costs on payments, for example,” Mr. Remolona said.

“We’re trying to manage that. But the idea is to reduce the reserve requirements in a substantial way,” he added.

The BSP governor earlier said that they are eyeing to bring down the RRR to as low as 5%.

Meanwhile, Mr. Remolona said that the RRR cuts’ impact on the economy will not be immediate.

“Our transmission mechanism has long lags. That’s partly because the markets are not deep and liquid. We take account of those lags,” he said.

“At the same time, we’re trying to improve the liquidity of the markets to shorten those lags. But that’s an effort that will take some time.”

BSP Assistant Governor Zeno R. Abenoja said that slashing the RRR could spur lending activities and economic growth.

“We are hoping additional liquidity will be deployed to help expand productive economic activities. However, that will take time,” he said.

“So, some of it will be deployed by banks in various financial markets, including government securities, equity, but some of it may still reside in their accounts, including depositing it back to the BSP.”

The RRR cuts in June last year coincided with the expiration of the BSP’s pandemic relief measures, which allowed banks to count their lending to small businesses as part of their compliance with the reserve requirement for deposit liabilities and substitutes.

“In terms of liquidity, the reserves for the reserve requirement are on our balance sheet on the same side, on the liabilities side. So, if we cut the reserve requirement, that part will go down and we want to compensate for that,” Mr. Remolona said.

“So, that’s more liquidity for the bank system and we want to compensate for that by absorbing back some of that liquidity, which will go into some other part of our balance sheet,” he added.

The BSP chief earlier said that the Philippines’ current RRR is among the highest in Asia. He also said reserve requirements “drive a wedge” between deposit rates and lending rates.

When a bank is required to hold a lower reserve ratio, it has more funds to lend to borrowers. This increases the bank’s lending capacity, impacting its ability to support economic growth and meet the credit needs of individuals and businesses. – Luisa Maria Jacinta C. Jocson, Reporter

Philippine automotive sales grew by an annual 6.6% in August, despite a decline in passenger car sales, according to an industry report.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed vehicle sales rose to 39,155 units in August from 36,714 units in the same month last year.

Month on month, car sales inched down by 0.4% from the 39,331 units sold in July.

August sales were dampened by the 5.6% drop in passenger car sales to 9,529 units from 10,094 units sold a year ago.

Month on month, passenger car sales slumped by 12.76% from 10,923 units in July.

However, this was offset by the 11.3% annual jump in commercial vehicle sales to 29,626 units in August from 26,620 a year ago. Commercial vehicles accounted for 75.66% of the industry’s total sales.

Month on month, sales of commercial vehicles increased by 4.3%.

Broken down, light commercial vehicle sales went up by 3.3% year on year to 21,812 units, while sales of Asian utility vehicles (AUV) surged by 53.5% to 6,829 units.

Sales of medium trucks slid by 4.9% to 312, while sales of heavy trucks fell by 64.8% to 45. Light-duty truck and bus sales went up by 5.2% to 628 units.

For the first eight months, vehicle sales went up by 10.3% to 304,765 units from 276,215 units a year ago, CAMPI-TMA data showed.

Passenger car sales jumped by 14% to 80,327 units in the January-to-August period, while commercial vehicle sales increased by 9.1% to 224,438 units.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said new vehicle launches and improving employment data are driving the growth of car sales in recent months.

“Newer models, more brands, more electric and hybrid vehicles [launches], favorable demographics, and improving employment data in recent months are still driving the demand for vehicles,” Mr. Ricafort said in a Viber message.

“[This was] reflected in the double-digit growth in consumer loans, particularly auto loans, defying relatively higher interest rates,” he added.

A preliminary report from the Bangko Sentral ng Pilipinas showed that consumer loans to residents grew by 24.3% to PHP 1.42 trillion as of end-July, with motor vehicle loans going up by 19.9% to P424.93 billion.

“For the coming months, lower Federal Reserve and local policy rates could increase demand for auto loans and also vehicle purchases,” Mr. Ricafort said.

In August, the Bangko Sentral ng Pilipinas (BSP) cut policy rates for the first time in nearly four years. The benchmark rate was trimmed by 25 basis points to 6.25%, from the nearly 17-year high of 6.5%.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said the auto industry’s sales were driven by commercial vehicles.

“These vehicles cater more to businesses, logistics, and transport needs, reflecting a shift towards utility and functionality, possibly in response to increased demand for delivery services, logistics support, or business expansions in the post-pandemic era,” said Mr. Arce via Viber.

“The passenger car segment saw a notable drop in August. However, the continued strong performance in the commercial sector more than offset this decline, suggesting that businesses, rather than individuals, are leading the market’s recovery,” he added.

In the first eight months, Toyota Motor Philippines Corp. remained the market leader with sales of 140,654 units, up by 10.9% from 126,795 units a year ago. Toyota sales accounted for 46.15% of the industry’s total.

Mitsubishi Motors Philippines Corp. ranked second with a market share of 19.2%. Mitsubishi sales jumped by 16% to 58,513 units in the first eight months.

In third spot was Ford Motor Co. Phils., Inc. which saw sales drop by 3.8% to 18,961 units. This accounted for 6.22% of the industry.

Rounding out the top five were Nissan Philippines, Inc., whose sales went up by 2.2% to 18,270, while Suzuki Phils., Inc. posted an 11.7% rise in sales to 13,206 units.

Last month, CAMPI raised its sales target to 500,000, from 468,300 initially. If realized, this will be the industry’s highest annual sales to date and will represent a 16.3% increase from last year’s 429,807 units sold. – Justine Irish D. Tabile, Reporter