In the Milken Institute’s 2015 Global Opportunity Index released yesterday, the Philippines rose six spots to 87th, out of 136 countries on six continents.

“The [Southeast Asian] region turned in an impressive performance in our latest survey. The Philippines and Malaysia showed the most improvement in their scores,” the report read.

The index assessed 61 variables grouped into four categories. A score of 10 indicates “very strong economic fundamentals,” while a value of 0 means “relatively weak conditions.” The Philippines got an average score of 4.75 this year, up from 4.37 in 2014.

Each one-unit increase in index score is associated with a 42% increase in FDI per capita and a 55% increase in international portfolio flows, according to the report.

The Philippines got a score of 5.09 in the category of economic fundamentals, which covered macro performance, openness to trade and FDI, quality and structure of labor force, and physical infrastructure. It scored 4.52 in ease of doing business, which measured accounting and disclosure requirements, tax burden, as well as costs of terrorism and crime, starting a business, enforcing contracts, and resolving insolvency.

The country scored 5.70 in quality of regulation or regulatory barriers, whose subcomponents are extent and burden of regulation, corruption, transparency, and extent of controls on capital. It was graded 3.70 in rule of law, which covered legal infrastructure as well as protection of property and investor rights.

“The Milken Institute’s Global Opportunity Index is both descriptive and prescriptive,” Milken Institute economist Heather Wickramarachi, who is a co-author of the report, explained in a statement accompanying the report.

“The higher the country scores in the index, the greater the inflow of foreign direct investment. With the pending normalization of monetary policy by developed countries, it will be more important than ever that developing countries are attractive places for investment.”

Latest available central bank data show the Philippines’ inbound FDI flows dropped by half to $851 million last quarter from $1.715 billion in the comparable period in 2014.

Sought for comment, Trade Undersecretary Adrian S. Cristobal, Jr. said in a mobile phone message: “Improvement in international rankings is always welcome, but we will continue to remove hindrances to doing business in the country... and implement reforms in governance to improve the business environment.”

Meanwhile, the European Chamber of Commerce in the Philippines (ECCP) took a more skeptical view of the improved scores.

Replying to a mobile phone query, ECCP Executive Vice-President Henry J. Schumacher said: “Great for the Philippines but I wonder how collects data; I fear many businessmen will not share the optimism expressed by Milken.”

He noted that in the index’s four major categories, “not much is happening in those areas.”

This year’s top three spots went to Singapore, Hong Kong, and Finland, while Malaysia was the only developing country that made it to the top 10 after a strong showing in the rule of law category.

“From 2009- 2015, there was a slight decline among many advanced economies and mainly positive changes among developing countries, highlighting the hit that developed markets took during the financial crisis, as well as continuing reforms in developing countries,” the statement read. 

Source: Business World Online